CCU - Earnings call transcript Q2 2021 | Compañía Cervecerías Unidas S.A.

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Claudio Las Heras

[Call Starts Abruptly] these statements should be taken in conjunction with the additional information about risks and uncertainties set forth in CCU’s annual report in Form 20-F filed with the U.S. Security and Exchange Commission and in the annual report submitted to the CMF and available on our website. It is my pleasure to introduce Patricio Jottar.

Patricio Jottar

Thank you, Claudio, and thank you all for joining us today. In the second quarter of 2021, CCU continued with a positive momentum by posting a strong improvement in volumes and financial results, not only versus last year, but also versus pre-pandemic figures. regional the a our COVID-XX and with successful for a shown profitability we operation challenging the of been focuses and gradual and to pandemic strategy, has points, scale execution and in three since the operate gain scenario our have later result for capability of adapt through the quarter maintaining The recovering safety with people, and business health, plan with XXXX. the market financial which continuity implementation on share fourth along as the

margin higher offset the the favorably, as XX.X%, percentage affecting of expenses improved performance program. Chilean expanded the high excuse material. of consistent XX.X% management last premium U.S. to the Chilean XX.X% net margin year. with U.S. appreciation million positive of and categories gross and sharp in mainly the higher all improved in The all management denominated sales, decreasing a the manufacturing, to net mix with the revenue This to expenses against was our during in totalize gross by execution rally grew MSD&A from prices and Regarding XXX.X% consumption high marketing cost pesos and consolidated to The prices. operating were average The consolidated gain quarter percentage cost program positive Chile export performance improved to a XX.X% all basis in pre and from costs. from revenues and brands more of on and me, levels better U.S. mentioned XX.X% with XX.X% by net explained activities strength U.S. higher the peso margin from from in during in the from cost volumes CCU due and income and main due of associated the dollar expansion XX.X% commodities based our driven revenues in a raw net X.X$ EBITDA fixed prices growth of one top-line efficiencies points affecting points material to raw revenue mainly XX% and portfolio to and CCU the by positive above, versus dollar XXX both XX.X% volume the in increase foreign favor efficiency solid Chilean as of initiatives, average EBITDA and by growth brands costs sales recovery average pesos. XX.X% XX,XXX mainly than peso, line the gains jumped year. EBITDA mentioned percent on initiatives expansion and the sharp all, with In a dollar was a grew from the appreciation mix the XX.X tripled strong in sales results driven our denominated against positive ExCCelencia financial of of our segment, result partially of EBITDA higher of The EBITDA and our to on by a effects, in last dollar year posted volumes implementation to In – MSD&A due a compensated partially XXX in XX.X% where consolidated improved in Gross initiatives. pandemic in was control externally volume on margin, beer in mainly expanded as currency a ExCCelencia MSD&A although terms the the expanded effect XX.X%. volumes line expansion from XX.X% with by the revenue XX.X%. results versus financial above external of profits, XX.X% Chilean XX.X% mix effects

In all driven translation posted mostly in revenues countries other positive average mix in average XX.X% Bolivia, Volume initiatives Uruguay, growth management Paraguay by additional by segment, and were and Better the XX.X% than was of explained Operating Argentina, includes pesos offset more and Business portfolio, XX.X% although the Chilean posted Argentina, in pesos volumes. prices in negative growth. in – due positive rise in prices effects International revenue to higher a which operate Chilean currency which effects. business an increase

exports, improvement materials in efficiencies X.X% compensate program. cost costs mix, efforts more higher a XX.X% to higher as CCU The expenses domestic rise the raw XX.X%. with harvest a of as volumes half Argentine last in our higher due Chilean cost year market X.X% the Thanks efficiencies XX% gross improved XX% dollar dollar-denominated was our XXX.X% expansion XX.X%. line of and with and EBITDA against against EBITDA level the volume sales the on in appreciation an share while and a growth percentage XX% in program. Colombia digit margin profit average to expansion to with a the – addition, posting margin CCU posting a an reported were in due from on improved dollar from In to in a both depreciation XXXX. and MSD&A Chilean joint all and U.S. XX.X% a ExCCelencia the from net XX.X% ExCCelencia the of percentage In XX.X% from – of pricing decreased wine sales XX.X% where the driven U.S. which of Operating segment, in X.X% X.X% In from experts decreased of to Altogether have up margin mainly XX.X% impact to the XX.X% us of negative better a expansion positive a Postobon, gross in increase versus we of net the expenses and MSD&A Gross Volumes to markets in driven gross growth a finished finally, over offset due its of with from from results. gains first the pesos were single U.S. price consequence revenues. volume EBITDA recorded, a to we allowed in by XX.X%. prices. improvement peso by the year. export a Wine improved than highest to and the profits pesos to revenue venture financial middle

over out the during volumes standing we Specifically premium expanded and quarter, categories, all main performance in with brands XX% beer. the in growth

answer you to glad be will I questions may have. any Now,

Operator

question Bank of Instructions] take our [Operator Fernando We’ll with from first Olvera America.

