Companhia Brasileira de Distribuicao SA (CBD) 2008 Q4 法說會逐字稿

Good morning and thank you for waiting. Welcome to Grupo Pao de Acucar's teleconference to discuss the results of the company in the fourth quarter and during the year of 2008. This event is broadcast simultaneously through the Internet and it may be accessed on www.gpari.com.br where you'll find the presentation. The selection of the slides will be controlled by you. The replay of this event will be available right after its closure.

We inform that the press release about the results is also available in the Investor Relations site, www.gpari.com.br. This event is being recorded and all participants will be just listening to the teleconference during the presentation of the company. After that we'll begin with the Q&A session when further instructions will be given. (Operator Instructions).

Before we move on we would like to clarify that the statements that may be made during this teleconference are regarding the prospects of the GPA Group, the projections and the aspiration and financial targets that are based on beliefs and premises of the company as well on information currently available. Future remarks are not guarantees of future performance. They entail risks, uncertainties and premises because they regard future events and therefore they depend on circumstances that may or may not occur.

Investors must understand that the general economic conditions, the industry conditions and [other] operational factors may affect the future performance of Grupo Pao de Acucar and may lead to results that will materially differ from those expressed in such statements.

Now we pass the floor to Miss Daniela Sabbag, the Director of Investor Relations, that will open the presentation on the performance of the company in the quarter.

Good morning, everyone. Welcome to our teleconference on the results of the fourth quarter and on the year of 2008. Today we have here with us the CEO, the President of the Board, Abilio Diniz, who is in France but will participate in the teleconference; Claudio Galeazzi, the CEO and the Executive Directors, Eneas Pestana, Jose Roberto Tambasco, Hugo Bethlem and Caio Mattar.

Today's presentation will follow a format in which we'll emphasize the major initiatives that we had in the year of 2008 and our operations for 2009. Each of the Executive Directors will talk a little bit about the development and the trends in their areas and then Eneas will address the major financial and operational results that were obtained during 2008. And then we'll have the Q&A session. Now I would like to pass the floor to the President of the Board, Abilio Diniz, for his initial remarks. Abilio, you have the floor.

This is Abilio Diniz talking from France from the Casino headquarters in Paris. Good morning, everyone. It's very nice to be working at France right now and I miss Brazil. We have been having very good results in Casino here in France that will be announced soon.

As for Brazil, as for [Pao de Acucar], I am quite pleased, quite satisfied with the results attained in 2008. I think that our performance was beyond what we expected. We had a major add to the growth and more important than that we grew a lot in terms of sales at the stores, winning customers. And we had a certain deceleration of the economy by the end of the year and in spite of that we obtained growth. So I'm quite pleased with the results that we have obtained so far in this beginning of 2009.

As for sales, for results, as for everything that has been happening so far, I'm quite pleased. And this is the result of the work that our teams have been carrying out. Since the beginning of 2008 as I have been telling you we have a different environment within our company. We are working as we worked in the old days. We went back to basics, Claudio Galeazzi created this slogan going back to basics, and this has been extremely important.

I have no doubt that last year we gained market share and I have no doubt, I'm quite convinced, that in early 2009 we are gaining even further market share, especially over the smaller companies that are more hit by the crisis, they are more hit by the difficult moment that we have been witnessing this year.

After a year of hard work in 2008 the team is now addressing the strategy in detail, most of it has been implemented. Now we have to keep on working. We are not going to do anything spectacular, those who'll be waiting for that will not see that. We'll keep on working at the [steady] line of work we'll now address things in detail, we'll do better what we have been doing.

From purchasing up to logistics and IT and the stores operations and the contact with customers always entailed. So this is our target and I'm sure that this is what is providing the good results that we have been obtaining so far.

We're experiencing a difficult moment. As I said it's important to be outside the country to feel the difficulties that other countries are facing and I have no doubt that we in Brazil we are in a quite privileged position. It's not that there is no crisis in Brazil. Of course we are facing difficulties, especially if we analyze industry by industry. But it's not a generalized crisis in all of the sectors.

In retail we virtually do not feel the global crisis because we had a good increase in the income in the last two years -- in the [general] income in the last few years. We enlarged the medium income bracket that started consuming more and this is still going on, this is still happening. The inflation rate is quite low, enabling people to really consume and buy more -- buy normally actually. We do have some issues that we will have to face ahead. Of course we will face some difficulties and the most concerning one for the Brazilian society is the unemployment rate. And the government has been paying great attention to that, trying to encourage the development of the economy to have a very low unemployment rate.

My impression is that many companies in many sectors have made already some adjustments late in 2008 and early in 2009. Of course the situation may get worse but this is not the impression that I have. I don't think it's going to get much worse. Companies are taking measures to curb the crisis. They have taken the right actions and the impression, the feeling that we have is that we'll keep on having a very good economic and privileged situation.

As for the crisis itself, of course outside Brazil we feel the crisis more [insistently]. I don't know if we have reached the worst phase. I'm always cautious about the things that I say but the impression that I have is that there's very little that can happen now. Anything serious that may happen in the future will be just about the same that has been happening for the last few months. We will not have any alarming events any longer as we had in the last quarter of last year.

And I keep on saying and I keep on believing that Brazil is in a privileged position. My trust on this country is enormous and I'm sure that we'll be among the countries that will be strengthened by this so-called crisis. Because actually we at Pao de Acucar, we cannot even say that we are facing crisis. As I told you, we are still gaining market share, we are still advancing and progressing, we are still having satisfactory and very good results for everybody, for the internal team and for the shareholders. And I'm quite pleased with all of that.

Of course, I feel that we are not yet recognized by the market. We have a very low assessment, much lower than other retail companies that we see in Latin America. And I ask myself -- I wonder why because we are doing a work that I consider to be brilliant, especially under the current circumstances.

However, I do trust the market and I'm sure that our work will be recognized, our stocks will rise in price and this will satisfy all of the shareholders. We have most of our capital in the hands of the market, in the hands of the shareholders. And I would like here to thank the whole team at Pao de Acucar from Claudio Galeazzi, the CEO, and all of those who work with him I would like to thank our 66,000 employees because they really make this company work, they really make this company the success that it is. I would like to thank you all and once again I would like to reiterate my satisfaction about the results of last year and my total reliance on the operations of Pao de Acucar. Thank you very much.

Now we'll pass the floor to Claudio Galeazzi to make a presentation.

Good morning. This is Claudio Galeazzi. I'm going to speak briefly about the year 2008, some comments about 2009 as well and after the team will go into further details about our results in '08.

