Q3 2024 Compañía Cervecerías Unidas SA Earnings Call
Turnaround.
In.
Volume volume.
Volume
EBITDA and EBITDA margin.
Evipta and Evipta Marja
Mainly as the.
mainly as the result of revenue management initiatives and cost and expenses control efforts.
As a result of revenue management initiatives and cost and expenses controlling faults.
In the wine operating segment, we kept an upward trend in EBITDA, mostly driven by favorable U S dollar and efficiencies on.
In the wine operating segment, we kept an upward trend in Evita, mostly driven by favorable U.S. dollar and efficiencies.
On the other hand in international business operating segment results were weaker than last year as we faced another challenging quarter, mostly associated with the sharp contraction in the beverage industry in Argentina.
On the other hand, in the international business operating segment, results were weaker than last year as we faced another challenging quarter, mostly associated with a sharp contraction in the beverage industry in Argentina.
The EBITDA drop in this segment more than offset the better results in the Chile and wine operating segment.
The EBITDA drop in this segment more than offset the better results in the Chile and Huayna Operating Segment.
Before moving into the analysis of the quarter, we would like to mention that from third quarter of this year, we started consolidated our <unk> our water business in Argentina.
Before moving into the analysis of the quarter, we would like to mention that from third quarter of this year, we started consolidated Aguas de Origen, our water business in Argentina, of which we now hold 50.1% of the shares.
We now hold 51% of the shares.
The consolidation of this business of it in in this quarter at 844000 hectoliter slower consolidated volumes and a loss into quite a bit of 1050 2 million Chilean pesos.
The consolidation of this business added in this quarter 844,000 hectoliters to our consolidated volumes and a loss in the quarter of 1,052 million Chilean pesos to our consolidated EBITDA.
Our consolidated.
Yet formations below in the paragraph related to the consolidated and the international business operating segment result, considering consider organic figures. This is excluding the consolidation of our stewardship.
Speaker Change: The explanations below in the paragraph related to the consolidated and international business operating segment results consider organic figures. This is excluding the consolidation of Aguas de Origen.
Speaker Change: During the third quarter of this year organic revenues contracted six 9% explained by a five five contraction in volumes.
Speaker Change: During the third quarter of this year, organic revenues contracted 6.9%, explained by a 5.5% contraction in bonus.
Speaker Change: In organic volumes and one five decrease in organic average prices in Chilean pesos. The decrease in organic volume was mainly due to the weakening demand in Argentina.
Speaker Change: in organic bonos and 1.5% decrease in organic average prices in Chilean pesos. The decrease in organic bonos was mainly due to the weakened demand in Argentina.
Speaker Change: Lower organic average prices at GM peso specials were fully explained by Argentina, partially compensated by revenue management efforts.
Speaker Change: Lower organic average prices in Chilean pesos were fully explained by Argentina, partially compensated by revenue management efforts.
Speaker Change: Gross profit was down 13, 7% as a percent of net sales deteriorated three calculate and 42 basis points organically due to higher cost pressure, mainly coming from the depreciation of the Chilean peso and the Argentine peso against the U S dollar impacting our U S dollar denominated costs.
Speaker Change: Gross profit was down 13.7% as percent of net sale deteriorated 342 basis points organically.
due to higher cost pressure mainly coming from the depreciation of the Chilean peso and the Argentine peso against the US dollar impacting our US dollar denominated cost.
Speaker Change: <unk>.
Speaker Change: Organic give us some gain expenses contracted 10% on a sequential net sales improved 130 basis points organically due to efficiencies across all operating segments in all organic EBITDA reached 771490 3 million pesos is seven.
Speaker Change: Organic MS and DNA expenses contracted 10% and supercell net sales improved 130 basis points organically due to efficiencies across all operating segments.
Inon
Organic Evita reached 71,483 CHM, a 17.2% decrease, and Organic Evita margin contracted 140 basis points.
Speaker Change: 17, 2% decrease.
Speaker Change: Organic EBITDA margin contracted.
Speaker Change: 140 basis points.
Speaker Change: Consolidated net income reached a gain of 29000 548 million Chilean pesos increasing too.
Speaker Change: Consolidated net income reached a gain of 29,548 million Chilean Pesos, increasing 211.1%, driven by a better non-operating result, particularly in Argentina.
