Q2 2026 Compania Cervecerias Unidas SA Earnings Call

Operator 2: Good day, everyone, Welcome to CCU's Q2 2026 Earnings Conference Call on 5 August 2026. Please note that today's call is being recorded. At this time, I would like to turn the conference call to Claudio Heras, the head of investor relations. Please go ahead, sir.

Speaker #2: After this time, at this time, I would like to turn the conference call to Claudio Las Eras, the head of investor relations. Please go ahead, sir.

Speaker #3: Welcome. And thank you for attending CTU's second quarter 2026 conference call. Today with me are Mr. Eduardo French Davis, Chief Executive Officer; Mr. Felipe Duvernet, Chief Financial Officer; and Mr. Diego Monizaga, Financial Planning and Investor Relations Manager.

Claudio Heras: Welcome, and thank you for attending CCU's Q2 2026 conference call. Today with me are Mr. Eduardo Ffrench-Davis, Chief Executive Officer, Mr. Felipe Duverne, Chief Financial Officer, and Mr. Diego Munizaga, Financial Planning and Investor Relations Manager. You have received a copy of the company's consolidated Q2 2026 earnings release. As usual, the call will start by reviewing our overall results, and then we will move on to a question-and-answer session. Before we begin, please take note of the following statement. The statements made in this call that relate to CCU's future financial results and forward-looking statements, which involve known and unknown risks and uncertainties that could cause our actual performance or results to materially differ.

Speaker #3: You have received a copy of the company's consolidated second quarter 2026 earnings release. As usual, the call will start by reviewing our overall results and then we will move on to questions and answers session.

Speaker #3: Before we begin, please take note of the following statements. Statements made in this call that relate to CCU's future financial results are forward-looking statements which involve known and unknown risks and uncertainties that could cause our actual performance or results to materially differ.

Speaker #3: These statements should be taken in conjunction with the additional risks and uncertainties set forth in CCU's annual report submitted to the CMF and in our Form 20F filed with the US Security and Exchange Commission, both documents available on our website.

Claudio Heras: These statements should be taken in conjunction with the additional information about risks and uncertainties set forth in CCU's annual report submitted to the CMF and in our Form 20-F filed with the U.S. Securities and Exchange Commission, both documents available on our website. It is now my pleasure to introduce our CEO, Mr. Eduardo Ffrench-Davis.

Speaker #3: It is now my pleasure to introduce our CEO, Mr. Eduardo Fernandez Davis.

Speaker #4: Thank you very much, Claudio. And thank you all for joining us today. It is my pleasure to share with you our second quarter 2026 financial results.

Eduardo Ffrench-Davis: Thank you very much, Claudio, and thank you all for joining us today. It is my pleasure to share with you our Q2 2026 financial results. For the first time, as CEO of CCU, company in which I have worked for more than 20 years, and I am proud to lead at a time that we need to look to the future with the strength and conviction that has always characterized us, as we face a particularly challenging context. Nonetheless, we have always shown a longstanding track record of adaptability and for sure execution. Therefore, to continue successfully shaping our future, I would like to mention some relevant changes that we have defined. We have defined the strategy Vamos por Más, which is built on our four main pillars. First, the first pillar, increase our focus on businesses. The second one, boost operational synergies.

Speaker #4: For the first time, a CEO of CCU, company in which I've I have worked for more than 20 years, and I am proud to lead at a time that we need to look to the future with the strength and conviction that has always characterized us.

Speaker #4: As we face a particularly challenging context, nonetheless we have always shown a long-standing track record of adaptability and, for sure, execution. Therefore, to continue successfully shaping our future, I would like to mention some relevant changes that we have defined.

Speaker #4: We have designed the strategy Vamos Formas, which is built on our four main pillars: first, the first pillar, increase our focus on businesses; the second one, boost operational synergies; the third one, act with greater agility; and fourth one, accelerate our transformation.

Eduardo Ffrench-Davis: The third one, act with greater agility. Fourth one, accelerate our transformation. These pillars are oriented to generate growth and to respond to the new demands and challenges of the market. To support this strategy, we will execute changes in our organizational structure, as well as strengthening our internal processes and capabilities to remain at the cutting edge of new trends while enhancing our technological transformation. This transition will be implemented gradually throughout this year, with our main focus being to ensure operational continuity and for sure performance. I am confident in the commitment that has always characterized all the CCU employees, and together we will prepare CCU to successfully navigate current and future challenges. Regarding our Q2 performance, CCU delivered a solid 59.4% consolidated EBITDA expansion, mostly driven by a robust set of results in our main operating segment, Chile, which expanded EBITDA 26.2%.

Speaker #4: These pillars are oriented to generate growth and to respond to the new demands and challenges of the market. To support this strategy, we will execute changes in our organizational structure as well as strengthening our internal processes and capabilities to remain at the cutting edge of new trends while enhancing our technological transformation.

Speaker #4: This transition will be implemented gradually throughout this year with with our main focus being to ensure operational continuity and, for sure, performance. I am confident in the commitment that has always characterized all the CCU employers, employees, and together we will prepare CCU to successfully navigate current and future challenges.

Speaker #4: Regarding our second quarter performance, CCU delivered a solid 59.4% consolidated consolidated EBITDA expansion. Mostly driven by a robust set of results in our main operating segment, Chile, which expanded EBITDA 26.2%.

Speaker #4: The international business operating segment also contributed to a higher EBITDA by posting a 25.8% lower EBITDA loss. As we continue facing a sub-consumption environment in Argentina, on the other hand, the wine operating segment contracted EBITDA by 61.9%, sharply impacted by unaffordable trends for the wine category globally and a higher cost of wine.

Eduardo Ffrench-Davis: The international business operating segment also contributes to a higher EBITDA by posting a 25.8% lower EBITDA loss. As we continue facing a sub-consumption environment in Argentina. On the other hand, the wine operating segment contracted EBITDA by 61.9%, sharply impacted by unfavorable trends for the wine category globally and a higher cost of wine. I will now pass the call to our CFO, Felipe Duverne, who will give you further details about our performance by operating segment during this quarter. Felipe?

Speaker #4: I will now pass the call to our CFO, Felipe Duvernet, who will give you further details about our performance by operating segment during this quarter.

Speaker #3: Felipe, thank you, Eduardo, and good morning, everybody. Consolidated net sales grew 4.8%, almost fully explained by 6.4% higher average prices in CLP as volume declined 1.5%, higher prices in Chilean pesos were mostly a consequence of revenue management initiatives in all our operating segments, and in terms of volumes, the 2.5% increase in the Chile operating segment was offset by decreases of 7.4% and 13.7% in international business and wine operating segments, respectively.

Felipe Duverne: Thank you, Eduardo, and good morning, everybody. Consolidated net sales grew 4.8%, almost fully explained by 6.4% higher average prices in CLP as volume declined 1.5%. Higher prices in Chilean pesos were mostly a consequence of revenue management initiatives in all our operating segments. In terms of volumes, the 2.5% increase in the Chile operating segment was offset by decreases of 7.4% and 13.7% in international business and wine operating segments, respectively. Gross profit grew 6.8%, and gross margin improved 76 basis points. MSMD&A expenses rose 3.3% due to higher distribution expenses associated with higher oil prices during the quarter and restructuring expenses in Argentina and the wine operating segment. This was partially offset through ongoing efficiency initiatives, mainly in logistics. As a percentage of net sales, MSMD&A expenses decreased 62 basis points. In all, EBITDA grew 59.4%.

Speaker #3: Gross profit grew 6.8%, and gross margin improved by 76 basis points. SG&A expenses rose 3.3% due to higher distribution expenses associated with higher oil prices during the quarter.

Speaker #3: And restructuring expenses in Argentina and in the wine operating segment. This was partially offset through ongoing efficiencies initiatives, mainly in logistics, as a percentage of net sales, MSNDNA expenses decreased 62 basis points, in order EBITDA grew 59.4%.

Speaker #3: Regarding net income, we recorded a higher loss from second quarter of 2025, mostly due to a non-recurring negative effect of 6,068 million Chilean pesos from an impairment loss related to our business in Bolivia and lower income taxes in in second quarter of 2025, coming from a non-recurring positive tax effect in Argentina.

Felipe Duverne: Regarding net income, we recorded a higher loss from Q2 2025, mostly due to a non-recurring, negative effect of CLP 6,068 million from an impairment loss related to our business in Bolivia and lower income taxes in Q2 2025, coming from a non-recurring positive tax effect in Argentina. In terms of our segment, the Chile operating segment expanded top line by 1.5%, explained by 2.5% higher volumes, gaining overall market share versus same quarter of last year, partially offset by 1% decrease in average prices in Chilean pesos. During the quarter, the non-alcoholic categories grew mid-single digits, outweighing the low single-digit decline in alcoholic categories, which encompasses beer and spirits.

Speaker #3: In terms of our segment, the Chile operating segment expanded top line by 1.5%, explained by 2.5% higher volumes gaining overall market share versus same quarter of last year, partially offset by 1% decrease in average prices in Chilean pesos.