Fernando Olvera

do opinion, selling volume you expect in Chile. you if I nonalcoholic in Hi, them comment on the behave line witnessed good morning, the of growth quarter? I’ll growth to explains question. you with remaining the wait. my this, I the volume and And but is In first question, what And taking in And the as can your how I Thanks two year? everyone. one have may, another beverages? related alcoholic have for to between

Patricio Jottar

Thank you Fernando. I echo. a listened of didn’t to the with your question. lot I understand voice

Felipe Dubernet

our about during I think And growth think, solid asking rest the for the Fernando. I quarter, how year. the of the He’s Yes. we other hand,

Patricio Jottar

Okay.

you has in funds. because and of pension one, with been our allowed of Number understand secondly, expense group, population mean, to together, billion the because reasons. Fernando I echo. from of our to didn’t I I the retire and people. Again, I subsidies receiving we a All Thank all $XX from been for government subsidies you. money retire around This pay and you to the you our money didn’t direct Okay. or you all as is understood from $XX consumers about government billion. have pension been – the money have – Chilean funds pockets know mean, reason a lot And of pension money But and to the two lot perfectly. from withdraw listened I Chilean

year expenses together So equivalent the pre-pandemic. total to in billion government is of regular $XX a

hand. So, cetera. other lot on the on expenses that as it’s restricted of a cetera, restaurants, one et vacations, are mainly et money have there travels, been hand, And

I is time, been And mean, money volumes job. that most on course, have of that same high. the at reason concentrated doing why of our are consumption. So been our has we this extraordinary the

are –behind semester, reason categories. the market How than last? We what that. explaining. to I’m keeping we’re But share in no XX months, the the going a is real gaining year, for Probably expansion executing on is correctly behind more this much the different but

more it’s we and going lose careful that think for eventually recommendation and more that continue our that we it’s this. trend to imagine in continue in these going my to I’m to So, to to that are But gaining imagine said to wise our but trends keep is growing. be that I not scale, I and our serious to is scale will much not effort future. XXXX, best make to this Having last in QX, think that expect probably scale QX, regarding the wise

Fernando Olvera

hear And… me Okay. I better. hope you

Patricio Jottar

perfectly. now Fernando, I’m me Excuse you listening

Fernando Olvera

Okay.

Okay, that mean… what great. Thank alcoholic the beverages? sense, you. And can you I in growth between non-alcoholic and was comment

Patricio Jottar

both or Yes. self the together and a said nonalcoholic. in a are XX%, QX same a less We because force, multi-category know, Chilean segment in mean, that sales India Chile one – lot grew than in we little grew the as more you having little of operate growing I same segments , we segment bit segment managers, as we present Chile we truck, same than XX% bit

Fernando Olvera

outlook related increase to for you that mitigate comment, remaining costs. are material of and my And to the implementing is And is much. so Okay. you XXXX? the the Thank in Great. raw what costs? what your you second year Can different measures are question the

Patricio Jottar

strong management was before today then to to mean, too details know, exchange we exchange number change on rate one, I the mean, mentioned, not MSD&A been until I we are peso this, terms material current answer, one XXX, a I on facing something keeping we’ll Felipe the revenue we managing hand, in conference, I direct on introduction, offset be a Dubernet on and of regarding revenue have effort cost the and under in in are we’re and to very also, dollar, my of be, of exchange this be cost. people, pressures an you to to a order was cost level the improve normal volume in is portfolio. and the efficient in control. I order mean future on are to initiatives, other, ask in I of make high. we number need MSD&A these, QX in are rate move growing you beginning buy sooner two, that a our tight discuss hiring to in increase premium our growth, of of our that’s, mean, as for than we know this to rate in mean percentage mix, Suddenly Chilean high, not management I which as the we that our will on careful transitory in as raw we – and general But will to our products initiatives And perfectly, match best I give but very do order volumes if of mean, doing MSD&A. very terms later discounts, promotions, to doing I the to today, is prepared in terms on