Speaker Change: Cognizant and 11, 1% driven by a better nonoperating result, particularly in Argentina.
Speaker Change: In the Chile operating segment topline expanded 7% as a result of five 2% increase in average prices on one date.
Speaker Change: Volumes average prices were boosted by revenue management efforts, while volumes expanded changing the trend of the first half of the year thereafter.
Speaker Change: higher volumes. Average prices were boosted by revenue management efforts while volumes expanded, changing the trend of the first half of the year.
Speaker Change: Gross profit was up 8% on a sequential net sales decreased from $44 eight to two.
Speaker Change: Gross profit was up 2.8% and as a personal net sales decreased from 44.8% to 43% as a result of higher cost pressure largely coming from our US dollar denominated cost.
Speaker Change: 43% as a result of higher cost pressure largely coming from our U S dollar denominated costs on the other half.
on the other hand
Speaker Change: We are very proud of.
Speaker Change: Our MSR MSR.
Speaker Change: <unk> expenses decreased one 7% and as a person pedophilic sales improved 302 basis points due to efficiencies, which more than offset higher U S. Denominated expenses such as for example energy costs.
basis points due to efficiencies which more than offset higher U.S. denominated expenses, such as, for example, energy costs.
Speaker Change: In August.
Speaker Change: In all, we are presenting a turnaround in terms of EBITDA, as EBITDA totalized 59,980,000,000 Chilean Pesos.
Speaker Change: We are presenting a turnaround in terms of EBITDA attributed totaled 59000 880 million Chilean pesos.
Speaker Change: On a 13, 8% ranks and EBITDA margin grew 80 basis points.
Speaker Change: and a 13.8% rank and a victim margin grew 84 basis points.
Speaker Change: In International business operating segment, which includes Argentina, Bolivia, Paraguay, and Uruguay organic net sales recorded a 33, 3% decrease as a consequence of.
Thank you for watching!
Speaker Change: In the international business operating segment, which includes Argentina, Bolivia, Paraguay and Uruguay, organic net sales recorded a 33.3% decrease as a consequence of a 23.5% contraction in organic volumes and 12.8% lower organic average prices in Chilean pesos.
Speaker Change: $23 five contraction in organic volumes and 12, 8% lower organic average prices in Chilean peso.
Speaker Change: We get organic volumes were mostly.
Weaker organic volumes were mostly explained by Argentina, due to a difficult context for consumption. Although, we want to say that we are starting to see a sequential improvement.
Speaker Change: <unk> claimed by Argentina, due to a difficult context for consumption although.
Speaker Change: We want to say that we are starting to see a sequential improvement.
Speaker Change: Lower organic average prices in Chilean peso were driven by negative translation effects in Argentina as prices in local currency.
Lower organic average prices in Chilean pesos were driven by negative translation effects in Argentina as prices in local currency grew.
Speaker Change: The later was partially compensated by revenue management efforts and positive mix effect in all the other countries.
The laser was partially compensated by revenue management efforts and positive effects in all the other countries.
Speaker Change: Organic.
Speaker Change: Organic gross margin deteriorated from 198 basis points as a result of cost pressures mostly coming from the charge depreciation of the Argentine peso against the US dollar and its impact in the already mentioned US dollar denominated cost.
Speaker Change: Gross margin deteriorated by having a net 98 basis points as a result of cost pressures, mostly coming from the sharp depreciation of the Argentine peso against the U S dollar and its impact in there.
Speaker Change: Already mentioned U S dollar denominated costs.
Speaker Change: Organic Amazon DMA expenses decreased 26, 5% of sector present, better prevent sales deteriorated 446 basis points, mainly due to the lower scale in Argentina.
Speaker Change: Organic EBITDA reached 5000 6 million Chilean pesos annually.
Speaker Change: <unk> 80.
Speaker Change: 6%.
Speaker Change: We would like.
Speaker Change: To highlight that during this month in October.
Speaker Change: In October in Paraguay, we continue expanding our regenerative escape, but in selling into an association with BMC group.
Speaker Change: Regarding the Pepsi Pepsi co licenses for the production and distribution of beverages as well as the distribution of snacks in this country.