Speaker #3: During the quarter, the non-alcoholic categories grew mid-single digits, outweighing the low single-digit decline in alcoholic categories, which encompasses beer and spirits. Flavored low alcohol ready-to-drink products, led by brands such as Stones in beer, Mistral Ice, and Cantal in spirits, continued to show excellent results, with volume growing double digits in the quarter and representing 8% 8.3% of total alcohol in this segment as of June 2026.

Felipe Duverne: Flavored, low-alcohol, ready-to-drink products led by brands such as Stones in beer, Mistral Ice and Kantal in spirits, continue to show excellent results, with volume growing double digits in the quarter and representing 8.3% of total alcohol in this segment as of June 2026. Average prices contracted due to mix effect in the portfolio, partially offset by revenue-managing initiatives in all categories. Gross profit increased 9.4%, mainly driven by lower direct costs, mostly coming from the 5% appreciation of the Chilean pesos against the US dollar, impacting favorably our US dollar-denominated costs, partially offset by higher aluminum prices. MSMD&A expenses grew 3.5%, below inflation, although as a percentage of net sales increased 71 basis points due to expenses pressures coming from higher distribution costs, partially offset by efficiencies. Altogether, EBITDA recorded a 26.2% increase, and EBITDA margin expanded 264 basis points.

Speaker #3: Average prices contracted due to mixed effects in the portfolio, partially offset by revenue management initiatives in all categories. Gross profit increased 9.4%, mainly driven by lower direct costs, mostly coming from the 5% appreciation of the Chilean pesos against the US dollar, impacted favorably our US dollar denominated cost.

Speaker #3: Partially offset by higher aluminum prices. MSNDNA expenses grew 3.5%, below inflation, although as a percentage of net sales, increased 71 basis points due to expense pressures coming from higher distribution costs, partially offset by efficiencies.

Speaker #3: Altogether, EBITDA recorded a 26.2% increase, and EBITDA margin expanded 264 basis points. I would like to mention that during the quarter, CCU acquired a 49% equity interest that Nestlé Chile held in our subsidiary, Aguas S1 Nestlé.

Felipe Duverne: I would like to mention that during the quarter, CCU acquired a 49% equity interest that Nestlé Chile held in our subsidiary, Aguas de Sechura Nestlé. After this acquisition, CCU reached 100% ownership of this subsidiary, allowing us to further consolidate our leadership in a steadily growing water industry in Chile, which is expanding low double digits as of June 2026. Following this transaction, we will maintain our strategic relationship with Nestlé, continuing the distribution of the ready-to-drink coffee-based beverage products and water brands in Chile. In the international business operating segment, net sales increased 15.7%, driven by 24.9% higher average prices in Chilean pesos, partially offset by a 7.4% contraction in volumes. Higher average prices in Chilean pesos was due to revenue management initiatives, mainly with price actions in Argentina in line with inflation.

Speaker #3: After this acquisition, CCU reached 100% ownership of in this subsidiary, allowing us to further consolidate our leadership in a steadily growing water industry in Chile, which is expanding low double digit as of June 2026.

Speaker #3: Following this transaction, we will maintain our strategic relationship with Nestlé, continuing the distribution of the ready-to-drink coffee-based beverage products and water brands in Chile.

Speaker #3: In the international business operating segment, net sales increased 15.7%, driven by 24.9% higher average prices in Chilean pesos, partially offset by a 7.4% contraction in volumes, higher average prices in Chilean pesos, was due to revenue management initiatives, mainly with price actions in Argentina in line with inflation.

Speaker #3: Volumes in these segments were below last year, mainly explained by Argentina due to a high single-digit contraction in beer and water industries, and a difficult business scenario in Bolivia, marked by social unrest and roadblocks that disrupted our operations.

Felipe Duverne: Volumes in these segments were below last year, mainly explained by Argentina due to a high single-digit contraction in beer and water industries and a difficult business scenario in Bolivia, marked by social unrest and roadblocks that disrupted our operations. Gross profit increased 20.8%. MSD&A expenses grew 7.6%, as a percentage of net sales decreased 460 basis points. EBITDA resulted in a 25.8% lower loss versus Q2 2025. During the quarter, we incurred in restructuring expenses in Argentina by CLP 1,408 million. The wine operating segment posted a top-line drop of 14.1%, mostly driven by the 13.7% decrease in volumes, as average prices contracted 0.5%. Lower volumes were driven by industry contraction in export and domestic market in Chile.

Speaker #3: Gross profit gross profit increased 20.8%. MSNDNA expenses grew 7.6% as a percent percentage of net sales decreased 460 basis points. EBITDA resulted in a 20 in 25.8% lower loss versus second quarter 2025.

Speaker #3: During the quarter, we incurred in restructuring expenses in Argentina by 1,408 million Chilean pesos. The wine operating segment posted a top line drop of 14.1%, mostly driven by a 13.7% decrease in volumes as average prices contracted 0.5%.

Speaker #3: Lower volumes were driven by industry contraction in the export and domestic market in Chile. The decline in average prices was due to a negative mix effect in the portfolio and a stronger Chilean peso against the US dollar, which negatively impacted export revenues.

Felipe Duverne: The decline in average prices were lower due to a negative mix effect in the portfolio and a stronger Chilean peso against the US dollar, which impacted negatively export revenues. These effects were partially offset by revenue management initiatives. Gross profit fell 26.9%, mostly due to cost pressures from a higher cost of wine, partially offset by efficiencies in manufacturing. MSD&A expenses dropped 3.7%, mostly due to the lower business scale. Altogether, EBITDA decreased 61.9%. During the quarter, we incurred in restructuring expenses amounting CLP 1,633 million. To navigate the difficult scenario in the wine business, we will continue pursuing efficiencies and keep developing a strategy of accelerating high-margin innovation.

Speaker #3: These effects were partially offset by revenue management initiatives. Gross profit fell 26.9%, mostly due to cost pressures from a higher cost of wine, partially offset by efficiencies in manufacturing.

Speaker #3: MSNDNA expenses dropped 3.7%, mostly due to the lower business scale. Altogether, EBITDA decreased 61.9%. During the quarter, we incurred in restructuring expenses amounting 1,633 million Chilean pesos.

Speaker #3: To navigate the difficult scenario in the wine business, we will continue pursuing efficiencies and keep developing a strategy of accelerating high margin innovation. In this regard, as of June 2026, Flavored low alcohol ready-to-drink products, based on wine, almost doubled versus last year, mostly driven by the launch of the single-serve can version of our brand Gato Selección Dulce, among other brands backed by our multi-category production capabilities.

Felipe Duverne: In this regard, as of June 2026, flavored low-alcohol ready-to-drink products based on wine almost doubled versus last year, mostly driven by the launch of the single-serve can version of our brand Gato Selección Dulce, among other brands, backed by our multi-category production capabilities. Regarding our major venture and associated business in Colombia, we posted mid-teens volume growth during the quarter. We are focused on that country on building brand equity and scale to intense profitable growth in the future. We will be glad to answer any question you may have.

Speaker #3: Regarding our major inventure and associated business, in Colombia, we posted meetings volume growth during the quarter. We are focused on that country on building brand equity and scale to enhance profitable growth in the future.

Speaker #3: Now, we will be glad to answer any questions you may have.

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

Operator 2: Thank you. 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 and wait to be prompted. If you are dialing by the web, you can type your question in the box provided or request to ask a voice question. Our first question comes from Alejandro Fuchs from Itaú BBA. Your line is open. Please go ahead.

Speaker #1: If you are dialed in by the web, you can type your question in the box provided or request to ask a voice question. Our first question comes from Alejandro Fuchs from Itaú BBA.

Speaker #1: Your line is open. Please go ahead.

Speaker #2: Thank you, operator Ola Eduardo Felipe and team. Thank you for the space for questions. I have two very quick ones, if I may. The first one, I wanted to see if maybe you could elaborate a little bit on how you see the competitive environment in Chile especially on the soft drink market, anything that has changed the last couple of months.

Alejandro Fuchs: Thank you, operator. Hola, Eduardo, Felipe, and team. Thank you for the space for questions. I have two very quick ones, if I may. The first one, I wanted to see if maybe you could elaborate a little bit on how you see the competitive environment in Chile, especially on the soft drink market, anything that has changed in the last couple of months, and maybe how do you see the rest of the year? The second one, in terms of alcoholic, especially beer in Argentina, we saw volumes continue to be pressured despite the sporting events this quarter. I wanted to see if you could break down for us what do you expect for the rest of the year and if there was a positive impact or not, given the sporting event in the country. Thank you.

Speaker #2: And maybe how do you see the the rest of the year? And then the second one, in terms of alcoholic especially beer in Argentina, we saw volumes continue to be pressured despite, you know, the sporting events this quarter.

