Q2 2026 SMU SA Earnings Call

August 12, 2026

Operator: Ladies and gentlemen, thank you for standing by. I would like to welcome you to SMU's Q2 2026 results conference call on 12 August 2026. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by the management, followed by a question and answer session. I would now like to pass the line to Carolyn McKenzie, Head of Investor Relations at SMU. Please go ahead, ma'am.

Operator: Ladies and gentlemen, thank you for standing by. I would like to welcome you to SMU's Q2 2026 Results Conference Call on 12 August 2026. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by the management, followed by a question and answer session. So without further ado, I would now like to pass the line to Carolyn McKenzie, Head of Investor Relations at SMU. Please go ahead, ma'am.

Speaker #1: Ladies and gentlemen, thank you for standing by, and I would like to welcome you to SMU's second quarter 2026 results conference call on the 12th of August, 2026.

Speaker #1: At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by management, followed by a question-and-answer session.

Speaker #1: So, without further ado, I would like to pass the line to Ms. Carolyn Mackenzie, Head of Investor Relations at SMU. Please go ahead, ma'am.

Speaker #2: Thank you very much. Thanks, everyone, for joining us today. I'm here with our CFO, Arturo Silva, as usual. We're going to start today's presentation with a few slides describing some of our business highlights, and then we will go to the financial results for the first half and second quarter of 2026.

Carolyn McKenzie: Thank you very much. Thanks everyone for joining us today. I am here with our CFO, Arturo Silva. As usual, we are going to start today's presentation with a few slides describing some of our business highlights. Then we will go to the financial results for the H1 and Q2 of 2026. After that, Arturo will be happy to take any questions. You can send questions by chat or raise your hand and we can unmute you. An audio recording of this call will be available on our website later today. As usual, please note that we may be making forward-looking statements today. As always, please remember to take a look at the caution regarding forward-looking statements on slide number 2 of our presentation. Moving on to slide 3.

Speaker #2: And after that, Arturo will be happy to take any questions. You can send questions by chat or raise your hand, and we can unmute you.

Speaker #2: An audio recording of this call will be available on our website later today. And as usual, please note that we may be making forward-looking statements today, so as always, please remember to take a look at the caution regarding forward-looking statements on slide number two of our presentation.

Speaker #2: Moving on to slide three, our strategic plan for 2026 to 2028 is structured around three key pillars: growth with value for the customer, technology assets, and efficiency and productivity.

Carolyn McKenzie: Our strategic plan for 2026 to 2028 is structured around three key pillars: growth with value for the customer, technology assets, and efficiency and productivity. Our sustainable culture serves as a supportive base to implement our strategy. On the next few slides, we will go over the progress so far. On slide number 4, we have our store openings. The 2026 to 2028 plan includes a total of 60 new stores in three years, with 16 openings planned for this year. To date, we have opened seven of those stores, including three in the Q2. By format, in the Q1, we opened two Unimarc and two Maxi Ahorro. In the Q2, we opened an additional Unimarc, as well as two Super 10 stores.

Carolyn McKenzie: Our strategic plan for 2026 to 2028 is structured around three key pillars: growth with value for the customer, technology assets, and efficiency and productivity. Our sustainable culture serves as a supportive base to implement our strategy. On the next few slides, we will go over the progress so far. On slide number four, we have our store openings. The 2026 to 2028 plan includes a total of 60 new stores in three years, with 16 openings planned for this year. To date, we have opened seven of those stores, including three in the Q2. By format, in the Q1, we opened two Unimarc and two Maxi Ahorro. In the Q2, we opened an additional Unimarc, as well as two Super 10 stores.

Speaker #2: Our sustainable culture serves as a supportive base to implement our strategy. On the next few slides, we'll go over the progress so far. On slide number four, we have our store openings.

Speaker #2: The 2026 to 2028 plan includes a total of 60 new stores over three years, with 16 openings planned for this year. To date, we've opened seven of those stores, including three in the second quarter.

Speaker #2: By format, in the first quarter, we opened two Unimarks and two Maxi Auroras, and in the second quarter, we opened an additional Unimark as well as two Super DS stores.

Speaker #2: The strong performance that we've seen from our new store openings from our previous three-year plan makes us optimistic about the outlook for these recent openings, as well as the other stores we have in the pipeline.

Carolyn McKenzie: The strong performance that we've seen from our new store openings from our previous three-year plan makes us optimistic about the outlook for these recent openings, as well as the other stores we have in the pipeline. On slide 5, we have an update on the performance of our low-cost formats, Alvi and Super 10. Last year, we made the decision to enhance coverage and scale by converting 100% of our Mayorista 10 stores into either Alvi or Super 10. This decision was made and fully executed in 2025. 100% of the stores were converted, and this mostly took place during the Q3 and Q4.

Speaker #2: On slide five, we have an update on the performance of our low-cost format's Alvi and Super DS. Last year, we made the decision to enhance coverage and scale by converting 100% of our Miami City stores into either Alvi or Super DS.

Speaker #2: This decision was made and fully executed in 2025. One hundred percent of the stores were converted, and this mostly took place during the third and fourth quarters.

Speaker #2: We are very confident that Alvi and Super DS will allow us to compete more effectively than Miami City. So, the growth potential is much higher, but we know from past experience that remodeling stores produces a temporary negative impact on sales, and that is what happened with the stores we converted, as you can see on the graph on the slide.

Carolyn McKenzie: We are very confident that Alvi and Super 10 will allow us to compete more effectively than Mayorista 10, so the growth potential is much higher. We know from past experience that remodeling stores produces a temporary negative impact on sales, and that is what happened with the stores we converted, as you can see on the graph on the slide. Sales for Alvi and Super 10 were down 11.5% in the Q3 of last year and 8.3% in the Q4. However, we've been improving quarter-over-quarter. Sales were only down 0.6% in the Q1, and in the Q2, we have positive revenue growth. Following the change in banner, we've been working to attract new customers, taking advantage of our increased geographic coverage and scale to use more mass communication strategies in order to build brand awareness.

Speaker #2: Sales for Alvi and Super DS were down 11.5% in the third quarter of last year, and 8.3% in the fourth quarter. However, we've been improving quarter over quarter.

Speaker #2: Sales were only down 0.6% in the first quarter, and in the second quarter, we have positive revenue growth. Following the change in banner, we've been working to attract new customers, taking advantage of our increased geographic coverage and scale to use more mass communication strategies in order to build brand awareness.

Speaker #2: On the slide, we have a couple of examples of those campaigns. As we build up our customer base, sales volumes will continue to grow.

Carolyn McKenzie: On the slide, we have a couple of examples of those campaigns. As we build up our customer base, sales volumes will continue to grow. In particular, one of the clear findings we've seen in Alvi during the H1 is consistent growth in the number of B2B customers at the converted stores, which means these stores are reaching their target audience. On slide 6, another part of growth with value for the customer is expanding our omnichannel coverage, reaching our customers not only through our physical stores, but also through our online sales channels. This year, we've made a big push to expand coverage, adding 200 new locations, which contributed to the 15% growth in online sales in the H1.