Speaker Change: Consequently, <unk> becomes the second country, where the Pepsi Pepsi co license is part of the CCU brand portfolio. In addition to Chile.
Speaker Change: The VLC group with 57 years of experience in various sectors.
Speaker Change: As each quarters in Paraguay, developing its activities in Paraguay, but I've seen.
Speaker Change: Chile, Bolivia, Peru, Panama, Uruguay, and the United States.
Speaker Change: Finally, the wine operating segment posted a topline expansion of three 3% driven by one 9% higher volumes and one for rise in prices.
Speaker Change: Earnings were boosted by the Chinas domestic market, which grew six 5% while export from Chile contracted 112% due to logistic difficulties in September which caused shipment delays.
Speaker Change: The better average prices were explained by the weaker Chilean peso and favorable impact on export revenues, partially offset by negative mix effects.
Speaker Change: Net profit rose, one, 6% and gross margin decreased 66 basis points MSM G&A expenses were flat and <unk> net sales decreased 102 basis points due to efficiencies in all EBITDA reached 12000 521 million Chilean pesos seven.
Speaker Change: <unk> nine.
Speaker Change: The percent growth and EBITDA margin expanded 771 basis points.
Speaker Change: Regarding our main JV.
Speaker Change: The associated business in Colombia volume increased high single digits.
Speaker Change: Driving better financial results.
Speaker Change: <unk> allow us to record a positive EBITDA on an equity related basis as of September 2024.
Speaker Change: Now.
Speaker Change: Ladies and gentlemen, please standby.
Speaker Change: Okay. Thank you very much we are now ready for questions.
Speaker Change: If you have a question. Please press star two and occupied Star two occupied pointing voice questions. You May also ask a voice or text question. Thank you 1000 via the web. The first question comes from Mr. Alvaro Garcia from BTG Pactual. Please go ahead Sir.
Speaker Change: Regulatory agencies I guess, a question will be.
Speaker Change: Hi can you hear me weather.
Speaker Change: Yes. Please go ahead.
Speaker Change: Thanks for the space for questions, Hi, Filippo Hogging Claudia.
Speaker Change: My first question is on the licensing agreement in Paraguay with Pepsi.
Speaker Change: I was wondering if you could maybe give a little bit more color.
Speaker Change: Uh huh.
Speaker Change: Hello, My comparative Chinas agreement the snacks element is it a 50 50 JV is it just a distribution agreement.
Speaker Change: Any sort of color would be greatly appreciated them.
Speaker Change: Hello <unk>.
Speaker Change: Name I didn't hear your mainland.
Speaker Change: Alberto <unk>.
Speaker Change: Joelle model.
Speaker Change: Good morning, Yeah.
Speaker Change: Sure.
Speaker Change: Yes. He is a long term license agreement with Pepsi that has the.
Speaker Change: The company the new company will consolidate thus we control the company.
Speaker Change: In EMEA.
Speaker Change: In Paraguay.
Speaker Change: <unk>.
Speaker Change: The award.
Speaker Change: We would either.
Speaker Change: Practically.
Speaker Change: <unk>, 40% loan to the to the to the business.
Speaker Change: Of course, we received the Pepsico com.
Speaker Change: With a strong brown.
Speaker Change: International brand and Carlos.
Speaker Change: Also gateway.
Speaker Change: And at the same time, we will be doing their distribution offer officemax.
Speaker Change: It will add let's.
Speaker Change: Let's say.
Speaker Change: Yes.
Speaker Change: Very.
Speaker Change: Total daily two hour.
Speaker Change: In Paraguay.
Speaker Change: <unk>.
Speaker Change: Of course, we will have synergies in sales and logistics and we have a plan to implement these in the following.
Speaker Change: Let's say six to nine.
Speaker Change: Uh huh.
Speaker Change: As we said is these.
Speaker Change: These are first class partners with operations in several countries with a long legacy.
Speaker Change: Doing business in EMEA.
Speaker Change: Why the Dfc.
Speaker Change: The group and we are glad that this is the second life Pepsico license double counting there in the region along with Chile.
Speaker Change: And of course, we will we will.
Speaker Change: To the business all our experience in managing.
Speaker Change: The multi category.
Speaker Change: Folio on especially Pepsi brands.
Speaker Change: As you know we have been several times selected us.
