Compañía Cervecerías Unidas SA Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Highlights: CCU delivered higher financial results vs 2023 with a turnaround in the second half. Faced industry contractions in Argentina, flat volumes in Chile, and cost pressures from currency devaluation. Full year consolidated EBITDA with non-recurring gain up 9.6%, net income up 52.3%.
• Quarter Four 2024: Consolidated EBITDA reached CLP 182,621 million, a 65.2% increase. Net income gained CLP74,153 million, up 77.7%. Results driven by all operating segments. Volume down 0.1% excluding inorganic volumes.
• Business Strategy: Strengthened regional footprint with consolidation of water business with Danone in Argentina, partnership in Paraguay, invested in brands, digital transformation, and inaugurated PET recycling plant in Chile.

Segment Performance

• Chile Operating segment: Top line expanded 9.9% due to 4.9% average price increase and 4.7% higher volumes. EBITDA expanded 23% with EBITDA margin at 19.6%.
• International Business Operating segment: Excluding inorganic volumes, organic net sales increased driven by higher average prices offsetting 11.5% organic volume contraction. EBITDA more than tripled.
• Wine Operating segment: Top line expanded 21.4% with 21.7% average price increase (volumes flat). EBITDA up 16% but margin down 74 basis points.
• Colombia: Full year 2024 volume reached 2.3 million hectoliters, up 7.8%, and achieved positive EBITDA.

Guidance

• Expect margin recovery in 2025 and 2026 through revenue management and efficiencies. Cautious on 2025 due to volatile business scenario. Focus on 2025-2027 strategic plan on profitability, growth, and sustainability, with special focus on profitability via revenue management and efficiencies.

Risks

• Currency devaluation against USD impacting costs.
• Volatile economic environment in Argentina and Chile.
• Uncertainty in macroeconomic factors affecting volumes and margins.

Q: Comment on Chile beer mix between premium and mainstream, outlook for mix in 2025 and price elasticity in Chile.

A: Mix stable Q4 2024 vs 2023, industry soft, expecting low single-digit growth in 2025. Price elasticity linked to revenue management to recover margins.

Q: Performance in Argentina in 2025 so far and outlook.

A: Gradual improvement in Argentina, volumes improved from Q2/Q3 2024, still recovering scale, macro challenges impact timing of recovery.

Q: Margin recovery in 2025-2026, source of recovery.

A: Recovery from revenue management and efficiencies, sequential margin improvement expected, especially in Chile.

Q: Wine division volume outlook, export and domestic, Colombia volume behavior.

A: Wine exports recovering slowly with commercial offices, maintaining Chile domestic leadership, Colombia grew high-single digits, positive EBITDA, expect good performance to continue.

Q: CapEx expectations, CapEx vs EBITDA, net financial debt over EBITDA.

A: CapEx to be around 5.5% of sales, moderate vs previous years, net financial debt to EBITDA improving, within reasonable range, investment grade maintained.

Q: Chile cost inflation outlook and pricing rationality.

A: Cost inflation volatile, linked to exchange rate, pricing in line with inflation and brand equity to maintain margins.

Q: Competition in Chile beer price increases.

A: Companies increasing prices to recover margins, brand equity important in rationalizing promotions.

Q: Other plans beyond HerCCUles for efficiencies in 2025.

A: HerCCUles concluded, focus on 2025-2027 strategic plan on profitability, growth, sustainability, continuing efficiencies from HerCCUles.