Speaker #2: So I wanted to see if you could break down for us what do you expect for the for the rest of the year and and if there was a positive impact or not given the sporting event in the country.

Speaker #2: Thank you.

Speaker #3: Thank you, Alejandro. I will take the the first question from from from Chile. Thank you for both questions. In terms of competitive environment in in Chile, especially in the soft drinks, always this is a is a very mature category compound by different segments.

Felipe Duverne: Thank you, Alejandro. I will take the first question from Chile. Thank you for both questions. In terms of competitive environment in Chile, especially in the soft drinks, always this is a very mature category compound by different segments. Actually, we operate nine segments within that macro category, and it has always been very competitive. We believe that the trends will continue. All the better-for-you products, all the healthy products such as waters, flavored waters, juices, functional products are growing, and we will see that they are continue growing. We have a strong position in terms of market shares in those categories, and we will invest in those categories in order to get more innovations and to push the mix on those categories. Within the CSD categories, we are doing a great job with Pepsi within the cola segment, and we're strong brands in the flavor sub-segment as well.

Speaker #3: Actually, we operate nine segments within that macro category. And it has always been very competitive. But we believe that the trends will continue. All the better for you products, all the healthy products such as waters, flavored waters, juices, functional products are are growing and we will see that they they are they are continue growing.

Speaker #3: We have a strong position in terms of market share in those categories, and we will invest in those categories in order to get more innovations and to push the mix on those categories.

Speaker #3: Within the CSD categories, we are doing a great job with with Pepsi, within the cola segment, and we we're strong brands in the in the flavor.

Speaker #3: Subsegment as well. But we believe that the soft drinks will continue growing, mainly through better-for-you products, in which we believe we have a very, very strong position.

Felipe Duverne: We believe that the soft drinks will continue growing mainly through better-for-you products, which we believe that we have a very strong position. The second question, the beer in Argentina, I will pass that question to Felipe now. Hello, Alejandro. The beer industry contraction was high single digit. However, we are comparing a particularly, let's say, high comparison base, in Q2 of last year. Maybe, you know, in Q3 volume collapse, as this is in line with a significant rise on interest rate in Argentina, unemployment due to all the macroeconomic adjustments that were done in Argentina last year. We should

Speaker #3: The the second question, the beer in in Argentina, I will pass that that that question to Felipe now.

Speaker #4: Hello, Alejandro. Yeah, the the the second quarter, as you know, this we we decrease our the beer industry contraction was high single digit. However, we are comparing a particularly, let's say, high companies on base in the second quarter of last year.

Speaker #4: Maybe you know in quarter three volume collapsed as this is in line with significant rise on interest rates in Argentina unemployment due to all the macroeconomic adjustment that were done in in in Argentina last year.

Speaker #4: So we showed we should look or or see a recovery in volumes in second half of 2026. One, because of the of the companies on base on quarter three, on the one hand.

Eduardo Ffrench-Davis: Look or see a recovery in volumes in H2 2026. One, because of the company's own base from Q3, on the one hand. Also, what we are seeing now is a continuous improvement in volume trends in Argentina since March. As if we seasonally adjust the volumes in Argentina, we are seeing a recovery month-on-month since March. A more stable macroeconomic scenario in terms of inflation and devaluation in Argentina yet has not translated to a more dynamic consumption environment. However, everything is volatile, and this is a forward-looking that I cannot ensure to you, we should see a more robust consumption environment towards the end of the year, as we have seen, let's say, some good signs since March in terms of improvement of volumes. Thank you, Alejandro.

Speaker #4: But also what we are seeing now is a continuous improvement in volume trends in in Argentina since March. As if we adjust is if we adjust seasonally adjust the volumes in Argentina we are seeing a recovery months on month since March.

Speaker #4: A more stable macroeconomic scenario in terms of inflation and devaluation in Argentina yet has not translated to a more dynamic consumption environment. However, but you know, everything is volatile and this is a forward looking that I cannot ensure to you we should see a more robust consumption environment towards the end of the year.

Speaker #4: As we have seen let's say some good signs since March in terms of improvement of volumes. Thank you, Alejandro.

Speaker #2: That was super clear. Thank you, Eduardo and Felipe.

Alejandro Fuchs: That was super clear. Thank you, Eduardo and Felipe.

Speaker #1: Thank you very much. Our next question comes from Fernando Olvera from Bank of America. Your line is open. Please go ahead.

Operator 2: Thank you very much. Our next question comes from Fernando Olvera from Bank of America. Your line is open. Please go ahead.

Speaker #2: Hi, good morning. Thanks for taking my questions and congratulations, Eduardo, for for the appointment. My my first question is related to the the strategic plan that you mentioned in your initial remarks.

Fernando Olvera: Hi. Good morning. Thanks for taking my questions, and congratulations, Eduardo, for the appointment. My first question is related to the strategic plan that you mentioned in your initial remarks. Maybe if you can give some color of what are some of the targets that you are planning to achieve with this new strategic plan in the medium term, that would be great. My second question is related to Chile. How do you expect consumption to behave in the remaining of the year? Maybe if you could share some initial thoughts about 2027, considering the mega reform approved by the government. Thank you.

Speaker #2: Maybe you can give some color on what some of the targets are that you are planning to achieve with this new strategic plan in the medium term.

Speaker #2: That would be great. And my second question is related to Chile. No. How do you expect consumption to behave in the remaining of the year and maybe if you could share some initial thoughts about 2027 considering the mega reform approved by by the government.

Speaker #2: Thank you.

Speaker #3: Hi, Fernando. Thank you. Hi, Fernando. Thank you for your message and, of course, for your questions. I am very optimistic for the future.

Eduardo Ffrench-Davis: Hi, Fernando. Thank you. Hi, Fernando. Thank you for your message and, of course, for your questions. I am very optimistic for the future. I will answer both questions. The first one around the new strategy. For sure, this new strategy will be part of our new strategic plan. We are going to create a new strategic plan based on two main things. The first one, it's going to be a four-year plan looking forward to 2030 and setting some KPIs for that year. The second thing is we are going to interrupt the current strategic plan to create a new one. This new strategic plan is based on the estrategia Vamos por Más that I talked on the beginning of this presentation. This estrategia is based basically in four main pillars, and I will explain a little bit more further on these pillars.

Speaker #3: So I will ask you both both question. The first one, around the new strategy, for sure this this new strategy will be part of the of our new strategic plan.

Speaker #3: We are going to create a new strategic plan plan based on two main things. The first one, it's going to be a four-year plan looking forward to the 2030 and setting some KPIs for that for that year.

Speaker #3: And the second thing is we are going to interrupt the the current strategic plan to create a new one and this new strategic plan is based on the on the estrategia vamos por más that I that I talk on the on the beginning of this of this presentation.

Speaker #3: This estrategia is based basically in four main pillars. And I will explain a little bit more further on this on these pillars. The first one is to focus on businesses.

Eduardo Ffrench-Davis: The first one is to focus on businesses, which is not mean that we haven't had focus on business, but we will strengthen our focus in our businesses, separating or differentiating our core businesses with our high-potential businesses. We are going to go deep in our multi-category strategy, which focus on each single category, leaving distinct consumption occasions and growing volume and margin across all our operations. We are going to be very focused on consumer occasions and to go deeper in those occasions and satisfy consumers in different places, times, with our multi-category portfolio, which is something that we really believe that is very strong. The second one is operational synergies. We will reach greater productivity and efficiencies, leveraging our multi-category strengths and the reduction of redundancies. We are looking for the whole company.

Speaker #3: Which is not mean that we haven't had focus on business, but we will strengthen our focus in our businesses separating on differentiating our core businesses with our high potential businesses.

Speaker #3: We are going to go deep in our multi-category strategy with focus on each single category. Leaving distinct consumption occasions and growing volume and margin across all our operations.

Speaker #3: We are going to be very focused on consumer occasions and to go deeper in those occasions and satisfy consumers different in different places, times, with our multi-category portfolio, which is something that we really believe that is is is very strong.

Speaker #3: The second one is operational synergies. We will get we will we will reach greater productivity and efficiencies leveraging our multi-category strengths and the reduction of redundancies.

Speaker #3: We are looking for the whole company. We we have done a first single act like synergy in wines and and and liquors in especially in the domestic in the domestic Chilean market.

Eduardo Ffrench-Davis: We have done a first single act like synergy in wines and light liquors, especially in the domestic Chilean market. We have several more things to come in order to get more synergies, leveraging our multi-category spirits and vocation. The third one is agility. We will implement a greater autonomy to respond to the market. We are living in a very volatile market with accelerated changes, and we want to be more agile in order to respond those changes. Less operational friction, we have called peajes or tollbooth, and a real-time control in our operation with leaner and more connected structures. The fourth one is transformation. We are doing some transformation, especially with digital tools in sales, for example, with Goospeed in our logistic and planning, integrating new tools, structures, and processes, and in industrial in our facilities as well.

Speaker #3: But we we have several more things to come in order to get more synergies leveraging our multi-category spirits and vocation. The third one is agility.