Speaker Change: Our specialty heartland of the of the loan the loan given what they've done.
Speaker Change: I'll now be someone with micro opening Alvarado.
Speaker Change: <unk>. Okay. So that's the color I can I can I can give you so far.
Speaker Change: Thank you very much for your network.
Speaker Change: Although they did.
Speaker Change: Alberto debate.
Speaker Change: Thank you. Thank you very much for the question next question comes from Mr. <unk> <unk> from Scotiabank. Please go ahead.
Speaker Change: Thanks, operator.
Speaker Change: And.
Speaker Change: A little hot on cloud thanks for the space for questions. So a couple of questions. I was surprised that you managed that you mentioned that there were some expenses in dollars and the Chile operation just wondering if you could give us some detail about what those are and kind of the magnitude. Just so we can think about this whenever there is devaluation of readout.
Speaker Change: <unk> it would help us in our model.
Speaker Change: And then the second question.
Speaker Change: What's the low more strategic.
Speaker Change: Talked about the logistic difficulties in wine exports.
Speaker Change: And your wind division.
Speaker Change: Just wondering if you can talk about what the details are on those I know we've had this before in the last three years, we thought they had gone away.
Speaker Change: And then probably more importantly should we expect kind of a catch up for this in the coming quarters as you kind of cover the hole that Wisconsin September. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you Philippe and nice to hear about you. So let me touch Chile.
Speaker Change: I have done some some work and read your report of some some reports so.
Speaker Change: We are really satisfied about the performance in Chile in the in the third quarter, because we grew over into double digit.
Speaker Change: After a very tough quarter too as we talk.
Speaker Change: And with positive with posted positive volume, one date and I would like to highlight.
Speaker Change: Got it.
Speaker Change: In terms of comps within the having an easy comp from water three because.
Speaker Change: Some of you have posted that quarter three degrees minus <unk>, 5% compared to quarter three 2022.
Speaker Change: But I would remind you that in 'twenty two we still had some effect of some carryover in terms of per capita consumption.
Speaker Change: Due to the.
Speaker Change: Pension pounds.
Speaker Change: Withdraw so.
Speaker Change: Comparing quarter through what the 323 against the same quarter of 2002 was a little bit misleading.
Speaker Change: So.
Speaker Change: Comps were not easy and despite that we grew our volumes one 8%, while increasing prices by four 2%.
Speaker Change: In two years, the total price increase for the operating segment is up to 15%, which is our strategy.
Speaker Change: To recover profitability as you pointed out as a consequence.
Speaker Change: We grew gross profit.
Speaker Change: Two 8%, which is good and a very good expense control at the level of MSR MBNA.
Speaker Change: So.
Speaker Change: The quarter was in all of these maintaining our market share.
Speaker Change: And.
Speaker Change: This EBITDA growth managing external effect up to 11 million Chilean pesos, so which is significant.
Speaker Change: I would say are.
Speaker Change: 11000 million Chilean peso all.
Speaker Change: Especially due to FX.
Speaker Change: Two exchange rate.
Speaker Change: So.
Speaker Change: Going forward of course, now we can selling quarter four we will have an EC call regarding quarter four of last year.
Speaker Change: <unk> of weather condition.
Speaker Change: Because seasonally adjusted.
Speaker Change: The decrease of quarter four.
Speaker Change: Last year compared to a normal quarter three was 10%.
Speaker Change: We will have a significant.
Speaker Change: <unk> in terms of looking at the comps and it's a very high quality. So we are positive on the results of Chile in the quarter, three and I wanted to highlight and thank you for your question.
Speaker Change: Regarding your second question, yes, absolutely Who's got tap you know.
Speaker Change: <unk> transportation defense I don't know what happened in the Red Sea, what's happening with international trade.
Speaker Change: He said you procure diesel September, but certainly with a cap in the in loan in October of this we will not lose this.
Speaker Change: <unk> as you know export <unk>.
Speaker Change: And let's say level of inventory.
Speaker Change: That closely there is kind of contingencies, we are not talking about the prices, we got during the <unk> or right. After the pandemic regarding.
Speaker Change: See slides.
Speaker Change: Hello.
Speaker Change: But that's very clear and maybe if I can do a follow up.
Speaker Change: You talked about the price increase in Chile.