First of all, I'd like to thank this team. This is a winning team without which we could not have reached the results that were perfectly aligned with the guidelines that were given to them in April 2008. We tried along 2008 to focus on the excellence of basic internal procedures. That is back to basics. We unified the commercial operation and marketing areas under one single leadership so that we could integrate the decision-making process being consistent in all decisions made and especially trying to find a dynamic pace as we saw in December where -- when we quickly positioned ourselves and the result was a very reasonable growth rate, especially considering the crisis situation.

Along the year we are trying to strengthen our regional sectors with the creation of regional boards and specially trying to direct our commercial activities to the target audience in each one of these regions. We also were able to integrate the areas of technology and supply chain where we are continuing with our investments and then Caio is going to speak further about this, trying to increase our infrastructure here in the organization which will allow us as soon as this crisis is over to be much more strong, to be stronger than we were before, more dynamic to tackle this market. And as soon as we reach the level of growth again we are trying to maximize the existing resources. Instead of searching for new resources we are trying to maximize our resources and base our results on existing assets and resources.

We are working with this slogan -- with our mantra as [Juliana said] supply, price and communication and services. This is our mantra, as Juliana said. Assortment and so we are no longer working obsessively on sales because they are a consequence of a well developed work based on these other pillars. We are seeking efficiency gains through very disciplined taskforce working groups. And I'm here highlighting the results of this taskforce in expenses control that I'd like to mention here. We were against cutting expenses but we are in favor of controlling expenses and Hugo is going to address this subject.

Along the year we tried to strengthen our capital structure. In March and April as you all know we reviewed our debt profile in a moment where no one was thinking about that. We renegotiated the due date of our indebtedness so that we do not have any relevant due date, any -- in the next year. And we renegotiated this position at a price or at a cost at that occasion that was a little bit higher than we were expecting. But in the end of the day the result was a very strong situation in that our indebtedness today is 52% of our EBITDA in an average cost that is very low, much lower than what today is prevailing in the market. And our cash position close with BRL1,600m, a little bit above that.

This capital structure along the year we tried to be very conservative in our investments, seeking the return -- a return on our investments for our shareholders. And we also reviewed the models of different stores -- the different stores and the (inaudible) that we had. They were all reviewed, they are more consolidated and we are prepared so that in the right moment we can have an aggressive growth with very well established models and we believe in this return on our investment.

We also believe in the reduction of stock days. This was hard work. Today our inventory is six days lower than in 2008. This inventory is adequate -- is agile so that we can work with our slow movers. We are working with this capital structure and this has only made us stronger. Were we not under this global crisis we would be living at a moment of very aggressive growth.

So we are well prepared to face 2009 and to remain with our personality. We have very daring in our expectations and bold. We had a -- program of variable compensation that is very aggressive. All my colleagues here are smiling now because they were able to reach their results and they benefited from this program.

About 2009 and speaking about the main guidelines that were determined for the year of 2009. First of all, we must keep the economic health and the financial health of the company. This is our main goal here. We are going to be very conservative in our financial actions, our financial attitudes so that we can keep our company healthy.

We are also going to seek market share. Market share with common sense. Trying to find an adequate equation between margin and expenses reduction so that we can keep our competitive edge in the market. The third guideline, we're going to continue to control our expenses. We are trying to control our expenses and so working with a level of growth for zero percent as if we were working in a market with zero growth rate.

And at last our policy of reactive growth. So we are going against the trend here -- against the current here in the crisis. Our actions are defensive and we know that we will be the last ones to feel the crisis and probably will be the first ones to solve -- to leave this state of financial crisis. We are trying to adequate to the market situation at this point.

So having said that I pass the floor to Jose Roberto Tambasco, our Commercial and Operational Vice President.

Good morning to all of you. Although we are not announcing any figures for 2009 I'd like to announce to you our overview of what's happening in the market and in terms of our sales performance also.

Since the beginning of the crisis, since September, we have been trying to monitor our customers using also research institutes from abroad in trying to detect changes in consumer behavior. And what we have identified here is that in fact there are only a few changes in the consumption behavior, especially in terms of foodstuff, hygiene products, retail and even in non-food products this behavior has changed slightly only. And this has been allowing us to keep with the same level of performance, winning new market share compared to '08.

The beginning of '09 is above our expectations. We started the year with the expectation that these behaviors could change. And fortunately our performance as I told you is above our expectations, Specifically what I think that is important is in terms of the sales growth in Pao de Acucar is that is happening through increasing the number of tickets. This means more customers visiting our stores. And also in the average ticket showing that there is an improvement in the product mix that the consumer is buying in our stores.

In the sector of foodstuff, hygiene and cleaning products that's where we have identified the lowest change in the consumer behavior and the whole market has been growing this sector. In the case of Pao de Acucar the data that we have shows a continuous gain in market share in this sector as we have announced along '08.

In the non-food product department what we see is that the consumer still buys, their behavior has not changed radically but the consumer there is more cautious. They are paying more attention to prices and to payment terms. So especially in the area of electronic products the sales growth is more moderate. On the other hand in categories such as the bazaar, textiles, gas stations, drugstores, we see an expressive growth, confirming the continuing of the consumer behavior.

Since you may follow the information -- there is a summary of the information on pages seven and eight of what I'm talking about right now. And although the sales performance is good in virtually all of the banners of the Group in all of the regions, I think it's worth pointing out the central and western regions with Brasilia and Minas Gerais and most of the northeastern region of the country because since mid last year we have been changing the sales trend which was negative in the past and the figures are growing steadily. And this year we are going to consolidate our growth in those regions, showing a figure that will be in line with the rest of the company.

Of course, we had this concern and since January we made the decision of reinforcing the communication strategy in our campaigns, especially in Extra in non-food. So we are focusing on the partnerships with our suppliers, we have been trying to publicize more the advantages of the FIC, that is the financial company that we have, that has been showing also a good performance from the point of view of the credit card customer base as well as the growth of the installment sales. And the Extra campaign is based on strengthening the fact that at Extra you still have credit. We offer even further credit and quite interesting options for the consumer because this is a consumer that today is more inclined to negotiate when buying. And the payment and credit terms will eventually be a key point to really make the sale.

And finally, although Caio is going to address in detail the expansion strategy I think it's worth pointing out that in Assai, that is the retail/wholesale model that is more oriented to the transformer sector, in November and December we opened 10 new stores with the Assai banner. Five of them were transformed from Pao de Acucar to Assai and the performance is exceptional. We have stores that grew fivefold in terms of sales when we compare to the past with an average growth of two or threefold in sales.

So Caio will talk a little bit about the expansion of the Assai banner as well as on the Extra Facil. Thank you very much.