Speaker #2: In particular, one of the clear findings we've seen in Alvi during the first half of the year is consistent growth in the number of B2B customers at the converted stores, which means these stores are reaching their target audience.

Speaker #2: On slide six, another part of growth with value for the customer is expanding our omnichannel coverage. Reaching our customers not only through our physical stores, but also through our online sales channels.

Speaker #2: This year, we've made a big push to expand coverage, adding 200 new locations, which contributed to the 15% growth in online sales in the first half.

Speaker #2: This was driven by an increase of 15% in the number of transactions on our Unimark.cl and Alvi.cl platforms, and we also saw growth from last milers.

Carolyn McKenzie: This was driven by an increase of 15% in the number of transactions on our unimarc.cl and alvi.cl platforms, and we also saw growth from Last Mile. Another initiative within the plan is to grow private label penetration, as these products contribute to our competitiveness and profitability and also help us to offer a differentiated and attractive assortment to our customers. In the Q2, we reached private label penetration of 14% of sales, driven by strong performance at Unimarc. In line with the goals of differentiation and profitability, we've had particularly strong growth in the national brand equivalent segment, which are higher margin products than the opening price point products. Finally, we've also been growing our supplier base using the trading company we acquired at the end of 2024 to strengthen our global sourcing, reducing intermediation costs and achieving savings that help us compete better.

Speaker #2: Another initiative within the plan is to grow private label penetration. As these products contribute to our competitiveness and profitability, and also help us to offer a differentiated and attractive assortment to our customers.

Speaker #2: In the second quarter, we reached private label penetration of 14% of sales, driven by strong performance at Unimark. In line with the goals of differentiation and profitability, we've had particularly strong growth in the national brand equivalent segment, which are higher margin products than the opening price point products.

Speaker #2: And finally, we've also been growing our supplier base, using the trading company we acquired at the end of 2024 to strengthen our global sourcing.

Carolyn McKenzie: Finally, we've also been growing our supplier base using the trading company we acquired at the end of 2024 to strengthen our global sourcing, reducing intermediation costs and achieving savings that help us compete better. On slide 8, we have the next initiative, which is focused on relevant assortments, where we aim to ensure that we are offering products that are highly relevant for each of the segments and sophistication levels that we serve at our different formats. We recently added over 50 products from Fruna, a well-known supplier of sweets and snacks, to our assortments at all three formats in Chile. On the slide, we have images from Super 10 as an example. This is a great way for us to quickly enhance our selection of sweets in the opening price point segment, offering a well-known and valued product to our customers.

Speaker #2: Reducing intermediation costs and achieving savings that help us compete better. On slide 8, we have the next initiative, which is focused on relevant assortments.

Carolyn McKenzie: On slide 8, we have the next initiative, which is focused on relevant assortments, where we aim to ensure that we are offering products that are highly relevant for each of the segments and sophistication levels that we serve at our different formats. We recently added over 50 products from Fruna, a well-known supplier of sweets and snacks, to our assortments at all three formats in Chile. On the slide, we have images from Super 10 as an example. This is a great way for us to quickly enhance our selection of sweets in the opening price point segment, offering a well-known and valued product to our customers. On slide 9, we have more examples of ways that we are working to make sure we are offering the right products to meet our customers' needs, in this case, specifically for Alvi.

Speaker #2: Where we aim to ensure that we're offering products that are highly relevant for each of the segments and sophistication levels that we serve at our different formats.

Speaker #2: We recently added over 50 products from Pruna, a well-known supplier of sweets and snacks, to our assortment at all three formats in Chile. On the slide, we have images from Super DS as an example.

Speaker #2: This is a great way for us to quickly enhance our selection of sweets in the opening price point segment, offering a well-known and valued product to our customers.

Speaker #2: On slide nine, we have more examples of ways that we are working to make sure we're offering the right products to meet our customers' needs—in this case, specifically for Alvi.

Carolyn McKenzie: On slide 9, we have more examples of ways that we are working to make sure we are offering the right products to meet our customers' needs, in this case, specifically for Alvi. One of Alvi's key customer segments within the B2B space is hotels, restaurants, and catering businesses. We have been expanding our assortment specialty products targeting specific food service businesses, as shown on the top part of the slide. Another recent innovation at Alvi was the addition of impulse products at checkout, which means that customers can not only stock up on the products they need for their businesses, they can also buy something to drink for their drive back. Competitive pricing is another essential part of offering value to our customers, which is why our promotional strategy is a key driver for our results.

Speaker #2: One of Alvi's key customer segments within the B2B space is hotels, restaurants, and catering businesses. We've been expanding our assortment of specialty products targeting specific food service businesses, as shown at the top part of the slide.

Carolyn McKenzie: One of Alvi's key customer segments within the B2B space is hotels, restaurants, and catering businesses. We have been expanding our assortment specialty products targeting specific food service businesses, as shown on the top part of the slide. Another recent innovation at Alvi was the addition of impulse products at checkout, which means that customers can not only stock up on the products they need for their businesses, they can also buy something to drink for their drive back. Competitive pricing is another essential part of offering value to our customers, which is why our promotional strategy is a key driver for our results. Customers have reacted very favorably to our low, lower campaigns, which leverage our multi-format strategy by covering similar product categories across banners while remaining faithful to the marketing and pricing strategies that are specific to each format.

Speaker #2: And another recent innovation at Alvi was the addition of impulse products at checkouts, which means that customers can not only stock up on the products they need for their businesses, they can also buy something to drink for their drive back.

Speaker #2: Competitive pricing is another essential part of offering value to our customers, which is why our promotional strategy is a key driver for our results.

Speaker #2: Customers have reacted very favorably to our 'Low Lower' campaigns, which leverage our multi-format strategy by covering similar product categories across banners, while remaining faithful to the marketing and pricing strategies that are specific to each format.

Carolyn McKenzie: Customers have reacted very favorably to our low, lower campaigns, which leverage our multi-format strategy by covering similar product categories across banners while remaining faithful to the marketing and pricing strategies that are specific to each format. We continue to run high-low promotions for specific high impact categories, especially fresh products. On slide 11, we have the second pillar of our plan, technology assets. Here, we are highlighting two of the main initiatives within this pillar, cloud first and new technologies. We kicked off our journey to migrate our IT infrastructure to Google Cloud. We have successfully established secure connectivity across our systems and already migrated the first 10% of our servers. Transitioning to the cloud grants us greater flexibility and modernizes our technological foundation. This empowers our retail operations to rapidly develop or integrate business solutions.

Speaker #2: And we continue to run high-low promotions for specific high-impact categories, especially fresh products. On slide 11, we have the second pillar of our plan: technology assets.

Carolyn McKenzie: We continue to run high-low promotions for specific high impact categories, especially fresh products. On slide 11, we have the second pillar of our plan, technology assets. Here, we are highlighting two of the main initiatives within this pillar, cloud first and new technologies. We kicked off our journey to migrate our IT infrastructure to Google Cloud. We have successfully established secure connectivity across our systems and already migrated the first 10% of our servers. Transitioning to the cloud grants us greater flexibility and modernizes our technological foundation. This empowers our retail operations to rapidly develop or integrate business solutions. With respect to new technologies, we are working to make the most of our new AI platform, Gemini Enterprise, by rolling out training programs to increase productivity at the individual level, and we are also analyzing potential optimizations at the macro process level.