Speaker Change: It seems our what we've heard is that your competition has has also moved with you guys. So it seems like the price increase was was sustainable.
Speaker Change: I know that hasn't been the case the last couple of years. So just wondering if you could tell us what changed and what Youre seeing on the competitive environment in Chile.
Speaker Change: Chile is a very competitive market, we have discussed this several times.
Speaker Change: Competitive market, it's an open market.
Speaker Change: So.
Speaker Change: BN every body subject to the external effects in terms of currency.
Speaker Change: In terms of.
Speaker Change: Raw materials every view where in the world in the last since 2019.
Speaker Change: As loss.
Speaker Change: EBITDA margin.
Speaker Change: But especially in the line of gross margin because of input cost.
Speaker Change: Input costs are there.
Speaker Change: Although we have seen.
Speaker Change: Let's say some improvement in terms of cost or lower cost in sugar on PD aluminium.
Speaker Change: Astellas is sky.
Speaker Change: No.
Speaker Change: In that in that sense.
Speaker Change: Order to recover profitability revenue manage management efforts are key.
Speaker Change: And this is part of the <unk> plan.
Speaker Change: Having our scale, let's say and this we have been successful in Chile, as we grew our volume one 8% Euro explain I hope this was clear for you.
Speaker Change: The comps.
Speaker Change: The comps.
Speaker Change: Statement.
Speaker Change: But maintaining.
Speaker Change: Maintaining market share. So this was an ideal quarter in our view.
Speaker Change: Understood. Thanks, a lot for the color.
Speaker Change: Thank you very much. Our next question comes from Mr. Santiago <unk> from HSBC. Please go ahead.
Speaker Change: Thank you for taking my question. This is from downloading us for Carlos Laboy from HSBC could.
Speaker Change: Could you give us some more color regarding what's happening in the premium beer segment in Chile, just expand on how the category as a whole is growing thank you.
Speaker Change: Hello, Sam.
Speaker Change: Yes.
Speaker Change: Hello, Santiago and they anneal produced but now and music.
Speaker Change: Can you hear me Santiago.
Santiago: Yes, if I can here.
Speaker Change: We grew one.
Speaker Change: 8% or on in the in the whole geography, if I include domestic wine one 9%.
Speaker Change: The growth of non alcoholic products and alcoholic products.
Speaker Change: Was similar let's say.
Speaker Change: So even we grew a little bit more in.
Speaker Change: In alcoholic <unk>.
Speaker Change: Compared to normal column.
Speaker Change: But overall was similar let's say in this range.
Speaker Change: Range of one eight and if I include domestic one nine.
Speaker Change: Percent.
Speaker Change: Thank you.
Speaker Change: Thank you very much our next question comes from.
Speaker Change: Constanza Ramos from Quest capital. Please go ahead ma'am.
Speaker Change: Okay.
Speaker Change: Good afternoon.
Speaker Change: Felipe again, Claudia and thank you for taking my question.
Speaker Change: Great.
Speaker Change: In relation with our Gen. Dinah could you you asked about.
Speaker Change: About the consumption inflation there in this quarter and what are you expecting.
Speaker Change: The next period.
Constanza: Hello Constanza.
Constanza Ramos: How are you so Argentina, Argentina, as we mentioned we have seen a sequential improvement in quarters in quarter three.
Constanza: Not.
Speaker Change: Let's say.
Speaker Change: Steel decreasing the volumes, we decrease the volume against last year from something like 25%.
Speaker Change: However, I would like that the sequential improvement accelerated in October.
Speaker Change: Sure.
Speaker Change: Tobey we saw.
Speaker Change: We are real.
Speaker Change: Much better sequential improvement.
Speaker Change: Seasonally adjusted the volumes.
Speaker Change: Could you in Argentina.
Speaker Change: In October against.
Speaker Change: Against the trend we have in quarter three by 7%. This is seasonally adjusted so.
Speaker Change: Which is good because at the end we have sterling.
Speaker Change: Lower volume by last year, but.
Speaker Change: Much much lower decrease and a second sequence.
Speaker Change: We are seeing better results in terms of financial results because if you saw the international business.
Speaker Change: Although we had let's say positive EBITDA in the quarter.
Speaker Change: It is.