Speaker #3: We will implement greater autonomy to respond to the market. We are living in a very volatile market with accelerated changes, and we want to be more agile in order to respond to those changes.

Speaker #3: Less operational friction. We have what we call peajes or turbo, and a real-time control in our operations with linear and more connected structures. And the fourth one is transformation.

Speaker #3: We have been very—we are doing some transformation, especially with digital tools in sales, for example, with Cuspide in our logistics and planning. We are integrating new tools, people's tools, structures, and processes.

Speaker #3: And in industrial in our facilities as well. But we will go deep on that with an architecture based on a new processes and technologies putting the digital transformation as the number one enabler of synergies and mainly growth.

Eduardo Ffrench-Davis: We will go deep on that with an architecture based on new processes and technologies, putting the digital transformation as the number one enabler of synergies and mainly growth. That is answering your first question, Fernando. Obviously, more is coming on our strategic plan, and for sure, I cannot say it anymore. This is the main mindset that we are creating in order to have a new strategic plan focused on profitable growth based on our main capabilities. The second question is about the per capita consumption or volumes trends in Chile. Of course, we received the IMACEC yesterday, actually, and it was a good thing. Obviously, we cannot say that as a country, we are ready to grow as we have done in the past. We still believe that our categories are facing a new trend.

Speaker #3: So that's it. It's it's answering your first question, Fernando. Obviously, more more is coming on in our strategic plan and for sure I cannot I cannot say it anymore.

Speaker #3: But this is the main mindset that we are creating in order to have a new strategic plan focused on profitable growth, based on our main capabilities.

Speaker #3: The second the second question is about per capita consumption or or or volumes trends in in Chile. Of course, we we receive the IMASEC yes yesterday actually and was a good a good thing.

Speaker #3: But obviously, we cannot say that we are as a country we are ready to to grow as we as we have done in the past.

Speaker #3: But we still believe that with our categories are facing a new a new a new trend. For sure, we cannot avoid the the downtrend the downtrend rate that we are facing with alcohol.

Eduardo Ffrench-Davis: For sure, we cannot avoid the downtrend rate that we are facing with alcohol. We believe that our categories, with innovation and certain things, we can turn around that situation. The wine situation is basically a global one, but we have seen some early stages of early green grass with, for example, Bliss. It's ready-to-drink products. We launched our new wines, ready-to-drink products, I don't know, 1 month ago, and it has been very successful. We believe that we can turn around this alcohol downtrend in the domestic market. On the non-alcoholic business, as I mentioned before, we see that our portfolio, better-for-you portfolio, based on waters, flavored waters, juices and nectars, and functional, we are number 1 in all of those categories.

Speaker #3: But we believe that our categories with innovation and with certain things we can turn around that that situation. The wine situation is is basically it's a global one.

Speaker #3: But we have seen some early early stages of early green how do you say this? Green green grass with, for example, bliss. It's ready to bring products we launched our new wines ready to drink products.

Speaker #3: I don't know one month ago. And it has been very very successful. So we believe that we can turn around this alcohol downtrade in the domestic market.

Speaker #3: And on the non-alcoholic business, as as I mentioned before, we see that our portfolio better for you portfolio based on waters, flavored waters, juices and nectars and functional.

Speaker #3: We we are number one in all of those categories. We we believe that we'll continue growing integrating new consumer occasions and satisfying consumer needs that are eager for more alternatives and not only based on CSDs.

Eduardo Ffrench-Davis: We believe that we'll continue growing, integrating new consumer occasions, and satisfying consumer needs that are eager for more alternatives, and not only based on CSDs. We believe that in terms of per capita consumption, will be a H2 in order to see how the economy is turning around in a positive way. We believe that our portfolio is prepared to turn around the situations that we face on the H1.

Speaker #3: So we believe that in terms of per capita consumption will be a will be a second semester in order to see how the economy is turning turning around in a positive way but we believe that our portfolio it's it's prepared to turn around the situations that we face on the first semester.

Speaker #2: There's another text report.

Felipe Duverne: Let's move on tax reform.

Speaker #3: That let me complement what Eduardo has said regarding tax reform. I think it's a good news for the country the approval of the new tax reform reducing corporate taxes in in Chile.

Eduardo Ffrench-Davis: Yeah.

Felipe Duverne: Let me complement what Eduardo has said regarding tax reform. I think it's good news for the country, the approval of the new tax reform, reducing corporate taxes in Chile. When will this come to more consumption is something that we cannot predict. However, in the long term, it's good news for the country to boost investment in the country, to boost employment. Of course, this could boost the consumption for our products. As you know, there are many variables or many other inputs that are key for the level of consumptions. Okay, Fernando, thank you.

Speaker #3: This when will this come to more consumption is something that we cannot predict. But however, in the long term, it's a good news for the country to boost investment in the in the in the country to boost employment of of of course this could boost the consumption for our products.

Speaker #3: But as you know, there are many variables, or many, many other inputs that are key for the level of consumption. Okay, Fernando, thank you.

Speaker #1: Okay. Thank you both for the answer.

Fernando Olvera: Okay. Thank you both for the answer.

Speaker #4: Thank you so much. Our next question comes from Felipe U. Cruz from Scotiabank. Your line is open. Please go ahead.

Operator 2: Thank you so much. Our next question comes from Felipe Azócar from Scotiabank. Your line is open. Please go ahead.

Speaker #2: Thanks, operator. And good afternoon, Eduardo, Felipe, and team. Thanks for the space. Eduardo, well, congrats on the new role. Great to meet you. Perhaps a few follow-ups on the new strategy and the upcoming midterm plan that that you're still working on.

Felipe Azócar: Thanks, operator, and good afternoon, Eduardo, Felipe, and team. Thanks for the space. Eduardo, congrats on the new role. Great to meet you. Perhaps a few follow-ups on the new strategy and the upcoming midterm plan that you're still working on. I realize that you're still working on the plan, so it's probably a little too early to have definitive answers on this, but perhaps you can give us some initial thoughts on three things that I'm curious about. The first one is hedging. CCU has stood out within the publicly traded industry as one of the only companies that doesn't hedge, right? Just wondering if, within your strategy, there are any changes that you plan to make around this or perhaps bring to the board for potential changes.

Speaker #2: And I realize that you're still working on the plan, so it's probably a little too early to have definitive answers on this. But perhaps you can give us some initial thoughts on on on three things that I'm curious about.

Speaker #2: The first one is is hedging. CCU has stood out within the the the publicly traded industry as one of the only companies that doesn't hedge, right?

Speaker #2: And there's some chatter in the market that this generates different pricing needs than your competitors. So just wondering if within your your strategy there are any changes that you plan to make around this or or or perhaps bring to the board for potential changes.

Speaker #2: The second side is is wine. Obviously, it seems like you're already doing some restructuring there and you're you're innovating quite a bit. But wondering if there's like a bigger transformation around the approach and the strategy that you guys have had towards the wine segment.

Felipe Azócar: The second side is wine. Obviously, it seems like you're already doing some restructuring there and you're innovating quite a bit. Wondering if there's a bigger transformation around the approach and the strategy that you guys have had towards the wine segment. Perhaps whether you'll try to accelerate premiumization or any other things that you plan to change there. The last one is for Colombia, where you guys have had a decent performance this quarter. Just wondering if there are any changes that you plan on that side of the business. Thank you.

Speaker #2: Perhaps whether you're you're you'll try to accelerate minimization or any other things that that you plan to change there. And then the last one is is for Colombia.

Speaker #2: Will you guys have had a decent performance this quarter? Just wondering if if there are any changes that you plan on on that side of the business.

Speaker #2: Thank you.

Eduardo Ffrench-Davis: Hi, Felipe. Thank you for your question. Three main questions. I will pass the first one to Felipe Duverne, and the second one and third one, I'm going to respond directly.

Speaker #3: Hi, Felipe. Thank you for for your for your question. Three main questions. I will pass the first one to Felipe Duvernay and the second one and third one I I'm going to respond directly.

Speaker #5: Hello, Felipe. How are you?

Felipe Duverne: Hello, Felipe. How are you? Now, our policy regarding hedging of commodities for exchange rate remain unchanged. This is a policy that is reviewed every year by the board of CCU, but as of today, remain unchanged. Now Eduardo will answer you the question regarding the two important business of wine and Colombia.

Speaker #3: No. Our policy regarding hedging of commodities, for exchange rate, remain unchanged. This is a policy that is reviewed every year by the board of CCU.

Speaker #3: But as of today, remain unchanged. So now, Eduardo will answer you the the question regarding the two important business as wine and Colombia.

Speaker #5: Yeah. The the regarding wine, for sure we are facing a an important trend globally. We are we are an important player in Chile, for sure.

