Guillaume Gras: Now regarding our deleveraging point. We continue with the same prospects. Regarding drops, I shared this during the last call. And I would like to remind you which are our initiatives in order to reduce our leverage level this year. #1, it would be the dividend proposal that was carried out by Exito that will generate a cash-in of approximately BRL230 million. #2, well, these are operating initiatives to improve the generation of our operating cash flow that come from the improvement of the EBITDA margin, the reduction of inventory from 2, 3, 5 days, also monetization of fiscal credits. We have BRL9 billion of fiscal credits in our balance; BRL2.2 billion of PIS, COFINS; and BRL0.8 billion of ICMS. We also €“ there are also initiatives to sell assets, mainly real estate assets and nonstrategic business like gas stations; and at last our share €“ our remaining share in Grupo Exito after a spinoff of 13%.
So, yes, we do continue with the prospect of lowering our leverage level for Q1. We are affected by a seasonal effect that would be payment to our suppliers regarding Q4. And this creates a slight deterioration on Q4. But by the end of 2023, our perspective is to lower our debt. Now regarding the labor contingencies. It’s important to remember that on 2022, we faced many labor continues because of 2 factors: 1 was the closing of the hypermarkets; and 2, the law changes, in May, the labor law was changed. Therefore, the plaintiff doesn’t have to pay for the cost. Now what we can say is that this peak of entry was in May and June, and now we can see a strong drop of these lawsuits. And now we are also observing the amount of labor lawsuits that have dropped significantly, thanks to the agreement policies that we have.
So this would be it.
Operator: Our next question from Andrew Ruben, sell-side analyst from Morgan Stanley, in English. So we’ll go to the next question until he fixes his microphone problem. Our next question from Joseph Giordano, sell-side analyst from JPMorgan.
Joseph Giordano: These are 2 simple questions. #1 would be to better understand the ICMS liability regarding the electricity bill. I wanted to know if 100% has already been provisioned. And I would like to understand of liabilities regarding the ICMS. You were talking about BRL5.5 million. What is the magnitude of this? And we see the occupation costs of the company when we eliminate the extra store, it seems high. When we see the payment of leasing is 4%, 5% of your revenue, I would like to know if there is some legacy payments regarding the extra operations. And at last now, thinking about innovation, you spoke about e-commerce. I would like to understand how — if you’re thinking about exclusivity contracts with platforms like we see with Exito Colombia.
Unidentified Company Representative: Now regarding the ICMS, yes, 100% of the contingency was provisioned. These are past lawsuits before 2010 because after — these are processes be for 2010. So this has already been provisioned. Now regarding the cost of occupation and 4.5%. There is no extra effect. It is highly connected of inflation and the valuation of leasings. Therefore, this is a revenue that grows below inflation, and this is why you can see this increase. Interpreted Now regarding the e-commerce, the answer regarding innovations during the next 2 years, our focus will be on 2, 3 points. Regarding digitization, one would be to increase sales in a profitable way. This is to increase the penetration, providing a better experience to our customer and also improving the experience of the store like pickers and delivery process because we don’t want to see friction in these processes.
Point number 2 regarding customization, everything regarding CRM. We are making progress with CDP, customer data platform. So because we want to pull out of a CRM model that is a generalized context that is all the same for every — and we want an intelligent bespoke model focused on the existing customer base, and we have over 30 million customers. And within this context, we can harness, and we can be more optimized in terms of the investment and the return over investment. Therefore, we will diminish this. Point #3, and when you talk about exclusiveness, well, this is not our model. We are not going to work toward exclusiveness. We believe that customers have to be able to access Pao when, where, whenever they want and how they want. Therefore, we have to strengthen.
And here, yes, this is part of our strategy. We want to strengthen our app. Now the good news is that 70% of all of our purchases come from app. And this is a great contact hub for all the multichannel contacts that we have with our customers. Now regarding last mile’s partners, we do see opportunities, and this has materialized. And if you can offer and if you can be a positive reference of food retail in these platforms, well, yes, we do see an opportunity of sales growth in them. So within this context, we don’t need any exclusiveness with any of them.
Operator: Our next question from Joao Pedro Soares, Citi, sell-side analyst.
João Pedro Soares: I have 2 questions. One would be the follow-up regarding your gross margin. I would like to understand the competitive context. Even though it’s clear the initiatives that you are pursuing are based in assortment, service improvement, nonetheless, it’s important to understand the timing of the improvement of gross margin. When you can offer a more premium price and have this resiliency, so this doesn’t affect your gross margin? I don’t know if my question is clear. And point number 2 would be, I know that it’s difficult, Guillaume, I know that there are many initiatives of asset monetization. And naturally, there are effects that perhaps depend — I mean, there’s not a clear timing, but it’s important to understand the company’s capacity to generate cash.
And the cost of occupation is high. As just mentioned. So although there is an improvement in the EBITDA margin, I want to see the cash generation. So what can you share with us regarding organic cash generation?