Okay. Good morning, everyone. I'll talk a little bit about pages nine, 10 and 11. Here you can see what I'm talking about on these pages. And I'll begin with the investment plan. The investment plan that we have for this year is a quite bold plan. But based on what Claudio told you our major objective is to maintain the financial soundness of the company. So based on the performance of the company and based on the market behavior, based on what's happening with the crisis and the sales, that's when we are going to decide to increase or decrease the pace of our investment plan and we're going to do that carefully.

I would divide the investments in two different fronts. The organic growth and the acquisition-based growth. I'm going to talk about the organic plan in which we are going to prioritize the return on investments and we are going to be quite strict on approving such investments. Regardless of the crisis there are some things that we are going to do immediately. The first one of them will be the expansion of the Assai format, our wholesale/retail format, and the Extra Facil format in addition to remodeling the stores so that we can enhance the sales per square meter which is quite important for us to increase the sales in the same store format, same store (inaudible).

We are going to maintain investments in IT and logistics. Since last year we have been implementing SAP and Oracle in our company. And also in terms of future investment, we'll keep on buying tract] of land. We have an impressive line of assets in the area and we'll keep on buying land. Quite carefully though.

In terms of acquisitions, we have created a group of M&A which is analyzing all of the market opportunities. The Group is paying attention to everything that goes on in their area and they always focus on return on investment and the adherence to our business strategy. With that our investments this year will reach BRL1,200m.

I'll talk a little bit about real estate that is another strong front for us. We have a structure that is ready and that is focused on the real estate sector. We are just defining now the best operational mode if we're going to have a subsidiary or if we're going to have a spin-off of our assets in that area. For this year we have set aside BRL160m for the purchase of lending banking that provides the synergy between real estate and retail. This is quite important for us and we are going to split up or not depending on the results and depending on what we see happening in the economy.

As for the extra.com.br, that is a sector that is presenting expressive growth as well. We've had actions that allowed us to have good results. We updated our technological platform. We doubled the number of products available on the website with over 40,000 items available now. We had a strong growth in the sales of IP, electronic and electrical -- electronic items. We launched the service for the fast delivery. If you buy up to 3 p.m. we deliver on the very same day in Sao Paulo. So you buy up to 3 p.mm and you receive on the very same day at your home. And we enhanced the customer service through the Internet allowing us to have excellent levels of service to our consumer. This is our competitive edge.

With that the growth in sales in 2008 was 168% if we compare to '07 whereas the market grew 31% only. This is from the [big] stores. So we grew 168 whereas the market grew 31%. We had a positive net income in 2008 and we forecast to keep on growing at a very high pace in that segment.

I'll now pass the floor to Hugo Bethlem.

Good morning, everyone. It's quite important to focus on efficiency gain. And the efficiency gain, as you can see on slide number 13, is based on rationalizing and controlling expenses. Reinforcing what Claudio said, it's not simply cutting down on expenses. Many companies do that. We have done that in the past but it's different, it doesn't last that long. The important thing about rationalizing and controlling expenses is that it is based on two fundamental pillars. The structural pillar and the cultural pillar.

As for the structural pillar, we have reviewed early this year the whole structure. For instance in reviewing our macro processes we reduced the number of executive directors by half. With that our organizational structure was more adjusted to meet the basic target that we had in the back to basics - to be agile, to be simple, to have focus, to promote integration and to provide empowerment to those that have to make decisions.

Nothing of that would work if we didn't touch on the cultural side as well because we must address the cultural side otherwise the decisions will not last long. So we had to deal with the controls. We created the working groups that have been mentioned to you, they were key and they are still key. We keep on having the working groups because if we question -- if we review and if we ask about each cash operation in the company people get better prepared to be able to effectively justify the cash operations of the company.

So based on these structural and cultural adjustments we reached our objectives and we established our objectives quite clearly. So established the targets that were introduced to you on the GPA day, that was our guidance, that is 19% of expenses. If we don't have a target we cannot demand results and then if we don't demand results we don't see things happening. So we attained a reduction of 240 basis points, reaching the target that we had outlined in the past.

Together with the expenses we had the reduction of the stock level. That has three major fronts. The release of the working capital that is key to our business. The second point is something that we used to meet the third item in slide 13, that is recovery of the non-food segment. That is a strategic focus of our company. In order to deal with the inventory levels that the non-food requires so that we can have the right assortment of the textile, bazaar and electronic items, undoubtedly we need to increase the turnover and have the products, be them food or non-food.

And we also take advantage of the global sourcing because we can buy imported products to offer a greater differentiated assortment and to reinforce the pillar that is the growth in sales in the same store format.

With that and working strongly in the northeastern region as well we pursue the efficiency gains that will yet be captured in 2009. How have we been able to reduce the stock level? We have minus six days because we have been dealing with the slow movers and the non-slow movers. And we also defined the implementation of the order that is turning 75% of the volume of our orders into automatic orders. The 25% remaining orders they will be effectively negotiated through the purchasing department using better negotiations and a better gross margin. We have more a systemic planning and we have eliminated the manual interference that comes from the stores.

All of that has been possible because we have provided a better structure as you can see in slide 14 in terms of IT investment. In our retail business it's key to have agility and accuracy in terms of information exchange. And we have reached and met our target thanks to the in-house development, the legacy systems that have brought us so far in the last 20 years.

However the road to the future in the next 20 years with multi-format, with multiple businesses operating in different states, this forces us to be more structured, to have a faster response in our IT systems. We are going to invest BRL150m to BRL200m in IT in 2009 including the SAP. So for one year we have been developing the implementation of this and as of January 1, 2009 we have converted all of our back office, purchasing, accounts receivable, accounts payable, fixed asset, maintenance of stocks, treasury and we have had no important impact in doing this kind of conversion.

With that. Last year we commissioned a study to install our new ERP that will integrate the commercial, logistics, operation and marketing areas. And it's going to be a very long process. It's going to last three years. The first phase will be in 2009. And by the end of the year we shall be seeing important results.

In such a competitive market it's very important to know our consumers deeply, if consumption habits turn. In addition to being big, we must also work with the micro-market. In this micro-market it includes understanding how our campaigns are actioned, our assortment. And our pricing is adequate to these huge expectations, specific for each one of our consumers in each one of our stores.

And finally, an outsourcing project in our data center in IT in the first quarter '09 so that we can focus more and more on our businesses.

Now, on slide 15, we are going to speak about our complementary [businesses] and global sourcing. Today we have 143 drugstores. And we are the largest operator in food retail. We have captured more than 8m tickets last year from customers that came in our stores. And the main highlights that we decided to professionalize this operation, creating one business unit for drugstores through vertical management with horizontal synergies, renegotiation with supplier, adjustments to assortment and services that will ensure a higher profitability to the business.