Eduardo Ffrench-Davis: Yeah. Regarding wine, for sure, we are facing an important trend globally. We are an important player in Chile, for sure, but at the same time, we're important player outside in the export. We are doing, I think, two main things. The third one is not only integrating liquors, which we have an important ammunition or power in Chile with the wines in order to get synergies, but also we are doing this in order to fulfill consumer needs that we believe that are coming together. Today, the consumer is not only choosing product by product, it's choosing based on consumer occasions. We believe that together in Chile, with a portfolio combining wines and spirits, we can satisfy better to our consumer and for sure increase volumes due that strategy. In terms of global export, we are focusing our main capabilities on VSPT, on exports.

Speaker #5: But and and at the same time, we are an important player outside in the export. So we are doing I think two main things.

Speaker #5: The the third one is not only integrating liquors, which which we have an important ammunition or power in Chile with the wines, in order to get synergies.

Speaker #5: But also, we are doing this in order to fulfill consumer needs that we believe are coming together. Today, the consumer is not only choosing product by product; they're choosing based on consumer occasions.

Speaker #5: And we believe that together in Chile, with a portfolio combining wines and spirits, we can better satisfy our consumers and, for sure, increase volumes with that strategy.

Speaker #5: In terms of global export, we are focusing our main capabilities on BSPT, on exports, on on exports. Increase our our footprint outside, getting more markets within the within the company, and basically strengthen our position in terms of production, getting synergies and efficiencies from from there.

Eduardo Ffrench-Davis: Increase our footprint outside, getting more markets within the company, and basically strengthen our position in terms of production, getting synergies and efficiencies from there. We are adjusting some places, some pieces. For sure, we are facing a very important global trend, but we believe that we can start turning around that situation with this strategy. For sure, we have to see how it evolves, but we are taking decisions around that business now. In Colombia, we still believe that we have a plenty of space to grow over there. Colombia is an interesting country. It's facing a change in its government now. For sure, we are living a very good momentum in Colombia. We are double-digit growth with beer and Malta over there.

Speaker #5: So we believe that wine could we we are adjusting some some place some some pieces, for sure we are facing a a very a very important global trend.

Speaker #5: But we believe that we can we can starting turning around that situation with this with this with this strategy. For sure we have we have to see how it how it evolves.

Speaker #5: But we are taking decisions around that that business now. In Colombia, we still believe that we have a very very important or plenty of of of of space to growth over there.

Speaker #5: Colombia is an interesting country. It's facing a change in in in in his government now. For sure it's leaving a we are leaving a very very good good momentum in Colombia.

Speaker #5: We are double digit growth with a with with beer and a and Malta over there. And we are plenty of innovation and a new strategy setting up to Colombia in order to get more of this this this country.

Eduardo Ffrench-Davis: We have plenty of innovation and a new strategy setting up to Colombia in order to get more of this country. Colombia for us in this strategy, Vamos por Más, is a core country for us. We are there to grow, and we are there to win some battles. We are going to strengthen our position in Colombia, and we believe that we can create momentum of continuing the momentum that we are facing.

Speaker #5: Colombia for us in this strategy, vamos for for más, is a core country for us. We are there to grow and we are there to win some some battles.

Speaker #5: So we are going to strain our position in Colombia and we believe that we can we can create momentum of continue the momentum that we are facing on that latitude.

Speaker #2: Great. For that caller, maybe if I can do one follow-up on the cost of wine. Less less strategic, but you did mention that the cost of wine had increased.

Felipe Azócar: Great for that color. Maybe if I can do one follow-up on the cost of wine. Less strategic, but you did mention that the cost of wine had increased, and I thought that stood out in stark contrast to what Concha y Toro reported, where they're having much lower cost of wine and a very strong harvest. Just wondering why you think there's a difference. Perhaps it has to do with the regions, different climate in different regions, maybe with the suppliers of grapes that you guys use. Just wondering if you can comment a little about that differential. Thank you.

Speaker #2: And I I thought that kind of stood out and and stark contrast to what Ponte Toro reported, where they're having much lower cost of wine and a very strong harvest.

Speaker #2: So just just wondering why you think there's a difference, perhaps it has to do with the regions, different climate in different regions, maybe what the suppliers are of grapes that you guys use.

Speaker #2: Just wondering if you can comment a little about that that differential. Thank you.

Eduardo Ffrench-Davis: I pass this question. Thank you, Felipe, for the follow-up question. I pass this to Felipe Duverne.

Speaker #3: I pass this question. Thank you, Felipe, for the follow-up following up question. I pass these to Felipe Duvernay.

Speaker #5: Okay. Yes, Felipe. Regarding the wine cost, as you know, this year we are facing a particularly unfavorable input cost in terms of wine cost in our P&L.

Felipe Duverne: Okay. Yes, Felipe. Regarding the wine cost, as you know, this year, we are facing a particularly unfavorable input cost in terms of wine cost in our P&L as the whole industry. As you mentioned, a competitor also, we have had a positive wine harvest this year. That will reduce, going forward, our cost of wine, as we reduce, of course, inventory levels that are depending on how we evolve in the volumes. We see in a business that is suffering a lot, not only in consumption, but also in the input cost side, in the exchange rate side for our export business, this year a lot. At least we are seeing some green grass in the horizon now with the input cost of wine going forward. As I said, will depend on how we deplete our inventories going forward.

Speaker #5: As the whole industry, as you mentioned, and as you mentioned a competitor also, we have had a positive wine harvest this year. That will reduce, going forward, our cost of wine.

Speaker #5: As we reduce, of course, inventory levels, that are depending on how we evolve in the in the in the volumes. So we see in a in a business that is suffering a lot, not only in consumption, but also in the input cost side, in the exchange rate side for our export business, this year a lot.

Speaker #5: So at least we are we are seeing some green grass in the horizon now with the the input cost of wine going forward. But as I said, we depend on how we deplete our inventories going forward.

Speaker #2: Yeah. Very clear. Thanks for that caller.

Felipe Azócar: Very clear. Thanks for that call.

Speaker #1: Thank you very much. Our next question comes from Tiago Bertolucci from Goldman Sachs. Your line is open. Please go ahead.

Operator 2: Thank you very much. Our next question comes from Tiago Bortoluci from Goldman Sachs. Your line is open. Please go ahead.

Speaker #4: Yes. Thank you very much, operator. Good afternoon everyone. Hola, Eduardo, Felipe, Claudio. Eduardo, first of all, congrats on the new role. Wishing you the best of luck and wishing to continue the conversation with you.

Tiago Bortoluci: Yes. Thank you very much, operator. Good afternoon, everyone. Hola, Eduardo, Felipe, Claudio. Eduardo, first of all, congrats on the new role. Wishing you the best of luck and wishing to continue the conversation with you. Thank you for the opportunity to ask questions. I think my very only one question is for you, Eduardo. Once you take the CEO role and evaluate the situation in Chile more broadly, how satisfied would you say you are with the price points and price sensitivities, price relativities in each of the categories in Chile? Related to this, how should inflation and oil prices particularly impact your pricing decisions, particularly for H2? I know you have already implemented a price adjustment.

Speaker #4: Thank you for the opportunity to ask questions. And I think my my my my very own one question is for you. Eduardo, once you take the CEO role and evaluate the situation in Chile, more broadly, how satisfied would you say you are with the price points and price sensitivities, price relativities in each of the categories, in Chile?

Speaker #4: And do you think there is any particular segment that needs a more focused, targeted shift, or a strategic pivot in the next six months?

Speaker #4: And related to this, how should inflation and oil prices particularly impact your pricing decisions, particularly for the second half of the year?

Speaker #4: I know you have already implemented a price adjustment. How much of your underlying cost inflation is covered by this? Thank you very much.

Tiago Bortoluci: How much of your underlying cost inflation is covered with this? Thank you very much.

Speaker #5: Hi, Tiago. Thank you for for your message and and for and for your questions. Well, as you as you see in the presentation, we we have a very strong results in Chile.

Eduardo Ffrench-Davis: Hi, Tiago. Thank you for your message and for your questions. Well, as you see in the presentation, we have very strong results in Chile. Chile, mainly through the different categories, keeping our momentum and in market share with the beer category and improving our prices and the excellent development of non-alcoholic business, improving our market shares and improving our prices. We are facing a very good position regarding H2. In that terms, obviously, there are always opportunities in terms of pricing. Consumers are less willing now to take list prices, as we have done, several companies have done in the past. New technologies and new studies we have to put in place. In our new strategy, revenue growth management has an important role in our strategy.

Speaker #5: Chile mainly through the different categories from from the two categories. Keeping our momentum and in market share with the beer category and improving our prices, and the excellent development of non-alcoholic business, improving our market shares and and improving our our our prices, we are facing a a very good position regarding the the the second semester.

Speaker #5: In that terms, obviously, there are always opportunities in terms in terms of of pricing, consumers are are less willing now to take least prices, increase on least prices as we have done in in several company have done in the past.

Speaker #5: So new technologies and new studies are are have we have to put it in place. So in our new strategy, revenue growth management is is is a is a important has an important role in our strategy.