Speaker #2: Here, we're highlighting two of the main initiatives within this pillar: Cloud First and New Technologies. We kicked off our journey to migrate our IT infrastructure to Google Cloud.

Speaker #2: We've successfully established secure connectivity across our systems and have already migrated the first 10% of our servers. Transitioning to the cloud grants us greater flexibility and modernizes our technological foundation.

Speaker #2: This empowers our retail operations to rapidly develop or integrate business solutions. With respect to new technologies, we are working to make the most of our new AI platform, Gemini Enterprise, by rolling out training programs to increase productivity at the individual level. We are also analyzing potential optimizations at the macro process level.

Carolyn McKenzie: With respect to new technologies, we are working to make the most of our new AI platform, Gemini Enterprise, by rolling out training programs to increase productivity at the individual level, and we are also analyzing potential optimizations at the macro process level. On slide 12, the third pillar of our plan is efficiency and productivity. A disciplined approach to expenses is part of our culture, and that is something that is evidenced in the numbers, as we will see in a few more slides. We have efficiency and productivity initiatives throughout our operations, including supply chain, stores, and back office, as well as energy efficiency.

Speaker #2: On slide 12, the third pillar of our plan is efficiency and productivity. A disciplined approach to expenses is part of our culture, and that is something that is evidenced in the numbers, as we will see in a few more slides.

Carolyn McKenzie: On slide 12, the third pillar of our plan is efficiency and productivity. A disciplined approach to expenses is part of our culture, and that is something that is evidenced in the numbers, as we will see in a few more slides. We have efficiency and productivity initiatives throughout our operations, including supply chain, stores, and back office, as well as energy efficiency.

Speaker #2: We have efficiency and productivity initiatives throughout our operations, including supply chain, stores, and back office, as well as energy efficiency. The implementation of different technologies has contributed to productivity gains throughout our operations.

Carolyn McKenzie: The implementation of different technologies has contributed to productivity gains throughout our operations. These include self-checkouts, self-service scales, digital shelf management technologies, and a digital treasury system in our stores, as well as other technologies in the supply chain and back office, allowing us to optimize our organizational structure, carrying out two restructuring plans in 2025, one in Q1 and one in Q4, as well as three additional plans this year, one in January, one in June, and one in July, generating savings on personnel expenses going forward. On the slide, you can see that our sales per full-time equivalent, which is an indicator we use to measure productivity, increased 6.8% in H1. Regarding efficiency in the supply chain, we are leveraging our distribution network using our largest regional distribution centers to serve all formats in Chile.

Speaker #2: These include self-checkouts, self-service scales, digital shelf management technologies, and a digital treasury system in our stores, as well as other technologies in the supply chain and back office.

Speaker #2: This has allowed us to optimize our organizational structure, carrying out two restructuring plans in 2025—one in the first quarter and one in the fourth quarter—as well as three additional plans this year: one in January, one in June, and one in July.

Speaker #2: Generating savings on personnel expenses going forward. On the slide, you can see that our sales per full-time equivalent, which is an indicator we use to measure productivity, increased 6.8% in the first half of the year.

Speaker #2: Regarding efficiency in the supply chain, we are leveraging our distribution network, using our largest regional distribution centers to serve all formats in Chile.

Speaker #2: Previously, Alvi was only supplied out of Santiago, but now we've made adjustments that allow us to take advantage of our Concepcion, Coquimbo, and Puerto Montt DCs to help supply Alvi's growing footprint of stores.

Carolyn McKenzie: Previously, Alvi was only supplied out of Santiago, but now we have made adjustments that allow us to take advantage of our Concepción, Coquimbo, and Puerto Montt DCs to help supply Alvi's growing footprint of stores. In the face of rising fuel prices, maximizing efficiency and distribution costs has become even more important, and we have made efficiency gains in our truck utilization as well as optimizing transportation routes, making sure we are minimizing distances and using the most efficient mode of transportation. We have also been receiving more products from suppliers at our regional distribution centers instead of receiving products in Santiago and then having to ship them across the country, which also helps reduce transportation costs.

Speaker #2: In the face of rising fuel prices, maximizing efficiency in distribution costs has become even more important. We have made efficiency gains in our truck utilization, as well as optimizing transportation routes—making sure we're minimizing distances and using the most efficient mode of transportation.

Speaker #2: We have also been receiving more products from suppliers at our regional distribution centers, instead of receiving products in Santiago and then having to ship them across the country.

Speaker #2: This also helps reduce transportation costs. In addition, we've been working to optimize energy costs by migrating qualifying stores to lower, unregulated electricity rates, and using new technology to automate and control the main sources of energy consumption at our stores—refrigeration, lighting, and air conditioning.

Carolyn McKenzie: In addition, we have also been working to optimize energy costs, migrating qualifying stores to lower unregulated electricity rates, and also using new technology to automate and control the main sources of energy consumption at our stores, refrigeration, lighting, and air conditioning. Going on to the numbers. On slide 13, we have revenue, which grew 2.1% in H1, and similarly, 2.2% in Q2. Revenue growth was driven by Unimarc, which was up 2.3% in H1 and 1.9% in Q2. We also continue to see sequential improvements in Alvi and Super 10, as I mentioned earlier in the presentation. Gross margin was down slightly, 10 basis points in H1 and 40 basis points in Q2. We are still at the 32% level, which is where we expect to be this year.

Speaker #2: Going on to the numbers, on slide 13 we have revenue, which grew 2.1% in the first half, and similarly, 2.2% in the second quarter.

Speaker #2: Revenue growth was driven by Unimark, which was up 2.3% in the half and 1.9% in the second quarter. We also continue to see sequential improvements in Alvi and Super DS, as I mentioned earlier in the presentation.

Speaker #2: Gross margin was down slightly—10 basis points in the first half, and 40 basis points in the second quarter. We're still at the 32% level, which is where we expect to be this year.

Speaker #2: The decrease is because of the change in the format mix, and especially because of the 15 stores we converted from Mighty to DS to Alvi.

Carolyn McKenzie: The decrease is because of the change in the format mix, and especially because of the 15 stores we converted from Mayorista 10 to Alvi. Alvi has a different economic model than Mayorista 10. As a wholesale club, Alvi has lower margins, which is what we are seeing reflected here at the consolidated level, but it also has a lighter cost structure and higher sales volumes. So at the EBITDA level, a store that has reached maturity in sales will more than make up for the lower gross margin. At the bottom of the slide, we have gross profit, which increased 1.9% in H1 and 0.9% in Q2, even despite the lower gross margin. The key going forward is stronger top-line growth. On slide number 14, we have a double-click on revenue performance by format and how that has evolved over the past three quarters.

Speaker #2: Alvi has a different economic model than Mighty or DS. As a wholesale club, Alvi has lower margins, which is what we are seeing reflected here at the consolidated level, but it also has a lighter cost structure and higher sales volumes.