And gas stations, today we have 75 units. Prices are competitive. And the most important step the customer is seeking is reliability and quality of our fuel. Our main business will be the expansion in Extra and Assai stores that at this point do not have gas stations, and the acquisition of independent gas stations in the streets that will bring us synergy with drugstores and Extra Facil.

Global sourcing is a very competitive differential, again ensuring a differentiated product. In our stores last year we had imports totaling $172m, and representing 27% of growth compared to '07. In the search of synergy, with the group [Catina] Latin America, we have -- and in the world we have exports that surpass BRL317m taking Brazilian products with our own brand to other countries.

It's important to say that in this moment that the global crisis gets more and more serious, especially in other countries. This is a huge opportunity for us through the offices that we have, with Catina in Asia, to renegotiate our conditions and to supply our source with quality products.

Now I pass the floor to Eneas Pestana for his presentation.

Good morning to all of you. Thank you for your participation. We are very happy with the audience. Never before have we had so many people taking part of this conference call. So I'd like to thank you for this interest and your participation.

I'm going to try to speak briefly. Now we're going to read the results of '08. On page 17 we can start this explanation. And we are going to show our guidance. This is the guidance that we passed to the market in the GPA day last year, in April '08.

So the satisfaction is to be able to tell you that we matched the guidelines that we informed in sales that is more than BRL20b. We reached BRL21b. Nominal growth of 6.5%, we reached 8.5%. And gross margin we stayed with 26.4%, in a range from 26% to 27%. In expenses we were a little bit better than the guidance, with 18.8% versus 19%.

And therefore in EBITDA we arrived 7.5%. Of course that we have the effect of taxes and distribution affecting the margin that was the 6.8%. Expenses reaching 19%, and we would reach 7.7% of the EBITDA if it weren't for the effect of the distribution impacting the net sales. So even with this effect, we can say that the guidances were met.

And our indebtedness, we had our guidance, was to be below 1 times EBITDA, which is a very low leverage for a company such as ours. But still we reached the level of 0.58 or 0.58 times the EBITDA, which is very low. We've a very attractive debt profile, very relaxed, because relevant due date as of the beginning of 2010.

A quick reading of our results, starting by sales. Sales, gross sales in the fourth quarter grew by 13 -- 15.3%, and gross growth was 18.2%. The migration to the regime of new distribution in Sao Paolo which is happening again in 2009. In the year the growth of the gross -- of net sales was 18.8%. And the gross growth was 21%.

And same-store sales the improvement was 8.5%. And if discounts inflation, the growth was 2.6%. And net sales in same-store concept, we grew by 11%, and 6.3% in real terms, or discounting the inflation according to the IPCA.

And the food products, we grew by 7.3%, in non-food products 12.1%. It's important to highlight what we call our retail business fundament. We're managing to increase our sales, increasing the traffic of customers and increasing our average ticket without increasing our prices, but rather improving our product mix. And also gaining in terms of profitability, with [retailing] and expenses, increasing our image, improving our [image], and gaining in profitability. Those are reasons for great satisfaction to be able to announce such consistent results, sustainable results.

In terms of gross profit, on page 19, we had a gross profit in the fourth quarter, growing by 12.4%, or [150] basis points, representing additional BRL148m. In the year the growth was 13.8 points, with 160 basis points lower than the previous year, but with BRL575m in terms of cash margin that, in the end of the day, will pay for our accounts.

So how do we explain these results from this percentage reduction in the margin? It's not due to lower prices or that we are losing market or anything of this kind. But the basic explanations are, first of all, incorporation of Assai at worse, with a margin that is much lower than the average margin of the rest of the Group. And therefore we have an effect of 0.8% or points. Our competitive edge and pricing strategy competition represented half a point. And the effect of tax distribution accounts for 0.3%, 0.4% in the margin. This explains basically the effect of the reduction in the percent of margin.

So at least until the end of '08 we did not identify any risk in terms of loss in terms of image. And in the first two months of this year, this has not happened.

In expenses, as we have explained, Hugo explained and mentioned by Claudio, I think this was a very happy year for us, where we managed differently from the previous years to conduct a program to control all the expenses. To adequate micro-processes and structure resulting in a very effective reduction of our operational expenses in a sustainable way.

Reading the figures, you know that quarter against quarter we go from 20.1% to 18.4% reduction of 170 basis points. And in a year the result is even better, from 21.2% to 18.8% reduction, reducing 240 basis points year against year. This has to do with the work that was conducted in the beginning of the year where we reviewed our micro-processes, resulting in an [adequation] of our structure that was kept, and will be kept in a sustainable way. And as Hugo highlighted, we've been working with a different culture, culture directed to results in order to be a low-cost supplier.

In terms of EBITDA, on page 21, the consequence is a growth by 22.5% in the quarter, and 32.5% in a year. This is a very important variation. 32.5% representing [BRL330m] additional in our cash generation.

In terms of margins, also with the effect of expenses reduction, we were able to improve 60 basis points in the year and in the quarter 20 basis points. This was effectively gains in terms of profitability which were very important in 2008.

Below the EBITDA, here we have also mentioning our financial results. We do not have any surprises here. It's in line with everything we said in the three previous quarters. Around BRL170m in the quarter. So I'm not going to comment further.

But I'm going to go to page 23, where we comment our indebtedness profile. We see here that in 2007 we have 27% in the short term and 73% of our indebtedness from BRL2.3b in the long term. And now we are elongating this profile and we have 13% for the short term and 87% in the long term. In terms of indebtedness, as Claudio highlighted in the beginning, very low indebtedness. Only 0.58 times the EBITDA.

On page 24 we have FIC results. It was a much better year for FIC and reflected what we told you, this would be the year of the turnaround where the curve would then be favorable to FIC, going from losses of 28.9% (sic - see presentation) to 2.9% (sic - see presentation), improving by BRL32m, increasing 2 percentage points in the participation of the Group sales, and reaching a customer portfolio of 6m customers and with receivables of 1.6m. And our strategy is strongly based on the maximization of the revenues of extended guarantees.

Sendas, also we have good news. High growth, consistent continuity with the work that was initiated and conducted by (inaudible) Rio de Janeiro, result is our gross margin grew by 100 basis points. Expenses falling by 250 basis points. And this accounts for the EBITDA margin growing twice as much, [BRL250m], and as a result has never [ceased] the constitution of the joint venture.