Speaker #5: Obviously, revenue growth management is is a is a huge area that we have we can go deep dive, but there are several initiatives, like for example, let me bring an example, the TPO initiatives, trade promotion optimization within the modern trade, and several and and use of algorithm algorithms.

Eduardo Ffrench-Davis: Obviously, revenue growth management is a huge area that we can go deep dive, but there are several initiatives, like, for example, the TPO initiatives, trade promotion optimization within the modern trade and use of algorithms. We have a proprietary algorithms called Sales, which is helping us, our revenue growth management in traditional trade that we can help us to drive price without hitting the consumers and hitting all the places and SKUs at the same time. Technology, processes, and intelligent based on algorithms will help us to improve our mix, not only driven by prices, but also driven by channel and format or pack types mixture. I am confident that we have done a very good job on prices within H1, and we will continue with new tools doing a greater job on H2.

Speaker #5: We have a proprietary algorithms called SEOS, which is helping us our our revenue growth management in traditional trade that we have we can help us to drive price without hitting the consumers and and hitting all the places at the same places and SKUs at the same time.

Speaker #5: So technology, processes, and intelligence based on algorithms will help us to improve our mix, not only driven by prices, but also driven by channel and format or pack type mixes.

Speaker #5: So I am confident that we have done a very good job on prices within the first semester, and we will continue with new tools, doing a greater job in the second one.

Speaker #4: It's helpful. Thank you very much.

Tiago Bortoluci: This is helpful. Thank you very much.

Speaker #1: Thank you very much. Our next question comes from Álvaro García from BTG Petrol. Your line is open. Please go ahead. Mr. Álvaro, your line is open.

Operator 2: Thank you very much. Our next question comes from Álvaro García from BTG Pactual. Your line is open. Please go ahead. Mr. Álvaro, your line is open. Please go ahead.

Speaker #1: Please go ahead.

Speaker #3: Can you hear me?

Álvaro García: Can you hear me?

Speaker #1: Yes, we can.

Operator 2: Yes, we can.

Speaker #3: Okay. Sorry about that. I hi, Eduardo, Felipe, Eduardo. Congrats on on the new role. I I have a question on the Nestlé transaction, the water transaction in Chile.

Álvaro García: Okay. Sorry about that. Hi, Eduardo, Felipe. Eduardo, congrats on the new role. I have a question on the Nestlé transaction, the water transaction in Chile. It's pretty hefty transaction from a financial standpoint. I'm wondering how you're thinking about leverage heading into 2027, how you're thinking about the dividends into 2027. That's one aspect of the question, the other is sort of whether it changes the operating model for that business specifically. I'm guessing the answer is no, maybe on brands, maybe does 100% ownership, does that give you more flexibility on brand strategy in water specifically? If you could speak to any specific changes on the back of that transaction. Thank you.

Speaker #3: One, I mean, it's a pretty hefty transaction from a financial standpoint. So I'm wondering if that's how you're thinking about leveraging heading into 2027, and how you're thinking about the dividends into 2027.

Speaker #3: So that's one aspect of the question. But the other is sort of whether it changed changes the operating model for that business specifically. I'm guessing the answer is no, but but maybe on brands, maybe does like 100 100% ownership, does that give you more flexibility on brand strategy in water specifically?

Speaker #3: So, if you could speak to any specific changes on the back of that transaction. Thank you.

Speaker #5: Hi, Álvaro. Thank you for for your message and and regarding that question, let me let me let me answer it with a with a strategy.

Eduardo Ffrench-Davis: Hi, Álvaro. Thank you for your message. Regarding that question, let me answer it with the strategy. As you know, the water business is growing a lot. Within the water business, we have different kind of products. We have mineral waters, which satisfy certain part of the consumers, purified waters, which compete directly with tap water, actually, and flavored waters. Our strategy remain the same, with this acquisition, we are going to strengthen certain part of that strategy. We will continue creating momentum with Cachantun as a number 1 mineral water within the country. As you may notice, we have launched several innovations with Cachantun Strong Gas, the black one. It has been very successful, not only competing against water business, also getting momentum and getting consumer occasions from CSDs, which is something that is very interesting in terms of the water penetration.

Speaker #5: As as as you as you know, the water business is is is growing a lot and and within the water business, we have different kind of products.

Speaker #5: We have mineral waters, which satisfy a certain part of the consumers, purified waters, which compete directly with tap water, actually, and flavored waters.

Speaker #5: Our strategy remained the same but with this adquisition, we are going to strength certain part of that strategy. We will continue creating momentum with Catantun as a number one mineral water within the country.

Speaker #5: As you as you may notice, we have launched several innovations with Catantun, strongest Catantun, the black one is has been a very very successful not only competing against water, water business, but also getting momentum and getting consumer occasions from CSDs, which is something that is very is very interesting in terms of the water water penetration.

Speaker #5: Within the so we will continue with that. With regarding the flavored water, you have seen that flavors are growing different SKU are growing, different pack types or or PPA strategy, PPA strategies are are are getting momentum as well.

Eduardo Ffrench-Davis: We will continue with that. Regarding the flavor water, you have seen that flavors are growing, different SKUs are growing, different pack types or PPA strategies are getting momentum as well. We have launched several innovations, especially with gas. They are creating, again, an important growth coming from different categories and not only coming from the water categories. Finally, purified water, we switch our strategy from Nestlé Pura Vida, Nestlé Pure Life, which was a license fee coming from Nestlé, to our Manantial brand. Manantial has done a very great job. Now we are incrementing our market share in a sustainable manner and with strong numbers against our competitors, and at the same time, taking volumes from tap water, which is, in Chile at least, is a huge undercover market.

Speaker #5: We have launched several innovations, especially with gas and and and they are creating again an important growth coming from different categories and not only coming from the water categories.

Speaker #5: And finally, purified water purified water, we have been we we switch our strategy from Nestlé Pura Vida, Nestlé Pure Life, which was a a a license fee coming from Nestlé to our Manantial brand.

Speaker #5: And Manantial has has done a very very great job now. We are we are incrementing our market share in a sustainability matter and and with a strong numbers against our competitors.

Speaker #5: And at the same time, taking volumes from tap water, which is, in Chile at least, a huge, huge undercover market. So we believe that with this acquisition, we will strengthen our— we will make our decisions around the water business more agile, and we will be able to focus on growth.

Eduardo Ffrench-Davis: We believe that with this acquisition, we will make more agile our decisions around the water business, and we will on growth. Regarding leverage questions, I will pass the question to Felipe Duverne.

Speaker #5: Regarding leverage questions, I will pass the question to Felipe.

Speaker #2: Hello. How are you, Álvaro? Yeah. The leverage as as you noticed increased from 1.7 last quarter to 2.4 this quarter. This is due because we used the cash we had on hand that is came from the issuance of the 1.4 international bond within 2022.

Felipe Duverne: Hello, how are you, Álvaro? The leverage, as you know, this increased from 1.7 last quarter to 2.4 this quarter. This is due because we used the cash we had on hand, that it came from the issuance of the CLP 1.4 international bond within 2022. It was very good proceed of the money, this acquisition, because it's accredited on the one hand. It would further enhance our net income going forward, as we will have 100% net income from this business. Going forward, at the end, if we could see a recovery going forward in Argentina, that has a terrible H2 on last year, and the growth on strong results we are delivering in Chile, we should converge towards the middle of the range that we have defined between 1.5x, 2.5x net financial debt EBITDA going forward.

Speaker #2: So it was very good proceed of the of the money this acquisition because it's accredited on the one hand. So it would enhance further enhance our net income going forward as as we'll have a 100% a 100% net income from from this business.

Speaker #2: So going forward at the end, as we see if if we could see a recovery going forward in Argentina, that has a terrible second half on on on last year.

Speaker #2: And the growth or the strong results we are delivering in Chile we should converge towards the middle of the range that we have defined between 1.5, 2.5 net financial debt EBITDA going forward.

Speaker #2: So certainly in quarter four or not certainly, but we look that with good perspective on reducing the leverage. Regarding dividend policy, as maybe you know and is in the financial statement, the policy in CCU is to distribute at least 50% of net income.

Felipe Duverne: Certainly in Q4, or not certainly, but we look with good perspective on reducing the leverage. Regarding dividend policy, as maybe you know and it's in the financial statement, the policy in CCU is to distribute at least 50% of net income, and this is maintained in this coming exercise or coming in this year. For 2027, we need to wait until the shareholder meeting, which is typically in April, if these policies change or not. The policy remains the same, to distribute 50% of the net income, at least.

Speaker #2: And this is maintained in this coming exercise or coming coming in this year. For 2027, we need to wait until the shareholder meeting, which is typically in April if this policies es change or not.

Speaker #2: But the policy remained the same. To distribute 50% of the net income. At least.

Speaker #3: Great. Wonderful. Thank you very much.

Álvaro García: Great. Wonderful. Thank you very much.