Speaker #2: So, at the EBITDA level, a store that has reached maturity in sales will more than make up for the lower gross margin. At the bottom of the slide, we have gross profit.

Speaker #2: Which increased 1.9% in the half, and 0.9% in the second quarter, even despite the lower gross margin. The key going forward is stronger top-line growth.

Speaker #2: On slide number 14, we have a double-click on revenue performance by format and how that has evolved over the past three quarters. At the top left of the slide, we have the same second-quarter revenue and gross margin graph that we had on the previous slide.

Carolyn McKenzie: At the top left of the slide, we have the same Q2 revenue and gross margin graph that we had on the previous slide. Revenue was up 2.2%, and thanks to the sequential improvement in Super 10 and Alvi, we had growth in all of our business segments this quarter. Unimarc, 1.9%, Peru, almost 20%, and Alvi plus Super 10 were up 0.4%, and that was following a decrease of 8.3% in Q4 and 0.6% in Q1 of this year. This improvement is not only attributable to the converted stores. We also have an important contribution from new store openings. Quarter over quarter, there is significant improvement in the converted stores. You can see this in the same store figures, which have also shown a sequential improvement going from -9.1% in Q4 to -7.8% in Q1 and -4.7% in Q2.

Speaker #2: Revenue was up 2.2%, and thanks to the sequential improvement in Super DS and Alvi, we had growth in all of our business segments this quarter.

Speaker #2: Unimark, 1.9%; Peru, almost 20%; and Alvi plus Super DS were up 0.4%. That was following a decrease of 8.3% in the fourth quarter and 0.6% in the first quarter of this year.

Speaker #2: This improvement isn't only attributable to the converted stores. We also have an important contribution from new store openings. But quarter over quarter, there's significant improvement in the converted stores.

Speaker #2: You can see this in the same-store figures, which have also shown a sequential improvement, going from minus 9.1% in the fourth quarter, to minus 5.8% in the first quarter, and minus 4.7% in the second quarter.

Speaker #2: And on the right-hand side of the graph, we have this evolution, but in terms of what these formats are contributing in actual money rather than percentages.

Carolyn McKenzie: On the right-hand side of the graph, we have this evolution, but in terms of what these formats are contributing in actual money rather than percentages. Each graph shows how revenue changed year-over-year, starting with Q4 of last year, then Q1, and then Q2. In all three periods, Unimarc was leading growth, and Peru has also been growing. In the Alvi plus Super 10 segment, revenue was CLP 18 billion lower in Q4. We made significant progress in Q1 with only a CLP 1 billion decrease, and now in Q2, we have a positive number. We expect this trend to continue as the converted stores continue to mature. On slide 15, we have operating expenses, which once again increased less than inflation, even with significant pressure from fuel costs.

Speaker #2: Each graph shows how revenue changed year over year, starting with the fourth quarter of last year, then the first quarter, and then the second quarter.

Speaker #2: So, in all three periods, Unimark was leading growth, and Peru has also been growing. In the Alvi plus Super DS segment, revenue was $18 billion pesos lower in the fourth quarter.

Speaker #2: We made significant progress in the first quarter with only a ₱1 billion decrease, and now in the second quarter, we have a positive number.

Speaker #2: We expect this trend to continue as the converted stores continue to mature. On slide 15, we have operating expenses, which once again increased less than inflation, even with significant pressure from fuel costs.

Speaker #2: In the first half of the year, operating expenses increased 1.2%, but fell 20 basis points as a percentage of revenue. Most of that increase came from distribution costs, which were up 12%.

Carolyn McKenzie: In H1 of the year, operating expenses increased 1.2% but fell 20 basis points as a percentage of revenue. Most of that increase came from distribution costs, which were up 12%. Other expenses only increased 0.4%, even though we are operating more stores and face higher labor costs related to minimum wage, inflation adjustments, and pension reform. In fact, personnel expenses, which is the most significant line item in our operating expenses, decreased in H1 of the year. As I mentioned, the very low growth in expenses is taking place when we are operating more stores than last year. If we exclude the effect of net store openings, expenses would be lower in nominal terms by 1.3%. In Q2, we have essentially the same situation.

Speaker #2: Other expenses only increased 0.4%, even though we're operating more stores and facing higher labor costs related to minimum wage, inflation adjustments, and pension reform.

Speaker #2: In fact, personnel expenses, which is the most significant line item in our operating expenses, decreased in the first half of the year. As I mentioned, the very low growth in expenses is taking place even though we are operating more stores than last year.

Speaker #2: If we exclude the effect of net store openings, expenses would be lower in nominal terms by 1.3%. In the second quarter, we have essentially the same situation.

Speaker #2: Expenses grew only 1.9%, with a 20% increase in distribution costs and only 0.7% growth in other operating expenses, including flat personnel expenses. And if we exclude net store openings, we would also have a decrease in nominal terms.

Carolyn McKenzie: Expenses grew only 1.9%, with a 20% increase in distribution costs and only 0.7% growth in other operating expenses, including flat personnel expenses. If we exclude net store openings, we would also have a decrease in nominal terms. In the quarter, we also have a slight decrease in operating expenses as a percentage of revenue. On slide number 16, we have EBITDA explained in many, many graphs. We will go from left to right. At the top left, we have EBITDA for H1, which grew 3.9% with a 10 basis point expansion in EBITDA margin. At the bottom left, we have EBITDA for Q2, which was down 2.3% and with EBITDA margin decreasing 33 basis points. Why do we have EBITDA growing in the half but falling in the quarter? The graphs in the middle show the breakdown.

Speaker #2: In the quarter, we also have a slight decrease in operating expenses as a percentage of revenue. On slide number 16, we have EBITDA explained in many, many graphs.

Speaker #2: We will go from left to right. At the top left, we have EBITDA for the first half, which grew 3.9%, with a 10 basis point expansion in EBITDA margin.

Speaker #2: At the bottom left, we have EBITDA for the second quarter, which was down 2.3%, with the EBITDA margin decreasing 33 basis points. Why do we have EBITDA growing in the half but falling in the quarter?

Speaker #2: The graphs in the middle show the breakdown. In both quarters, gross profit is higher, but in the first half, it's 1.9% higher, whereas in the second half, it's only 0.9% higher.

Carolyn McKenzie: In both quarters, gross profit is higher, but in the H1 it is 1.9% higher, whereas in the H2 it is only 0.9% higher. That is a result of the lower gross margin, as I described before. Operating expenses are very much under control, and we are comfortable with the 32% gross margin. What we need to grow EBITDA in coming quarters is more revenue growth, and that is the trend that we are seeing. The graphs on the right just reinforce this message. The lower gross margin is not a problem per se, it just needs to be coupled with more top-line growth to get the operating leverage we need to grow EBITDA and EBITDA margins. On slide 17, we have non-operating income, where we have had some significant extraordinary items this year, specifically related to restructuring costs and asset sales. We have had restructuring plans in 2025 and 2026.

Speaker #2: And that is a result of the lower gross margin, as I described before. Operating expenses are very much under control, and we are comfortable with the 32% gross margin.