In Assai, the quarter, the first quarter from last year has been hard. We operated for a few months only. But it shows a good recovery and we had a quite good quarter. 5.1% in EBITDA margin in the quarter is a very good margin for the wholesale margin.

In net income, I must talk about the net income of the quarter, because last year in the very same quarter we were able to take a credit of a deferred tax that was approximately BRL50m. Of course, we have to adjust 42% of that. But if I adjust to be able to make the comparison, the net result without this credit last year would be BRL89m against BRL102m this year, which would account for a growth of 15%.

In income before taxes, we have 19% growth. So be careful in doing this assessment because it's not related to the operational issue. It's related to a taxation issue in that period. It's quite clear that we had this effect in the year. But the net income growth was virtually 42%.

I'll talk about the [lot] in CapEx, as Caio said, it was BRL503m with 31 new stores. Six conversions, we grew the sales area by 2.3%, closing the year with 597 stores in total.

I cannot fail to mention here, the return on the invested capital, on page 29, you can see that our return goes from 10.3% in '07, reaching 15% in '08. Of course, this is related to a small investment that we made throughout the year. But with the profitability that we have that was higher than in 2007, this leveraged our return quite importantly. And we also had an improvement in our asset turnover indicator.

I have to talk about the factors of the Law 11.638. I will not go into details here. But we are organizing with the IR area training at no charge to provide you information on Law 11.638 to help you understand the effect of this law. And Daniela, who is the Director of the Investor Relations sector, will talk then with all of you to see if you're interested in participating in such conference.

The effect of the law totaled BRL20.9m, virtually BRL21m. Therefore it affected our net income. It's worth pointing out that this effect is not a financial effect. It's an economic effect. It was due to a change in the accounting practices on account of the introduction of this law.

On page 31 I have tried to clarify the effect of this law. The base result, that is before the law, we had BRL281m in 2008. With the adjustment of the law, we had additional BRL21m, which leads to the result that we reported, worth BRL260m. But here I was adjusting this on the amortization of the premium, because with the law the premium will be no longer amortized. But this hadn't been regulated in 2008. And the adjustments hadn't been done in the balance sheet of 2008.

If it had been regulated and if it had been accounted for, it would bring a quite positive effect after taxes in the net income of BRL112.6m. Therefore the BRL260m would be then BRL372m that would have been the result of the Company if all of the effects of the law had been accounted for.

Why haven't we done that? Why haven't we taken into account the law? Because it hadn't been regulated last year, therefore we could not report like that. I'm saying that because definitely, as of 2009, everything will be regulated. All the balance sheet will be regulated according to the law. And we will report based on that, as all of the other companies do as well. So that's what I wanted to clarify.

To close, it's with great satisfaction that we may say, as previous said, that our belief is that Brazil will be less affected by the crisis. Brazil may be one of the countries that will overcome the crisis in the first place. And as Claudio said, we understand that our segment and our Company, based on our mix of sales, 75% on food, and based on the degree of efficiency that we have attained, we see that within Brazil we are going to be a company that will be ranked as the first -- we will be one of the first to leave the crisis behind.

So that's what I wanted to say. I pass the floor to Daniela for the questions. Thank you so much.

I would like to open the floor for the questions that you might have.

(Operator Instructions). The first question from [Cristina Farriana] from (inaudible).

Good morning, everyone. Congratulations on the results. You made a great effort and it has been worthwhile. Great work in 2008. I have two questions. One about the article we see in the newspaper about the committee of actions that you are creating. I would like you to talk about that. Perhaps give us an indication about the size of the actions and initiatives.

And I would like to further understand what is behind the magical number of 45 that Eneas called as a fair value for the shares. I'm not talking about the details of 2009, but what is behind that number in terms of the assumptions of the mid and short run in terms of the image of the Company?

Another question is about Galeazzi's succession. He's spent one year in the Company. He should spend another year in the Company. Are we going to see an extension of this term or is he going to be replaced? Thank you.

Cristina, this is Eneas. I'll try to answer your questions, because you mentioned my name so I have to answer this question. Beginning with the action committee, it is true. It is a committee that is not part of the corporate governance, not yet. But it is a committee that has been created internally. Abilio participates, Claudio, myself, Daniela, and two consultants participate in this committee. The consultants help us and support us. They are quite skilled people to help us in this direction.

It was created a while ago. The scope is to really address the performance of our actions, the value that we are disseminating, the concentration, the dissemination of values, when we compare ourselves with the other players or with the market in general. So we really discuss how we can improve the degree of communication with the market. For instance, something that we are doing here today and how we can better meet the demands in terms of disclosure, communication and transparency, trying to leverage the value of our shares, because we truly believe that it's underestimated.

So we keep on working. We have a meeting per month. The meetings have been quite productive, quite nice for us.

The buyback issue, right now I cannot talk about the value. We'll talk about the value of the buyback. The buyback program is yet small program that we have launched for three months only. It's been internal discussion here. We think it's important to promote that because we are under-valuated.

But we want to do this in the first quarter to test and understand. The Company has never done a program like that before. And we think it makes sense. It's a good investment. But we will do for a period of time as a trial, as a learning curve. And then we are going to discuss if we are going to continue with the program or not.

The 45 number, going back to the magical number, it's not a magical number. Something that was published is that we are compared -- as Abilio said in the beginning, we are compared with an international benchmarking with other players that have multiple operations. And we heard from some people recently that we had reached the multiples of the international top players.

We analyzed and we understood that this is not true. For instance, while [Max] that has been mentioned in that article, has multiples that are higher than ours, has an assessment that is higher than ours. And if you compare ourselves with them, if I use their assessment, their ranking, and I use my figures, the 30 should be 45 actually, if I have the same degree of efficiency.

As has been said by some market people, I think that there is a value gap. I think that there is an upside of over 50% that we should adjust, at least 50%. Because we are being compared and we have the same efficiency level, if we compare to any other international top player. So that's what I meant. Our actions are phased. We are having a defensive action because of our mix of sales, 75% based on food. But our shares, they offer security. And they really offer a great opportunity of capturing an upside trend because of our comparison with the international benchmark. That's what I mean, Cristina.

Okay. I've got it.

Cristina, as for the succession, it's Claudio speaking now. Of course, the human resources committee and the Board maintain this assessment going on. But the team is working together. So Galeazzi's succession is not so important. The major importance should be given to the growth of the team, the development of the team. So there is no definition yet about the succession. Of course it's on the agenda. But the important thing is to see the work that the team has been carrying out, the team that has been consolidating the performance of this Company. And we are discussing in that case a new coordinator of the whole process. So that's it for that topic.

Thank you, Claudio.