Speaker #1: Thank you very much. Our next question comes from Rodrigo Alcantara from UBS. Your line is open. Please go ahead.

Operator 2: Thank you very much. Our next question comes from Rodrigo Alcantara from UBS. Your line is open. Please go ahead.

Speaker #6: Good afternoon. Guys, thanks for taking my my my question. Just want to touch basis again on on Argentina. I guess the the the answer was very clear, right, from from a macro perspective.

Rodrigo Alcantara: Good afternoon. Guys, thanks for taking my question. Just want to touch base again on Argentina. I guess the answer was very clear from a macro perspective and totally get it. It is hard for us to predict what to expect in the H2. Still was not clear for me the share performance when you look at your number and other brewers. Just wonder if you can help me understand what you attribute this share performance we observed during the quarter, specifically in beer. If you can give us granularity on the portfolio, the brands, Heineken portfolio, and your own brands. What are you planning to do in order to revert that share-wise again into the H2?

Speaker #6: I'm totally get it. It's it's hard for us to to predict, right, what what to expect in the second half. Still, it was not a clear for me the share the share performance, right, when when when when look at your number and and and other brewers, right, just wonder if you can help me understand what you attribute this share performance we observe during the quarter, specifically in beer, right?

Speaker #6: If you can give us granularity on the portfolio, the brands, Heineken portfolio and your own brands and and what are you planning to to to do in order to revert that share-wise again in into the second half in in very quickly, would be on on to when and and and when to expect, right, the the launch of of Heineken Ultimate if any following the launching in Brazil if if we defer to some anytime soon could be in Argentina as well.

Rachel Smith: Very quickly, would be on to when to expect the launch of Heineken Ultimate, if any, following the launch in Brazil, if would be far too soon, anytime soon could be in Argentina as well. Those would be my questions. Thank you.

Speaker #6: Those would be my questions. Thank you.

Speaker #5: Hi, Rodrigo. Eduardo, thank you for your for your both both questions. The first one regarding the market share in Argentina, well, we we our numbers we have a Nielsen numbers and and we see our market share in Argentina year to date very growing a little bit, but but but but flat in that terms.

Eduardo Ffrench-Davis: Hi, Rodrigo. Álvaro, thank you for your both questions. The first one regarding the market share in Argentina. Well, our numbers, we have our Nielsen numbers, and we see our market share in Argentina year to date very

Eduardo Ffrench-Davis: Growing a little bit, but flat in that terms. For sure, we are eager for more, as we are used to saying, and we believe that our new strategy that we are trying to put in place in Argentina for the next year will get a little bit more market share. We have a very strong national brands, but also we have a very interesting local brands in Argentina that they are doing or could be do a greater job region by region. At least our numbers say that we are stable in terms of market share in Argentina, and actually gaining a little bit on value market share comparing the volume market share, because as Felipe mentioned in the presentation, we have done several price increase during the last quarter. Regarding the Heineken Ultimate, for sure we have a very strong pipeline in terms of innovation.

Speaker #5: For sure, we are eager for for more as as we are certainly saying and we believe that our new strategy that we are trying to put in place in Argentina for the for the next year will will get more a little bit more market share.

Speaker #5: We have very strong national brands, but also we have very interesting local brands in Argentina that are doing, or could be doing, a great job region by region.

Speaker #5: So at least our numbers say that we are stable in terms of market share in Argentina, and actually gaining a little bit on value market share compared to the volume market share. Because as Felipe mentioned in the presentation, we have done several price increases during the last quarter.

Speaker #5: Regarding the Heineken Ultimate, for sure we have a a very strong pipeline in terms of innovation. Heineken Ultimate is trying to reach consumer occasions that that that are not satisfied by the the typical normal beer products that are in the in the market in Brazil is is doing a great job and we are seeing to integrate that innovation in in several operations within our our our business in CCU, not only in Argentina but but in other places as well.

Eduardo Ffrench-Davis: Heineken Ultimate is trying to reach consumer occasions that are not satisfied by the typical normal beer products that are in the market. In Brazil, it is doing a great job, and we are seeing to integrate that innovation in several operations within our businesses. You see, not only in Argentina, but in other places as well. News are coming soon.

Speaker #5: So, news are coming soon.

Speaker #6: Excellent. Thank you. Thank you, guys.

Rodrigo Alcantara: Excellent. Thank you. Thank you, guys.

Speaker #1: Thank you very much. Our next question comes from Maria Paula Aroa from Nestlé. Your line is open. Please go ahead. Maria, your line is open.

Operator 2: Thank you very much. Our next question comes from Maria Paula Arua from Nestlé. Your line is open. Please go ahead. Maria, your line is open.

Speaker #7: Hello. Hello.

Maria Paula Arua: Hello? Hello?

Operator 2: Hi, I can hear you.

Speaker #1: Hi, I can hear you.

Speaker #7: So I've got two questions about the Colombian market. And the first one is, is the current expectation for Colombia to continue delivering made things grow or are we or are there any anticipated changes to the growth trajectory moving forward?

Maria Paula Arua: I've got two questions about the Colombian market. The first one is: Is the current expectation for Colombia to continue delivering mid-teens growth, or are there any anticipated changes to the growth trajectory moving forward? The second one is, as part of the Vamos por Más strategy, that is Colombia one of the core countries, and this strategy aims to deliver higher quality and more profitable growth. Should we expect Colombia to continue relying primarily on the value segment as the growth driver, or will there be a stronger strategy focused on premium brands moving forward?

Speaker #7: And the second one, is as part of the vamos por más strategy, that is Colombia one of the core countries, and this strategy aims to deliver higher quality and more profitable growth, should we expect Colombia to continue relying primarily on the value segment as the growth driver or will there be a stronger strategy focus on premium brands moving forward?

Speaker #5: Hi, Maria. Thank you for for your for the two questions. Regarding the first one, for sure is is is difficult now to to predict is it has always been difficult to predict the future, but now in Colombia is more difficult because government are are changing.

Eduardo Ffrench-Davis: Hi, Maria. Thank you for the two questions. Regarding the first one, for sure it's difficult now to predict. It has always been difficult to predict the future, but now in Colombia it's more difficult because governments are changing. We will see how is this new government set up in Colombia. Regarding that, Colombia is definitely a place that we believe that we have plenty space for growth. We truly believe in that market. We have been there. Obviously, we have a furious competition over there, but we believe that we have built a strong brands and certain parts of Colombia, we are doing really well, for example, in Cartagena. We believe in Colombia. We don't know if the market, the industry, will grow at the same pace that we have done in this last quarter, but we believe in to increase our competitive position over there.

Speaker #5: So we we will see how is this this new government set up in in in Colombia. Regarding of that, Colombia is is definitely a place that we believe that we have plenty plenty space for growth.

Speaker #5: We we truly believe in that market. We have been there obviously we have a a furious competition over there, but we believe that we have we have built a a strong brands and and certain parts of Colombia we are doing really really well.

Speaker #5: For example, in Cartagena. So we believe we still believe we believe in Colombia we don't know if the market the industry will grow at the same pace that we have done in this last quarter, but we believe in to increase our competitive position over there.

Speaker #5: In terms of our portfolio, Colombia is a very mainstream mainstream portfolio compare other regions or other countries within Latin America. And and it's dominated by by our competitor over there, so we believe that the the way that we can improve our profitability over there is to is to compete asymmetric with a with a with a different portfolio.

Eduardo Ffrench-Davis: In terms of our portfolio, Colombia is a very mainstream portfolio compared other regions or other countries within Latin America, and it's dominated by our competitor over there. We believe that the way that we can improve our profitability over there is to compete asymmetric with a different portfolio. We will increase our portfolio in terms of different brands, sell in different places, and trying to reach profitability with that strategy on the future.

Speaker #5: So we will increase our portfolio in terms of different brands, setting different places and and and trying to reach profitability what that with that strategy on on the future.

Speaker #1: Thank you so much. Our next question comes from Kevin Zavala from UBS. Your line is open. Please go ahead.

Operator 2: Thank you so much. Our next question comes from Kevin Zavala from UBS. Your line is open. Please go ahead.

Kevin Zavala: Hello, Eduardo, Felipe, Claudio, thanks for the space. Just one to question regarding distribution expenses. This quarter remain a source of pressure despite some efficient initiatives already underway. If you could explain which components are driving the increase, such as fuel, labor, fleet utilization, et cetera. In relation with that, which business process are the first targets for your digital investment? I would like to hear from you, where do you expect the most tangible benefits, whether either sales effectiveness, demand forecasting, procurement, manufacturing, logistics, from this investment in digital? Thank you.

Speaker #8: Hello. Eduardo, Felipe, Claudio, thanks for for this space. Just just want to to question regarding distribution expenses. You know, this quarter remained a source of pressure despite some efficient initiatives already underway.

Speaker #8: So if you could explain which components are driving the increase, such as fuel, labor, fleet, utilization, et cetera, and and in relation with that, I mean, which business process are the the first targets for your digital and investment?