Speaker #2: What we need to grow EBITDA in the coming quarters is more revenue growth, and that is the trend that we're seeing. The graphs on the right just reinforce this message.

Speaker #2: The lower gross margin isn't a problem per se; it just needs to be coupled with more top-line growth to get the operating leverage we need to grow EBITDA and EBITDA margin.

Speaker #2: On slide 17, we have non-operating income, where we've had some significant extraordinary items this year, specifically related to restructuring costs and asset sales. We've had restructuring plans in 2025 and 2026.

Carolyn McKenzie: On slide 17, we have non-operating income, where we have had some significant extraordinary items this year, specifically related to restructuring costs and asset sales. We have had restructuring plans in 2025 and 2026. On the graph, we are just showing the difference. Restructuring costs were about CLP 5 billion higher in the H1 of 2026 than in the H1 of 2025. In the Q2, we did not have restructuring costs last year, but this year we did have CLP 1.2 billion from an optimization plan that we implemented in June. These are costs that lead to future savings in personnel expenses. We also had asset sales in both periods, from the sale of stores or land that we owned or purchase options for stores that we leased.

Speaker #2: On the graphs, we're just showing the difference. Restructuring costs were about $5 billion pesos higher in the first half of 2026 than in the first half of 2025.

Carolyn McKenzie: On the graph, we are just showing the difference. Restructuring costs were about CLP 5 billion higher in the H1 of 2026 than in the H1 of 2025. In the Q2, we did not have restructuring costs last year, but this year we did have CLP 1.2 billion from an optimization plan that we implemented in June. These are costs that lead to future savings in personnel expenses. We also had asset sales in both periods, from the sale of stores or land that we owned or purchase options for stores that we leased. None of this affects operations or future development because we signed long-term rental contracts in all of these cases, but it is a financial optimization. In 2025, we had more gains on asset sales than in 2026.

Speaker #2: And in the second quarter, we didn't have restructuring costs last year, but this year we did have $1.2 billion from an optimization plan that we implemented in June.

Speaker #2: These are costs that lead to future savings in personnel expenses. We also had asset sales in both periods, from the sale of stores or land that we owned, or purchase options for stores that we leased.

Speaker #2: None of this affects operations or future development because we signed long-term rental contracts in all of these cases, but it is a financial optimization.

Carolyn McKenzie: None of this affects operations or future development because we signed long-term rental contracts in all of these cases, but it is a financial optimization. In 2025, we had more gains on asset sales than in 2026. The difference in the half is about CLP 11 billion, and in the quarter it is CLP 10 billion, because most of the 2025 sales took place in the Q2. Net interest expense is up mainly because of lower financial income, as we have a more normalized cash balance this year. Last year, we had a significant surplus in anticipation of a bond maturity. Finally, in the Q2, there is a significantly higher loss on index liabilities from inflation adjustments to our US-denominated debts.

Speaker #2: In 2025, we had more gains on asset sales than in 2026. The difference in the half is about $11 billion, and in the quarter, it's $10 billion—$10 billion—because most of the 2025 sales took place in the second quarter.

Carolyn McKenzie: The difference in the half is about CLP 11 billion, and in the quarter it is CLP 10 billion, because most of the 2025 sales took place in the Q2. Net interest expense is up mainly because of lower financial income, as we have a more normalized cash balance this year. Last year, we had a significant surplus in anticipation of a bond maturity. Finally, in the Q2, there is a significantly higher loss on index liabilities from inflation adjustments to our US-denominated debts. So both in the quarter and the half, we have a non-operating loss that is about CLP 21 billion higher than in the previous year, and most of that is explained by higher restructuring costs and lower gains on asset sales. On slide 18, we have net income, which was down 91% in both the half and the quarter.

Speaker #2: Net interest expenses are up, mainly because of lower financial income, as we have a more normalized cash balance this year. Last year, we had a significant surplus in anticipation of a bond maturity.

Speaker #2: And finally, in the second quarter, there is a significantly higher loss on index liabilities from inflation adjustments to our US-denominated debt. So both in the quarter and the half, we have a non-operating loss that is about 21 billion pesos higher than in the previous year, and most of that is explained by higher restructuring costs and lower gains on asset sales.

Carolyn McKenzie: So both in the quarter and the half, we have a non-operating loss that is about CLP 21 billion higher than in the previous year, and most of that is explained by higher restructuring costs and lower gains on asset sales. On slide 18, we have net income, which was down 91% in both the half and the quarter. In the H1, net income was lower by CLP 17.5 billion, which is essentially due to the non-operating results I described on the previous slide. There was also a decrease in operating results because of higher depreciation, and these effects were offset by the income tax benefit. The situation in the Q2 is similar, but there is a higher income tax benefit, mainly due to inflation adjustments to our tax loss carry-forward. On the next slide, we have our financial ratios.

Speaker #2: On slide 18, we have net income, which was down 91% in both the half and the quarter. In the first half, net income was lower by $17.5 billion pesos, which is essentially due to the non-operating results I described on the previous slide.

Carolyn McKenzie: In the H1, net income was lower by CLP 17.5 billion, which is essentially due to the non-operating results I described on the previous slide. There was also a decrease in operating results because of higher depreciation, and these effects were offset by the income tax benefit. The situation in the Q2 is similar, but there is a higher income tax benefit, mainly due to inflation adjustments to our tax loss carry-forward. On the next slide, we have our financial ratios. Net financial liabilities to EBITDA and net financial debt to adjusted EBITDA are both up compared to last quarter. This is mostly because we had increases to financial debt and financial liabilities from a bond placement in May, and these increases were not entirely offset by increases in cash due to temporary variations in working capital that affected the ending cash balance.

Speaker #2: There was also a decrease in operating results because of higher depreciation, and these effects were offset by the income tax benefits. The situation in the second quarter is similar, but there is a higher income tax benefit, mainly due to inflation adjustments to our tax loss carried forward.

Speaker #2: On the next slide, we have our financial ratios. Net financial liabilities to EBITDA and net financial debt to adjusted EBITDA are both up compared to last quarter.

Carolyn McKenzie: Net financial liabilities to EBITDA and net financial debt to adjusted EBITDA are both up compared to last quarter. This is mostly because we had increases to financial debt and financial liabilities from a bond placement in May, and these increases were not entirely offset by increases in cash due to temporary variations in working capital that affected the ending cash balance. The working capital variation in the H1 of this year was about CLP 41 billion, and this is a temporary effect, mainly explained by higher levels of inventory. This is because we have been implementing a strategy to increase purchase of merchandise in order to mitigate potential effects of higher oil prices that could eventually result in higher product costs.

Speaker #2: This is mostly because we had increases to financial debt and financial liabilities from a bond placement in May, and these increases were not entirely offset by increases in cash due to temporary variations in working capital that affected the ending cash balance.

Speaker #2: The working capital variation in the first half of this year was about $41 billion pesos, and this is a temporary effect, mainly explained by higher levels of inventory.