Our next question is from Gustavo Oliveira from Citigroup.

Good morning, everyone. Thank you for the conference. Three quick questions, the first about the stock levels. There has been a change because of the automation, the implementation of automatic orders. But the results were quite good this quarter. So what is the expectation for the next quarters? And what is the impact that you still foresee because of the automated orders?

The second question is about the global sourcing. If you could tell us what is the percentage of imported products that you have today in non-food.

And the final question is about the sales trend, what you see for January and February, what you have seen actually for January and February in terms of sales trends.

This is Hugo, Gustavo. Good morning. For your two first questions, the third one will be answered by Tambasco. But as for stock levels, the working group that has been implemented was based on the same pillars that we had in expenses. These are not isolated actions. These are structure-based and culture-based actions.

So we implemented a new system. The system was already operating. But we needed the cultural pillar to operate it. This was key to make the purchasing area focused on negotiating with the major suppliers that account for 75% of the volume, or just 25% of the order volume versus what we had before, when all of the orders were placed.

As long as you have more adjusted processes, be it in the stores, be it in the stock, be it related to the culture. And by means of all of these statistical calculations that allows us to replenish, properly covering all of the logistic area that we have to cover for all of the store formats, we can ensure then a better adjustment of our logistic area.

Working quite closely with many suppliers, we have an event that is called [Top Log]. It's a widely known event today in the industry. The 122 major suppliers come and talk to us. And we work in cooperation, be it about inbound, outbound, the back whole system, and many other [plannings] that are totally aligned with the commercial areas and company.

As said, we also are opening space in order to improve the negotiations of known food volume, including a part of imports. As I told you, we have our global sourcing which imported $172m FOB. In a simple account, this represent 8 times in reais, you get $172 FOB we are going to BRL1b, BRL1.5b in sales price in reais, which represents next to 13% of our business in imported products.

Is this okay?

Yes, yes.

Now, then, this is Tambasco speaking. In terms of the sales trend, what we are witnessing January, February, these are figures that we are not announcing. So far we also announce this by the end of the quarter. But as I told you initially, actually in the area of food products, the market is growing. And we are gaining market share. We are increasing our market share.

It's important that this growth is happening due to the increased number of customers in store, and also due to the product mix. The average ticket has been growing in our stores, which gives us a greater comfort in terms of the value of our product mix that we are offering. So these are very favorable figures.

And as I told you, even in non-food products, where we have electronic products, which -- and the customer is more cautious, sales are also growing in a more moderate way. But as a compensation, we have sector such as textiles, garment and bazaar, which has been showing very expressive growth rates.

So in terms of trends, the trend is good. I think we have everything in our hands so that we can keep our sales impact even in times of crisis.

Okay. Thank you.

Our next question comes from Andrea Teixeira from JPMorgan.

Hello. Good morning. I have three questions. Claudio, when you speak about compensating the margin, offsetting the margin, what can we expect for EBITDA margin in 2009? I know there's a number of moving parts. But what can we focus on? As you were successful in expenses reduction, can we think of a more rapid proposal in terms of pricing where you would reinvest part of this gain in margins in terms of price?

And what would be the effect of this conversion, the continuous conversion of stores into Assai for the margin?

Another question, in terms of the impact of the new processes or IT, SAP, implementation of SAP and Oracle systems, what will be the impact of that on the margin on operational expenses, because I know that part of this comes from CapEx and the other part is (inaudible) with consultants. Can we see any impact in 2009 in terms of margins?

And the third question in terms of CapEx, I believe that 1.2 obviously increasing the acquisitions. So what's your trend in terms of acquisitions for '09? And in terms of format, are you thinking -- what do you think -- do you think of that range, real size averages. Do you have anything in terms of Assai or in terms of geography? What are you thinking about this?

A part of the first question, and the disclosures, in '09 we cannot advance our expectations in terms of EBITDA at this moment. But we are going to try to find an equation in terms of margins and the reduction of expenses and an equation that allows us to be aggressive in the market without losing our profitability.

Yes, I will tell you in terms of margin, there is a continuous concern that when you increase the margin, your results will be worse. It depends obviously on your volume and it depends on the complete equation until you reach the EBITDA.

And do you think that, Claudio, there are expenses -- sorry, raising the bar for '09. Are you going to cut further expenses for this year? Can we expect that we are going to see any improved margin or expense?

Well, the expense is controlled. It's something that should be continued -- a continuous project in every company. Of course that when you try to -- when you start cutting these expenses it becomes, of course, harder and harder to obtain greater reductions. But in terms of retail, any half percentage point is relevant and it will affect the results.

How are you going to allocate the possible gains?

This is an issue that will be solved in our daily lives, that will be followed closely by Tambascos's teams and all of the people from the commercial area, leaded by [Hamachi]. And we'll try to correct day by day our margins, try to stick our competitive edge. And one of the guidelines is to improve our market share. Last year, according to Nielsen, we improved our market share and this year it's possible that we also get more market share without affecting the results, depending on how efficient we are in the allocation or in this equation and the application of this equation.

In terms of the effect of the stores conversion, I will pass the floor to Jose Roberto Tambasco.

Of course there's an impact of Assai in terms of percentage. Of course it takes something away, something around 0.9 percentage points. And it should grow due to increased participation of Assai sales from now on. It's possible that we double this Assai participation. And in percentage points, so we will affect the margin. But we must consider that Assai is at as sale performance per square meter per store that is much higher than the average of the rest of the Company in terms of real values. It offsets, due to the higher volume of sales that these stores show per square meter.

And then this is Eneas. Just to conclude before passing the floor to Caio. Of course, with this kind of movement of getting stronger in this atacarejo market that worsened the margins around 16% or with the strategy of growing the electronics category of (inaudible), taking that (inaudible) grew by 170%. As it was said, our growth in drug stores and gas stations that work with margins that are lower than the average of food products, of course.

And given the mix of businesses with which we are working, we're observing that the margin is getting lower than our stores of records every year, due to the growth of this diversified [new] business, in spite of the synergy that we get from it. If you get in terms of EBITDA we grew by 32.5% in cash, it's BRL334m in terms of our EBITDA. If I do not consider Assai, the margin would not be 7.5%, but 7.8%. If it were not for [FP] the margin would be then 8% against 6.9%. [In gross] reconciliation. So we are improving in terms of margin.

But this is what we consider, that we may have to work with lower margins and we have to add (inaudible) the Company. And the Company is growing in terms of cash margin in a very interesting way. So this my final -- this is the comment that I have to make. And I pass the floor to Caio.