Speaker #8: And I would like to hear from you, what do you expect the most tangible benefits to be, whether in procurement, manufacturing, or logistics, from this investment in digital?

Speaker #8: Thank you.

Speaker #5: Awesome. Okay. Okay. Hello, Kevin. We had some problem with the system here, but we solved it. So, I'm Felipe, and I will take your first question.

Felipe Duverne: Hello, Kevin. We have some problems with the system here, but we solve it. I'm Felipe. I will take your first question. We have some noise problems, but I think you were wondering about how oil and distribution expenses are impacting our P&L. I will take this part of the question. The second part, regarding the future, Eduardo will take it. As you notice, we build a KPI that is total expenses. It does include production cost, distribution cost, or MSD&A as a whole. Despite the higher distribution cost, because of oil pressures we had, we have been able to reduce our overall expenses over net sale by 56 basis points as in a consolidated basis, which is very good, and keep our expenses below Chilean inflation, 3.8%. Chilean inflation in the period is 4.2%.

Speaker #5: We have some noise problems, but I think you were wondering about how oil and distribution expenses are impacting our P&L. So I will take this part of the question.

Speaker #5: The second part, regarding the future, Eduardo will take it. So, have you noticed we build a KPI that is expenses—is total expenses?

Speaker #5: Does it include production cost, distribution cost, or MS and DNA as a whole? So, despite the higher distribution cost, because of oil pressures we had, we have been able to reduce our overall expenses over net sales by 56 basis points on a consolidated basis, which is very good.

Speaker #5: And keep our expenses below inflation. Cheating inflation, 3.8%. Inflation in the period is 4.2%. In my view, this is good because at the same time, we were investing more, especially in Chile, behind our brands.

Felipe Duverne: In my view, this is good, because at the same time, we were investing more, especially in Chile, behind our brands. This building the future. At the end, having this external pressure of oil and distribution costs on the one side, but on the other side, higher level of inflation, but on the other side, being able to invest more for the future for our brands, I think is the perfect equation for a company like us. This was particularly good this quarter. If you look and we are implementing efficient initiatives in all key aspects of the business with good result, mostly in logistics. That, in his previous role, was led by Eduardo, as he was the head of the non-alcoholic business and the logistics in chief.

Speaker #5: That is building the future. So at the end, having this external pressure of oil in distribution cost on the one side, but on the other side, higher levels of inflation, but also being able to invest more for the future for our brands, I think is the perfect equation for a company like us.

Speaker #5: And this was particularly good this quarter. If if you if you look and we are implementing efficient initiative in all key aspect of the business with good result, mostly in logistic, not in his previous role was led by Eduardo as he was the head of the non-alcoholic business and the logistics in in in Chile.

Speaker #5: And also, I forgot to mention that we have restructuring costs in two businesses that are suffering, such as Argentina and the wine business.

Felipe Duverne: I forgot to mention that we have restructuring costs in businesses that are suffering, such as Argentina and the wine business. That if we exclude those effects, our total expenses on a consolidated basis will be around 3% growth. This is much less than inflation. I will pass to Eduardo. Looking at the future, we need to improve our margins, that's sure. Especially going towards our pre-pandemic margins that we had. This needs more efforts in terms of synergies and efficiencies. Eduardo will make a commentary on that.

Speaker #5: That if we exclude those those effects, our total expenses in consolidated basis will would will be around 3% growth. So this is much less than inflation.

Speaker #5: Of course, and then I will pass to Eduardo, looking at the future, we need to to to to to improve our margins. That's sure.

Speaker #5: Especially as we work towards returning to our pre-pandemic margins. This will require more effort in terms of synergies and efficiencies. So, Eduardo will comment on that.

Speaker #5: Mm-hmm. Thank you, Felipe. Yes, Kevin. Yeah. Of course, within the the new studies that we have presented as vamos por más transformation in this is a is a key pillar, not only for getting efficiencies and and improve our EBITDA margin, but also to be the fuel for or enabler for for growth, which is something that is for top line growth, which is something that this kind of business needs in order to be better stronger and and and with higher margin as well.

Eduardo Ffrench-Davis: Thank you, Felipe. Yes, Kevin. Of course, within the new strategy that we have presented, the Vamos por Más transformation is a key pillar, not only for getting efficiencies and improve our EBITDA margin, but also to be a fuel or enabler for growth, which is something that is for top line growth, which is something that this kind of business needs in order to be better, stronger, and with higher margin as well. The digital transformation, as Felipe has mentioned, has been very successful, not only with low-hanging fruits initiatives, but also some stage 1 initiatives. We have done it silo by silo now. The future, and the new structures that we are setting up, is going to integrate all the transformation activities. If I am making a transformation in logistics in order to improve our logistics system, it's not 100% connected with sales transformation.

Speaker #5: So the digital transformation, as Felipe has mentioned, has been very very successful. Not only with low hanging fruits initiatives, but also some some stage one initiatives but we have done it silos by silos now.

Speaker #5: The the future and the new structures that that we are setting up, it's going to integrate all the transformation activities because if I am making a transformation in logistics in order to improve our our logistic system, I not it's not 100% connected with sales transformation sometimes there are inefficiencies between them.

Eduardo Ffrench-Davis: Sometimes there are inefficiencies between them. The new structure and the new strategy, Vamos por Más, is going to integrate the end-to-end value change, and set an appropriate structure in order to get that transformation an end-to-end system, and also integrate IT and AI capabilities within that structure at the same time. We are going to be more agile and penetrate silos and be end-to-end in order to get that transformation. Of course, there are plenty of examples for that, but real-time control. Now, for example, control towers in logistics, planning, commercial, industrial are, for example, a key system that we are going to put in place in order to get real-time synergies. Because when you are managing, for example, an efficiency on a line, but you're looking back that numbers with 1 month, you cannot make the necessary adjustment to get the efficiencies on real time.

Speaker #5: So the new structure and the new strategy vamos por más is going to integrate the the end to end value change and set an appropriate structure in order to to get that transformation an end to end system and also integrate IT and AI capabilities within that structure at the same time.

Speaker #5: So we are we are going to be more agile and and penetrate silos and be end to end in order to get that transformation and for of course, there are plenty of of of examples for that, but real time control now, for example, control towers in in logistics planning, commercial, industrial are, for example, a key a key system that we are going to put in place in order to get real time synergies because when you are managing, for example, an efficiency on a line, but you are looking back that that numbers one month with one month, you cannot make the adjustment necess the necessary adjustment to get the efficiencies or real time.

Speaker #5: So just it's just an example. Obviously, more things to come, but but future is is is is an important or transformation, sorry, on the future is a key point of our strategy.

Eduardo Ffrench-Davis: It's just an example. Obviously, more things to come, but transformation, sorry, on the future is a key point of our strategy.

Speaker #4: Thank you.

Kevin Zavala: Thank you

Speaker #2: Thank you so much. I'm not seeing any more questions, so perhaps we can hand it back to the CCU team for the closing remarks.

Operator 2: Thank you so much. I'm not seeing any more questions, perhaps I can hand it back to the CCU team for the closing remarks.

Speaker #5: So thank you. Thank you all. Thank you, moderator. Thank you to all the people who have listened to this Q&A session and listened to the presentation.

Eduardo Ffrench-Davis: Thank you all. Thank you, Lorena. Thank you all the people who have listened to this Q&A session and listened to the presentation. Thank you for the people who have done the question itself. I am very optimistic and I'm very eager for more. In this new role in CCU, I've been here 20, 21 years. I born in this company, but I'm looking with several challenges and optimism the future. Finally, we have to navigate these current challenges and volatile businesses context and keep protecting CCU's future. We will act with more agility and more focus while delivering synergies and efficiencies across all our operating segments. Together with a strengthening of our portfolio to adapt to new consumer trends by growing in high margin innovation category is key for our plan.

Speaker #5: Thank you to the people who have done the question itself. I am very optimistic. I'm very eager for more. So, in this new role in CCU, I've been here since 2021.

Speaker #5: I've been—I was born in this company, but I'm looking at several challenges and with optimism for the future. So, finally, we have to navigate these current challenges and the volatile business context.

Speaker #5: And keep projecting CCU's future. We will act with more agility and more focus while delivering synergies and efficiencies across all our operating segments. Together, with a strengthening of our portfolio to adapt to new consumer trends, by growing in high-margin innovation categories, which is key for our plan.

Speaker #5: Working with collaboration, we will be prepared with the strength for our 2027 and 2013 strategic plan with more focus more synergies more agility and more transformation.

Eduardo Ffrench-Davis: Working with collaboration, we will be prepared with a strength for our 2027 and 2030 strategy plan with more focus, more synergies, more agility, and more transformation. Vamos por Más. Thank you very much for your attendance, and see you in the next chapter.

Speaker #5: Vamos por más. Thank you very much for your attendance, and see you in the next chapter.

Operator 2: This concludes the call for today. We are now closing all the lines. Thank you and have a nice day.