Carolyn McKenzie: The working capital variation in the H1 of this year was about CLP 41 billion, and this is a temporary effect, mainly explained by higher levels of inventory. This is because we have been implementing a strategy to increase purchase of merchandise in order to mitigate potential effects of higher oil prices that could eventually result in higher product costs. Inventory also went up as a result of an increase in purchases of imported products, which leads to higher inventory days, but also better pricing and payment conditions. Additionally, accounts payable were down CLP 33 billion compared to December, whereas accounts receivable were only down CLP 17 billion. These, again, are temporary effects that change from day to day. Excluding the working capital effect, net debt would be lower, and consequently, the ratios would also be lower.

Speaker #2: This is because we've been implementing a strategy to increase purchases of merchandise in order to mitigate potential effects of higher oil prices that could eventually result in higher product costs.

Speaker #2: Inventory also went up as a result of an increase in purchases of imported products, which leads to higher inventory days, but also better pricing and payment conditions.

Carolyn McKenzie: Inventory also went up as a result of an increase in purchases of imported products, which leads to higher inventory days, but also better pricing and payment conditions. Additionally, accounts payable were down CLP 33 billion compared to December, whereas accounts receivable were only down CLP 17 billion. These, again, are temporary effects that change from day to day. Excluding the working capital effect, net debt would be lower, and consequently, the ratios would also be lower. For example, net financial liabilities to EBITDA will be 5.27x instead of 5.46x. The same is true of the ratio of net financial debt to equity on Slide 20.

Speaker #2: Additionally, accounts payable were down $33 billion pesos compared to December, whereas accounts receivable were only down $17 billion. These, again, are temporary effects that change from day to day.

Speaker #2: Excluding the working capital effect, net debt would be lower and, consequently, the ratios would also be lower. For example, net financial liabilities to EBITDA will be 5.27 times instead of 5.46 times.

Carolyn McKenzie: For example, net financial liabilities to EBITDA will be 5.27x instead of 5.46x. The same is true of the ratio of net financial debt to equity on Slide 20. Excluding the temporary working capital effect, the ratio would be 0.56x in June instead of 0.61. Although, in any case, we are well below the limit. On Slide 21, at the top of the slide, we have a summary of our cash flow for the H1. We started the year off with a cash balance of CLP 84 billion, and we generated operating cash of CLP 44 billion, which is less than our EBITDA for the same period, which was CLP 109 billion. The reasons for that difference are the same working capital difference I described before, as well as severance payments as a result of the restructuring plans we carried out in January and June.

Speaker #2: The same is true of the ratio of net financial debt to equity on slide 20. Excluding the temporary working capital effect, the ratio would be 0.56 times in June instead of 0.61. Although in any case, we are well below the limit.

Carolyn McKenzie: Excluding the temporary working capital effect, the ratio would be 0.56x in June instead of 0.61. Although, in any case, we are well below the limit. On Slide 21, at the top of the slide, we have a summary of our cash flow for the H1. We started the year off with a cash balance of CLP 84 billion, and we generated operating cash of CLP 44 billion, which is less than our EBITDA for the same period, which was CLP 109 billion. The reasons for that difference are the same working capital difference I described before, as well as severance payments as a result of the restructuring plans we carried out in January and June.

Speaker #2: On slide 21, at the top of the slide, we have a summary of our cash flow for the first half. We started the year off with a cash balance of $84 billion pesos, and we generated operating cash of $44 billion, which is less than our EBITDA for the same period.

Speaker #2: The reasons for that difference are the same working capital difference I described before, as well as severance payments as a result of the restructuring plans we carried out in January and June.

Speaker #2: But that will be recovered in the form of savings on personnel expenses over the course of the year. We also paid long-term incentives this year, which are provisioned over the three-year time horizon, affecting EBITDA each quarter, but they only affect cash when they are paid.

Carolyn McKenzie: That will be recovered in the form of savings on personnel expenses over the course of the year. We also paid long-term incentives this year, which are provisioned over the three-year time horizon, affecting EBITDA each quarter, but they only affect cash when they are paid. As I mentioned before, we issued a bond in May of this year. I have more details about that on the next slide, but the important thing here is to note the maturity profile below. The new bond matures in 2032, which is marked in pink and is a year when we had practically no maturities. So the new issuance fits nicely into our amortization schedule. Going back to the cash flow above, the uses of cash for the past included net bank debt amortizations.

Speaker #2: As I mentioned before, we issued a bond in May of this year. I have more details about that on the next slide, but the important thing here is to note the maturity profile below.

Speaker #2: The new bond matures in 2032, which is marked in pink, and is a year when we had practically no maturities. So, the new issuance fits nicely into our amortization schedule.

Speaker #2: Going back to the cash flow above, the uses of cash for the half included net bank debt, amortizations, lease payments, interest payments, capex, dividend payments, and share buybacks, ending the quarter, yes, with $92.5 billion pesos in cash.

Carolyn McKenzie: Lease payments, interest payments, CapEx, dividend payments, and share buybacks, ending the quarter, ending that quarter, yes, with CLP 92.5 billion in cash. Regarding the share buybacks, we completed the purchase of 1% of shares authorized by the board of directors, so we should not have further share buybacks this year. In 2027, if the board authorizes further buybacks, we will be able to purchase another 1%. We still remain above our minimum cash level of around CLP 50 billion, and we also have extremely limited refinancing needs for the rest of this year, as you can see in the maturity profile. We have bank debt that tends to be revolving and only about CLP 6 billion in bond maturities left this year. Finally, we would like to mention a couple of recent events. At the end of May, we issued bonds in the local market.

Speaker #2: Regarding the share buybacks, we've completed the purchase of 1% of shares authorized by the Board of Directors, so we shouldn't have further share buybacks this year.

Speaker #2: In 2027, if the board authorizes further buybacks, we will be able to purchase another 1%. We still remain above our minimum cash level of around $50 billion pesos, and we also have extremely limited refinancing needs for the rest of this year, as you can see in the maturity profile.

Speaker #2: We have bank debt that tends to be revolving, and only about $6 billion pesos in bond maturities left this year. Finally, we'd like to mention a couple of recent events.

Speaker #2: At the end of May, we issued bonds in the local market. The details of the transaction are on the slide, but I will read through them as part of this service.

Carolyn McKenzie: The details of the transaction are on the slide, but I will read through them as part of the service. The placement amount was $2 million. This bond has a bullet structure and matures in 6 years, in 2032, which as I showed before, fits very nicely into our maturity profile. The proceeds are for refinancing liabilities. The coupon rate for this bond is 2.9%, and we placed it at 3.35%, which was a spread of 110 basis points over the benchmark, and we had strong demand from institutional investors on this transaction. In addition, in July, we announced 2 restructuring plans, which are in addition to the plan that we implemented at the beginning of the year. The idea is the same. Our efficiency initiatives have allowed us to improve productivity and help mitigate increases in operating expenses.

Speaker #2: The placement amount was $2 million US. This bond has a bullet structure and matures in six years, in 2032, which, as I showed before, fits very nicely into our maturity profile.