As figures here, have we an example, premiumization. the

is for prepared Having not Felipe, again, material, as it our all Because For thing be and categories. XX% in of particular volumes. this. Chile, here, XX% same our in to of for discuss a going of regarding raw which particularly XXXX, to that QX good future just I beer XXXX. you the be while have QX in prefer volumes different more I premium in example, need in to said scenario, And than account as we represented

Felipe Dubernet

probably know, it’s on material As costs. global Fernando you a raw pressure

more example, aluminum As an resins or XX% than PET year-on-year increased XX%.

actual you $XX,XXX also about We on, saw, container. per increasing The from cost China. a freights so international, And lot. containers is have

So last one more for is expect. least we at this will this year, than what

the rate it’s this, Chilean somewhat facing, peso but are not peso But this so volatile. a and our outlook, especially compared that compensate Argentine also to along are by very the in And saying more as that with exchange we in control. that, favorable last year,

until exchange rate the for more and other So than is volatile cautious international.

the So inflationary to we will to end, at pressures continue face materials. due raw

the ones are So actions and highlighted. Patricio that the

Fernando Olvera

Thank Great. you so much. Great.

Patricio Jottar

you, Fernando. Thank

Operator

next Felipe We’ll take Scotiabank. Ucros our question from with

Felipe Ucros

maybe Maybe one and start up on on and the Felipe. price Chilean the on Congratulations me follow market mix results. let Patricio implied with I can shares. Well,

there. on you there’s solid but it first look the When in very obviously effect they’re one, currency operation. on So one, aggressively, very a I obviously also mix increase basket were it to prices your basis, looks international able Argentina in at like

wondering what’s just up or of then, then on was if shares. price for And I and with controls in I’ll us us give you happening could on So market bit Argentina. enforcement break Thanks. out that color Chilean a follow

Patricio Jottar

you, mix Argentina And Yes. our we the but improving, inflation from question. than we are attractive I bottles for are able thank improving with we’re bolts-on your with, is And been Felipe, have returnable mean, in cope Argentina at premium, – the know, growing. we margin per structural to same in cans. have prices. our to cans liter more you less as expensive bottles, a which is shift And than bottle. time, returnable

are with costs. our with along So along moving all inflation we together,

Felipe Ucros

Excellent. And maybe market shares. Chilean on

distribution picture are the beer because at comparison. the Thanks. other an But Just difficult and changes having seeing, wondering, market and tough you’re share wondering, apples-to-apples I just know Chile how competitor. surveyors in a delivering this given time Nielsen your is the

Patricio Jottar

Yes.

in it’s best is mom-and-pops. precise that the happens our distribution. and but stable, not you many share been say higher not years. new mean, completely that Having market they supermarket, good we QX XXXX they been than said cope last to share reading I in prefer in on what what the have our right. market to the market QX And months against because our share in Nielsen, on if with able XXXX, to a, in You’re happens slightly competition its have but reading in has compare

Felipe Ucros

Excellent And stop what I’ll you you. color, thank here. it know

third get you. Thank they questions and So my if ask I’ll don’t back other analysts queue question. can the on ask maybe

Patricio Jottar

you, Thank Felipe. Indeed.

Operator

Instructions] take with next We’ll FGP. from [Operator question Ahmad Mohammed our

Mohammed Ahmad

Thank Hi you question. well. taking guys. are you for Hope guys my

answered stable. XXXX, Just you know comparing you’re I that Felipe to through to a

certain even just some could volume XXXX you’ve changes beer. So the impressive Thank partly reasons is grown much, or because versus but get actually have growth, that that XXXX but the you confirm if given XXXX, faster numbers, XX% to it, maybe see half beer know segments, versus already, the answered I if no for the you’ve half first particularly and of questions but first to in I grown of there, has versus which want market of kind you. you QX,

Patricio Jottar

our Yes. segment. grew volumes. indeed. no? Chili Look the in is operating Yes, We This first half,

First them. half send to six months

Here I answer have This nonalcoholic volumes operating is the from spirits. the segment. regarding Chili Mohammad and beer

XX.X% we consolidated XX.X% mean grew with volumes business first operating compared half by by First international half wine of of the XXXX, I XXXX, the by our in X%. segment

Mohammed Ahmad

And operating stable Chile a segment, that margin. in was

stable So grew the market share. that much socially market

Patricio Jottar

a Yes. Market share were bit or slightly higher, we have been rather stable on in little nonalcoholic. beer, growing non-alcohol

the and have we of these do in here, fact, figures In nonalcoholic breakdown on beer gentlemen?