In terms of the investments, BRL1.2b that we mentioned, this is exclusively directed toward the organic growth. We did not -- we don't know if we are going to reach this level or not. It will depend on the performance in the next month. This is directed to the organic growth. When I spoke about Assai, Extra Facil, we are going to do it. But we still have the possibility according to the development of this aspect, [seems that] strongly in new stores, hypermarket, supermarkets and also invest strongly in gas stations and road stores. All of -- none of our models.

And in terms of acquisitions, this is considered separate. This is a separate structure. Acquisitions, they happen like accidents. They simply happen. It is not when we want and the way we want. We have opportunities. We are studying everything. And if something happens that is interesting to us, we are going to make -- create a new structure exclusively for that aspect, now [Luca].

About IT, Andrea, your last point, the impact of new IT processes, there's no doubt that we are trying to do that in order to increase our agility and accuracy. The implementation of SAP in itself brings in new reality. From the moment that we have SAP in real time, the whole accountancy of the Company when we close the month where everyone works overnight, trying to identify the data, it no longer exists. So we have automated gain in terms of overtime.

And a long time ago we adequate our people in order to deliver that. There's BRL100m that we mentioned. These are effective investments. Oracle in the first moment, is considered an investment. It's our stockers, equipment and brand. Also I mentioned the outsourcing of the data center. In addition to efficiency, we are also taking a cost rationalization.

This is Claudio speaking. I'd like to complement that CapEx of 1.2, it's what was approved in terms of budget. But we are accelerating in this process [instead]. And we are going to accelerate the process as the equation of the economic crisis and the Company's results allow for that. And now all of our CapEx, in addition to the infrastructure, we'll consider the return that is effectively gained on the investment capital.

So we don't losing the choreography of the retail. We are trying to establish our financial policy that is very conservative.

Okay, perfect, Claudio. And we've seen this BRL1.2b, returning to Caio's comment, if we think about what happened last year, I don't know if you used the whole BRL1.2b of CapEx. Within this growth can be the growth that may have a higher (inaudible) to last year or will you focus on real estate or sales space? How can we think, in terms of area?

Our intention is not growing in terms of land because this takes into account future planning because there's a cycle of purchasing that is buying land, developing and installing something there. But we are going to grow, yes, in sales space with new stores that are going to Brazil [yet] this year.

Thank you.

Hugo's remark meant that given the efficiencies that you expect in implementing the first module. And can you give us an idea about the schedule of the module implementation? There shouldn't be a negative effect in implementing the module. But if the benefit would be attained in 2009, is that what we can expect?

You're right. But the implementation of SAP or the first Oracle module will not entail an increase in expenses. It's quite the other way around. It will present gains, right at the first moment and it will help us to maintain, at least, our expenses, all the investments to improve the process are worthwhile.

And finally, just to understand Caio's remarks, we should be thinking about an area of growth that was higher than the one that you had in the past. Can you give us an idea?

Well, our intent is to grow more than we grew last year. But it's very difficult to give you numbers and figures now because it will depend on how the market reacts. And if we decide that further ahead we'll not have enough time to install as far as this year.

This is Claudio again. We'll address this matter in more detail in the GPA day. And just to conclude, as for the investment in the acquisition of land or property, we're allocating BRL160m to purchase land, especially in areas with a higher demographic density because these tracts of land are becoming scarce. And right now we have a possibility of a price drop in that area. So it may reach BRL1.2b as for the CapEx.

Yesterday, I mentioned in an interview that as we perform a more conservative financial policy and this requires us to allow the crisis to mature and evolve so that later on we can be fine. If we are going to increase or decrease the pace, this means that even if everything is favorable, we wouldn't reach BRL1.2b. I don't know if I was clear to you or not.

Thank you, Claudio, Eneas, Hugo and Caio for your answers.

The next.

Our next question is from Luis Adaime from [Bresser].

Good morning, everyone. My question is about Sendas. You have been increasing the margin of that operation. I would like to know how you plan to encourage the traffic in the format and what kind of behavior you have seen in that format, in terms of repositioning the banner in Rio de Janeiro.

Claudio answering your question now. Sendas undoubtedly had an exceptional performance. That was based on everything that was a result of our work. Can you hear me, because my voice is not very loud? So Sendas has been presenting a good result because it was repositioned in terms of pricing, cost and communication to the target audience for the Sendas format.

And about the market reaction, well, we follow -- of course we follow up the market in Rio de Janeiro. And I believe that we are ahead of the market with the actions there we have been taking, in terms of promotions, margin and pricing. So we've changed the pricing policy in Rio and in Sendas, so the margin had a very significant growth in Rio de Janeiro on account of that. So Sendas should keep on having the same performance obtained in 2008

Another question. In terms of criticism about Sendas operation or it's actually a concern, something that is, for instance, sacrificing growth by the margin. You've cut down costs but you hinder the future growth. How do you plan on encouraging the traffic in itself in this format? And how do you tackle this concern, because some people are quite concerned with this relationship that is the traffic against the margin growth?

Well, the traffic, as well as our average ticket has been growing a lot in the Sendas format, based on the mantra that we used. But it's once again tackling assortment, communication and pricing. Sendas hasn't had yet the maximized results that we would have if it weren't for the crisis. So we have huge possibilities for Sendas yet, possibilities for growth.

This is Tambasco. So you are talking about reducing courses and perhaps hindering future growth. That's your question. Am I right?

Yes, that's it.

Well, this is not true. I think that before Galeazzi joined the Company, I think we really had significantly reduced the costs, we lost the [profits] in the operation. But ever since mid-2007, we have resumed a better operation in 2008. We really consolidated the profits in Sendas. And I think the operational level is much better than the one that we had 1.5 years ago.

Rio de Janeiro is a very competitive market. And we have been successful in remodeling the stores there. We opened three stores that were Sendas and we've turned them into Assai, the wholesale/retail model. And we have been having a quite good performance. And in the next two months we shall open an additional three stores that are also Sendas stores that we'll start operating as Assai with a much better competitive average in a more specific market because at that time we didn't have a performance that was very good with Sendas. And I think we're going to be more successful with the Assai format.

Thank you.

Just supplementing a quite important fact, that in terms of our growth and number of people, that was significant. We went from 66,000 to 68,000. So the expenses are being controlled. We are not cutting down expenses. And it's a huge difference. And most people will not notice. We are not cutting back on expenses. We are controlling them.

And in terms of services, that would be the fourth pillar in our mantra of services. We are quite dedicated to that pillar and we should have very good results in terms of the [keel] of our personnel. So we are not cutting back. We are controlling and going from 66,000 to 68,000. It's a significant increase in terms of number of people.

Thank you.