Speaker #2: The proceeds are for refinancing liabilities. The coupon rate for this bond is 2.9%, and we placed it at 3.35%, which was a spread of 110 basis points over the benchmark. We had strong demand from institutional investors on this transaction.

Speaker #2: In addition, in July, we announced two restructuring plans, which are in addition to the plan that we implemented at the beginning of the year. The idea is the same: our efficiency initiatives have allowed us to improve productivity and help mitigate increases in operating expenses.

Speaker #2: We already saw the cost of the June plan in these second-quarter financial statements—approximately $1.2 billion pesos. The July plan will be reflected in the third quarter, with a cost of approximately $4.8 billion.

Carolyn McKenzie: We already saw the cost of the June plan in these Q2 financial statements, approximately CLP 1.2 billion. The July plan will be reflected in the Q3 with a cost of approximately CLP 4.8 billion. These plans generate savings, so we will offset the cost during the H2 of this year and the Q1 of 2027. That is it for our presentation. Thank you so much for listening. If there are any questions, Arturo will be happy to take them now.

Speaker #2: These plans generate savings, so we will offset the cost during the second half of this year and the first quarter of 2027. That is it for our presentation.

Speaker #2: Thank you so much for listening. If there are any questions or thoughts, we'll be happy to take them now.

Speaker #1: Thank you. So we'll now move to the question-and-answer section. If you'd like to ask a question, please press star 2 on your phone—that's star 2—and wait to be prompted.

Operator: Thank you. We will now move to the question and answer section. If you would like to ask a question, please press star 2 on your phone. That is star 2, and wait to be prompted. If you are dialed in via the web, you can type your question in the box provided or request to ask a voice question. Kind note that we will take voice questions first and then text questions. We will just wait a moment or 2 for the questions to come in. Our first question comes from Alonso Aramburu from BTG Pactual. Your line is open. Please go ahead.

Speaker #1: If you are dialed in via the web, you can type your question in the box provided, or request to ask a voice question. Kindly note that we'll take voice questions first, and then text questions.

Speaker #1: We'll just wait a moment or two for the questions to come in. Our first question comes from Alonzo Aramburu from BTG Pactual. Your line is open.

Speaker #1: Please go ahead.

Speaker #2: Hi, good afternoon. Thank you for the call. I wanted to ask two questions. One, you mentioned top-line growth was improving. Just curious what you meant by that, and how that is evolving after the quarter.

Alonso Aramburu: Hi. Good afternoon. Thank you for the call. I wanted to ask 2 questions. One, you mentioned top-line growth was improving. Just curious what you meant, how that is evolving after the quarter. Also looking at the H2 of the year, your comps and gross margins are a little bit tougher or similar to this quarter, and you mentioned 32% is what you expect. So we should expect then gross margin to contract a little bit in the H2 of the year? Thank you.

Speaker #2: And also, looking at the second half of the year, your comps on gross margins are a little bit tougher, or similar to this quarter. You mentioned 32% is what you expect.

Speaker #2: So we should expect, then, gross margin to contract a little bit in the second half of the year? Thank you.

Arturo Silva: Hi, Alonso. First of all, about top-line in Q3, sales improved in the second half of June, a trend that extended through July and into August, showing growth higher than the previous two quarters, and till now in the first 45 or 42 days in this quarter. For this reason, we are expecting to dilute more fixed cost in this quarter, improving our EBITDA. In terms of the gross margin, that performed well, remaining at the level seen in Q1 and Q2 2026, in the level of 32%, as you mentioned. We expect to sustain this level of margin for the remainder of the year, reaching our EBITDA margin in our target for this year between 8% or 8.5%. Because in the first quarter, we reached this number or this range. In the second quarter, it's always our worst quarter.

Speaker #3: Alonzo, first of all, about the top line in Q3: sales improved in the second half of June, a trend that extended through July and into August.

Speaker #3: Showing growth higher than the previous two quarters. Until now, in the first 45, 42 days in this quarter. For this reason, we're expecting to look at more fixed costs in this quarter.

Speaker #3: Improving our EBITDA. In terms of the gross margin, it has performed well, remaining at the level seen in Q1 and Q2 2026, at 32%, as you mentioned.

Speaker #3: And we expect to sustain this level of margin for the remainder of the year. Reaching our EBITDA margin in our target for this year between 8 or reached this number or this range, in the second quarter, it's always our worst quarter, but in the third quarter, the idea is to reach again between 8 and 8.5, but in the Q4, compensate the reduction of our EBITDA margin in Q2.

Arturo Silva: But in the third quarter, the idea is to reach again between 8% and 8.5%, but in Q4 compensate the reduction of our EBITDA margin in Q2, and reaching for the full year this range, 8.5%. Regarding expenses, we anticipate continued low growth as a result of the restructuring plan implemented in November 2025, January of this year, and June and July of this year as well. Notably, we are operating with lower staffing levels despite having additional stores. This will be important also to give our, or to reach this range of EBITDA margin in the rest of the year.

Speaker #3: Reaching for the full year, this range is 8%, 8%, 8.5%. Regarding expenses, we anticipate continuing low growth as a result of the respectful plan implemented in November 2025, January of this year, and June and July of this year as well.

Speaker #3: And notably, we are operating with a lower staffing level despite having additional stewards. This will also be important to keep, or to reach, this range of EBITDA margin for the rest of the year.

Speaker #2: Thank you, Arturo. And do you think this improved sales performance—do you think you're gaining share, or is this just the industry and consumption doing better?

Alonso Aramburu: Thank you, Arturo. Do you think this improving sales performance, do you think you're gaining share, or this is just the industry and consumption doing better?

Arturo Silva: The idea is to keep our market share. We are opening new stores, but our competitors as well. Therefore, our expectation is to keep our market share in the second half of the year.

Speaker #3: The idea is to keep our market share. We are opening the stores, but our competitors are as well. Therefore, our expectation is to keep our market share in the second half.

Speaker #3: Of the year.

Speaker #2: Okay. Who would you say is doing the toughest competition?

Alonso Aramburu: Okay. Who would you say has been the toughest competitor?

Arturo Silva: The idea is to keep our gross margin also in the H2.

Speaker #3: Actually, Alonzo, the idea is to keep our gross margin also in the second half.

Arturo Silva: The idea is to keep our gross margin also in the H2.

Speaker #2: Okay. Yes, around 32, you mentioned. So, sorry—talking about competition, I mean, is the environment still very competitive, and would you say Walmart is still the most aggressive?

Alonso Aramburu: Okay, yes. Around 32%, you mentioned. Sorry, talking about competition, is the environment still very competitive, and would you say Walmart is still the most aggressive?

Speaker #3: Yeah. In fact, we anticipate—when I look at the Yamil promotion in June—that was the main issue to improve in the second half of June, and to keep this level of growth in July and August.

Arturo Silva: Yeah. In fact, we anticipate our A Lo Que Llame promotion in June. That was the main issue to improve in the H2 of June and to keep this level of growth in July, August, because Walmart also anticipate the campaign of milk products and meat. Therefore, the competitiveness is very tight, is similar, and also with Tottus and Circulo. We are expecting this level of competitiveness in the H2.