Speaker Change: Consol dysfunctional and data of international business in Argentina, We also had a positive EBITDA.
Speaker Change: Much lower than last year.
Speaker Change: <unk> reason that we have been talking along the year.
Speaker Change: So to give you more color we are seeing more.
Speaker Change: Positive news now in October we saw let's say moderate positive news in quarter, three and now the starting of the quarter as steel.
Speaker Change: You know, we are subject faced weather, sometimes or things like that.
Speaker Change: We are starting we are seeing.
Speaker Change: On acceleration of this improvement in Argentina.
Speaker Change: Of course in Argentina.
Speaker Change: You must be go shoes, especially because the macro conditions. However, these.
Speaker Change: Improvement in quarter, three and what we are seeing in the first month of quarter four.
Speaker Change: We saw positive news.
Speaker Change: Thank you so much.
Speaker Change: Thank you very much. Our next question comes from Giuliano O'hara from Goldman Sachs. Please go ahead ma'am your line is open.
Speaker Change: Good morning, everyone. This is <unk> from Goldman Thanks for taking our questions I have two one just to make sure we're talking like for like on the same thing right. I know you commented about flattish market share in beer just to confirm if you could give us more detail sequentially on how your market share for beer and for Nab Biopharm.
Speaker Change: The Chile. This is the first question.
Speaker Change: And the second one is regarding pricing right you did a very good job in revenue management year to date basis Q.
Speaker Change: Rich tickets growing a bit below your cost inflation rate with daying formation in the vision visibility you have so far and the state of domestic consumption and Sheila I would just say there is more room for pushing prices a bit higher over the next few quarters.
Speaker Change: Thank you very much.
Speaker Change: Yes.
Speaker Change: We added multi category multi beverage company. So the number we posted in our in our annually in our <unk>.
Speaker Change: Investor Relations is related to the total market share of the beverage industry in Chile.
Speaker Change: Clothing beer nonalcoholic and this is completely stable, let's say a 45% we published last year 45. So far is 45, so overall maintaining market share.
Speaker Change: We measure market share you know every week in supermarkets, we measure market share every month in the whole market.
Speaker Change: Delay.
Speaker Change: Some categories by monthly.
Speaker Change: And we used four about Nielsen.
Speaker Change: The.
Speaker Change: So we pay for that let's say.
Speaker Change: We pay to have the data.
Speaker Change: You know, we have ups and downs.
Speaker Change: In the categories you ask specifically about beer, we don't publish the market share of beer, but what I can say within a range is it stable.
Speaker Change: Compared to two two last year, we as I said, we have ups and downs, but we have a higher one but to a lower one in quarter three but in within.
Speaker Change: What I would say within plus or minus one point in depends on the price dynamics on the price increases in competition, but nothing to worry about about that.
Speaker Change: In non alcoholic beverages, we have also stable market share I would say completely in the last three quarters, if I saw and compared to last two last year, let's say.
Speaker Change: Within the EVAR market, let's say state completely stable.
Speaker Change: Okay. Thank you very much for the question.
Speaker Change: So two for any additional questions or follow up questions. Please press star two.
Speaker Change: In the meantime, we will take next question.
Speaker Change: Mr. Mcconnell from C H L capital.
Speaker Change: Question goes how does you assess the current state of isotonic and hydration beverage market. Additionally, how does the growth of brands like swaps affect competition and what impact does this have on the product Day-trade. Finally, how do you proceed consumption behavior in this segment in the near future.
Speaker Change: <unk>, yes.
Speaker Change: Yes. Thank you for the question is regarding the question about partners, Yes, Paul brings or isoform, let's say Gatorade.
Speaker Change: Yes first of all I would like to highlight but the sport drink per capita consumption in 'twenty.
Speaker Change: 2012 was $1 three liters per capita.
Speaker Change: Nowadays.
Speaker Change: We are talking about something.
Speaker Change: One six liters per cup scope is significantly this is in Chile. The question was related to GIC.
Speaker Change: So.
Speaker Change: It is a significant increase in terms of per capita consumption, which is very good.
Speaker Change: More people also as Martin.
Speaker Change: It means SMT behavior, let's say.
Speaker Change: Aligned with TCU.
Speaker Change: Our goal for omission a better one that had more people running more people flying.