Next question from Juliana Rozembaun from Itau Securities.

Hi, good morning, everyone. My first question, just to clarify the CapEx issue, BRL1.2b could be seen as the maximum figure, maximum CapEx. Could you give us a minimal CapEx in addition to the IT and land investment? What is already compromised with remodeling and other expenses, because the -- added to this minimum CapEx?

The minimum CapEx has now -- well the minimum CapEx was not expected. It's very difficult to talk about that when we have [assuming] our BRL1.2. But that's not true. We spent over BRL500m this year.

In the opening remarks you talked about the review of the store model. Will that affect the reduction of the CapEx per store? Have you reached a very good equation with a lower CapEx per store?

Yes, definitely. According to the studies that we made with the new layouts, with the new changes that we made, everything aimed at implementing at lower costs, according to the new reality in the Brazil market. So we have had reductions in implementing the new stores.

Can you quantify? Is it 10% lower, 20% lower?

Approximately 15% lower. And also about the size, we changed our objectives in terms of the model, the size of the stores. For instance, the hypermarket had 8,000 square meters to 10,000 square meters. And today we intend to have 6,000 square meters, for instance, for the hypermarkets. And we have the compact hypermarket that should not surpass 4,000 square meters. That is, there has been a reduction in size adjusting to the current conditions of the market that oppose the large areas.

Claudio, so reducing to 6,000 square meters in a new hypermarket, do you think it's time to reduce the areas of sales in the existing hypermarkets?

Well, this is Hugo. Since '07, we have been performing reductions in area. One of the models that we have is at [Longeal Bridge] where we reduced some 10,000 to 6,000 square meters and we increased sales there before receiving Assai. And then we added Assai and we had -- grew in sales. So we gained significantly. This is going to be one of the projects for 2009.

It's worth pointing out that the investments in IT and logistics also foresee rationalizing the need of stocks within the stores because we use efficiency of the logistics network. The next step is to use the logistic network, benefiting the Assai structure and today it needs large room for storage. And it will no longer be necessary. The distribution that we have, in terms of sales area and in old stores, turning those spaces into commercial galleries as we did in Belo Horizonte, and Campinas which provides us a very high profitability.

Okay, thank you. As for Assai, how about the conversion into Assai outside Sao Paulo? Is Assai 100% operated by (inaudible)? How is the structure with the Assai format?

Hi, it's Eneas. No, I was surprised by your question. No, the partner has a management. They run the business. We are working closely. Maybe we get some store. But this is not the premise. The basic premise of the agreement is that we are partners. Even if they are out, structurally speaking, as a corporation, due to tax adjustment or -- this has nothing to do with being out of the partnership.

In terms of (inaudible) effect, puts and calls or something like this, we are constantly updating that, independent of what kind of tax or control situation. So I have nothing to tell you in terms of changing of the status quo or what was guaranteed, which is every Assai store is in this partnership. Still, in terms of Assai, the [extensions] of margin in the fourth quarter, here we consider gross margin. Here we consider-- it's due to promotional help from suppliers or do -- are we going to come back to the previous level? Juliana, you're right.

This margin is affected, yes, due to the moment in the first quarter, opening of new stores, a number of investments that are shared with the suppliers, yes. So this margin should return to the previous levels as we establish the goal for Assai, around 4%, 4.5%.

Perfect. And my last question. If you could comment for the opening of Extra Eletro of [fourth] quarter after awhile without opening stores, are you going to open new shoppings or what is the strategy due to the fact that the moment's not favorable to the sector?

Well, this was an opportunity as Caio said. We pay attention to the opportunity of a small network with five or six stores operating, I think nine stores. And we selected (inaudible) points of this old network and implemented the Extra Eletro. None of those cases we exchanged the situation for -- there was a case where we had a store on the same street, but we did not exchange stores. So we opened stores. And even in the non-food products in the area of Eletro electronic products, we are also being patient, seeking opportunities. So if we have opportunities, we operate in markets that have a lot of sales strength.

Okay, thank you for the answer and congratulations for the results.

Our next question comes from Mr. (inaudible) from JGB.

Two brief questions. One about the effective rate -- tax rate. What will be the tax rate for 2009?

And the second question, I like his comment about your suppliers. I don't know if (inaudible). There was a reduction of 10 days in comparison to the previous year. Are you going to recover that or no?

This is Eneas. In terms of the income tax, about '09, the rate -- the effective rate, considering (inaudible) at 25% and the other companies at 34%, and where I have the different income tax in order to gain (inaudible) in standards, which will not change with future projections, I would work with a rate about 28% -- variations on 28% and then it has to do with conclusions and additions that now I cannot tell you any kind of expectation. We are working with 28%. So income tax effective rate is 28%. Now I pass the floor to Hugo.

[Shanda], in terms of your question of the statement terms for suppliers, this is a snapshot, a short-term snapshot, it's not [limited] to five days. And there's an important effect here. The main thing has to do with the projects of rationalization and lower levels of inventory. So the old opportunity positions are no longer done. The opportunity is not as fantastic. And this is analyzed by the financial commercial areas.

So in this case, we have a snapshot. We have some [visible] suppliers that are stepped evolution, such as beverages and the payment terms are fixed. And we reduced some volumes by the end of the year and they -- this option was very interesting -- it proved to be very interesting. The average payment conditions from the moment that you increase non-food products, it gets better. But when you increase all the participations such as fuels or imports, you decrease that. But this is a healthy rate relation.

Just to complement that, you mentioned an effect related to your inventories. You mentioned that you are not going to conduct so many opportunity acquisitions. So if your inventory is reduced to seven days and the payment terms is five days, so if you no longer have these opportunities [available], so what is the effect of that?

I don't have the figures to tell you. I may try to identify specifically the results of payment conditions, speculative acquisitions or opportunity acquisitions taken when I increase in volume, the commercial department also offers a superior -- a greater number of days to pay our suppliers. But I cannot tell you due to the mix. But this is not a very relevant difference, I can tell you.

There are no further questions. I'll pass the floor to Ms. Daniela Sabbag for her final remarks.

I'll pass the floor to Claudio Galeazzi for his final remarks.

I'd like to thank you for your participation. I'd like maybe to extend our meeting in order to answer more questions, but I think that most of the questions will be answered during our GPA day. I'd like to thank the team for their participation in the results, and especially the Board of Administration and (inaudible) who has given us great support so that we may implement these cultural changes that happened in 2008.

Now good afternoon to you all and thank you.

Speaker statements on this transcript were Interpreted on the conference call by an Interpreter present on the live call. The Interpreter was provided by the Company sponsoring this Event.