Speaker #3: Because Walmart also anticipates the campaign of meal products Yamil, but the competitiveness is very high. It's similar also with Toto's and Seiko's.

Speaker #3: And we're expecting this level of competitiveness in the second half.

Speaker #2: Great. Thank you.

Alonso Aramburu: Great. Thank you.

Speaker #1: Thank you so much. Just a reminder, if you would like to ask a question, please press star two on your phone and wait to be prompted.

Operator: Thank you so much. Just a reminder, if you would like to ask a question, please press star two on your phone and wait to be prompted. If you are dialing by the web, you can either type your question in the box provided or request to ask a voice question. Let's just wait a moment or two for more voice questions to come in. Seems like there are no more voice questions. Carolyn, I pass the line to you for the text questions.

Speaker #1: If you are dialed in via the web, you can either type your question in the box provided, or request to ask a voice question.

Speaker #1: Let's just wait a moment or two for more voice questions to come in. It seems like there are no more voice questions. Carolyn, I'll pass the line to you for the text questions.

Speaker #4: Great, thank you. Okay.

Carolyn McKenzie: Great. Thank you. Okay.

Speaker #3: We have two questions from Alfredo.

Arturo Silva: We have two questions from Alfredo.

Carolyn McKenzie: Yes. The questions we have from Alfredo.

Speaker #4: Yes. So, the questions we have are from Alfredo?

Speaker #3: Yeah, I read the first question about the possible additional headcount reduction and its effect on productivity. In fact, we are implementing, or we implemented, an additional headcount reduction in June and July.

Arturo Silva: I will. The first question about the possible additional headcount reduction and effect in the productivity. In fact, we implemented an additional headcount reduction in June, July. The impact in June was not so relevant because the severance was only CLP 1 billion. But in the H1 of July, we implement additional reduction with important costs, CLP 5.5 billion additional, and with an important impact in our result. The idea is to recover this severance investment in the H2 of this year or into August until December and in the Q1 of 2027. In terms of what is the growth of sales to keep stable the relation or the ratio of expenses over sales, the idea is to grow in sales at least inflation, even more to keep this ratio.

Speaker #3: The impact in June was not so relevant, because the severance was only 1 billion pesos. But in the first half of July, we implemented an additional reduction with an important cost of 5.5 billion additional.

Speaker #3: And with an important impact on our results, the idea is to recover this severance investment in the second half of this year, from August until December.

Speaker #3: And in the first quarter of 2026. And in terms of, what is the growth of sales needed to keep stable the relation, or the ratio, of expenses over sales?

Speaker #3: The idea is to keep growth in sales at least at the rate of inflation, or even more, to maintain this ratio. That is the idea, because we always have some pressure in terms of prices, in salaries for the minimum salary, and pension fund reform.

Arturo Silva: That is the idea, because always we have some pressure in terms of prices in the salaries for the minimum salary, pension fund reform, and inflation. For this reason, we need to grow since offset at least this level to keep this ratio in the same level. The second question is about working capital recovery in the H2. The idea is to recover at least the additional inventory that we have in June, and that correspond to CLP 25 billion. Also could be possible to recover some money in terms of the payables, depending on the calendar of the close in December. But the idea is to recover, of course, depend on the behavior of the sales, because it is necessary to dilute this additional inventory. But inventory purchasing very good condition. This inventory wrote or dilute really fast.

Speaker #3: And inflation. For this reason, we need to grow in terms of sales at least to this level to keep this ratio at the same level.

Speaker #3: And the second question is about the working capital half. The idea is to recover at least the additional inventory that we have in June, which corresponds to 25 billion pesos.

Speaker #3: And also, it could be possible to recover some money in terms of the payables, depending on the calendar of the close in December. But the idea is to recover.

Speaker #3: Of course, depend on the behavior of the sales because it's necessary to dilute this additional inventory. But inventory purchasing very, very good condition. And this inventory wrote or dilute relatively fast.

Speaker #3: And for this, our expectation is to recover these 25 billion pesos in the second half of this year. And finally, about the net debt increase and the impact on the dividend and buyback policy.

Arturo Silva: For this, our expectation is to recover this CLP 25 billion in the H2 of this year. Finally, about the net debt increase and the impact in dividend and buyback policy. The net debt reduction or increase, excuse me. The main reason was the cash reductions, because the financial debt is not increasing, but the net indebtedness increased for this reason, for the lower cash. The reason was the working capital effect, and the idea is to recover this working capital in the H2. Therefore, the net debt should be similar and the previous year in the H2 of this year. Independent of that, our buyback was complete in July because the decision of the board was to purchase 1% of equity in the stock market. That is possible to purchase only 1% in 12 months, in one year.

Speaker #3: The net debt reduction or increase—excuse me—the main reason was the cash reduction. Because the financial debt is not increasing, but the net indebtedness increased for this reason: for the lower cash.

Speaker #3: And the reason was the working capital effect, with the idea to recover this working capital in the second half, and therefore the net debt should be similar to the previous year in the second half of this year.

Speaker #3: Independent of that, our buyback was complete in July, because the decision of the board was to purchase 1% of equity in the stock market.

Speaker #3: It is possible to purchase only 1% in 12 months, in one year. Any additional buyback will be after May 2027, if the board decides again to implement this program.

Arturo Silva: Any additional buyback will be after May 2027, if the board decide again to practice this program. Until now, until May, it is not possible that first we complete this decision of the board. Dividends, the idea is to keep this 75%, but it is not so relevant in the total. It is possible with our EBITDA improving in the next quarter to pay dividend and also to finance the CapEx without increase our indebtedness.

Speaker #3: And until now, until May, it is not possible for it. We complete this decision of the Board. And dividends, the idea is to keep this 75%.

Speaker #3: But it's not so relevant in the total it's possible with our EBITDA improvement in the next year in the next quarter, excuse me. To pay dividend and also to finance the CAPEX without increase our indebtedness.

Speaker #1: Thank you so much. Just a final reminder: if you would like to ask a question, please press star two on your phone and wait to be prompted.

Operator: Thank you so much. Just a final reminder, if you would like to ask a question, please press star 2 on your phone and wait to be prompted. If you are dialed in by the web, you can either type your question in the box provided or request to ask a voice question. We will just wait a moment or two for more questions to come in. I am not seeing any more questions, so perhaps I can hand it back to the SMU team for the closing remarks.

Speaker #1: If you are dialed in by the web, you can either type your question in the box provided, or request to ask a voice question.

Speaker #1: We'll just wait a moment or two for more questions to come in. I'm not seeing any more questions, so perhaps I can hand it back to the SMU team for the closing remarks.

Speaker #4: Great, thanks so much, everybody, for joining us today. Feel free to get in touch if you have any additional questions, and we hope you will join us next quarter.

Carolyn McKenzie: Great. Thanks so much everybody for joining us today. Feel free to get in touch if you have any additional questions, and we hope you will join us next quarter. Have a nice day.

Speaker #4: Have a nice day.

Operator: That concludes the call for today. We are now closing all the lines. Thank you, and have a nice day.

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Q2 2026 SMU SA Earnings Call

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