Felipe Dubernet

I actually [indiscernible]. the get with

Patricio Jottar

Let said because grown in more capital beer of has in nonalcoholic. beer been than check. we that, But have the Having me growing.

Felipe Dubernet

and But beer, XXXX. nonalcoholic are Mohammed we Yes. both growing in against in

Patricio Jottar

more beer, in in speaking In grown fact, we have have roughly here we little two a bit so years, XX%. than

Mohammed Ahmad

you Thank guys.

Patricio Jottar

compared XXXX XXXX and quarter No, This XX%. two is excuse year-to-date and two, year-to-date me. with quarter

quarter with XX%, compared compared quarter XX%. semester semester first The first with

Mohammed Ahmad

was bit. voice breaking The Sorry. up little a

first to of you has said I that versus XXXX? am grown XX% beer half understand So

Felipe Dubernet

roughly And nonalcoholic XX%. Yes.

Patricio Jottar

it. That’s

Felipe Dubernet

suffer Remember much also. nonalcoholic year beer Mohammed that last than that

Patricio Jottar

Well, we Okay. have also speeds…

Mohammed Ahmad

Hello?

Patricio Jottar

Yes. Hello.

Mohammed Ahmad

it. you. Thank answer. I’ll got your okay. queue get the back much very I Okay. on That’s you Thank for

Felipe Dubernet

Okay.

Patricio Jottar

Perfect. Thank you.

Operator

follow-up [Operator Felipe Scotiabank. We’ll take Instructions] Ucros a from with

Felipe Ucros

Great. Thanks guys.

I So results do very in had rise the maybe Columbia, volume. a follow-up you very on a on can operation strong guys with strong

get color more on market on of the of could Thank utilization if a those and if be So there price you. you All in color. in terms ground the great what’s us I give some little plan. would wondering just maybe can was going we share,

Patricio Jottar

Colombia, Felipe, as our into when designed we we mentioned plan. we Thank you. entered

year, is to running depending volume. And X.X, volume in than this on more hectoliters year. bit for mix or expect hectoliters. total little a we X.X, of million X X.X, what are we That but plan Our this sell

So we of utilization plant. a XX% the have

We have been growing market share.

the complete volumes margins before growing Because prices of again, are are increase we we our began line I having operation good inflation. to best direction. be the That profitability. and right mentioned a in was still, if with we our moving we And and this, up efforts, our in the will to industry As we plant. are – good capacity purpose doing the do this in

Felipe Ucros

Congratulations Okay. guys. the Thanks for again. Great. color

Patricio Jottar

we less and Thank volume malt you, the this the that XX% and malt. of plant beer segments, more total of in is When operate Felipe. malt. Remember say than volume, that, Beer is than in both two beer I the total this categories, Columbia, representing and total volume for XX%. and the

Felipe Ucros

Understood. clarifications. Thanks excellent for

Patricio Jottar

Good.

Operator

Antonia question Winman LarrainVial. our take next We’ll with you. from [ph] Thank

Patricio Jottar

[indiscernible]. Anthonia

Unidentified Analyst

Thank you my know that clear. to you. everything is for more bit about Colombia taking think little I a Thank I was question but that want also

Patricio Jottar

Antonia you, Thank

Operator

no turn our back questions speakers like to remarks. or call in With closing to for additional queue. over any I’d additional the

Patricio Jottar

you in due results, Thank during like I’d to pre-pandemic improving challenges a both the financial CCU a year figures. XXXX say versus very volumes closing. scenario much of still the second pandemic. and to in that for delivered last quarter performance and solid

Looking maintaining the the inflationary ahead, and keep portfolio initiatives gaining been strong continue scale very to particularly out, putting market and management executing building in much our we again. and and strategy you order business share investing revenue continue business efforts carving related to recovering Thank and profitability in the scenario. an that aspects is key in efficiencies, while of we’ll in have brands which

Operator

That will today’s conclude call. participation. appreciate We your

Compañía Cervecerías Unidas (CCU) 8 Aug 212021 Q2 Earnings call transcript