CCU.SN - Earnings call transcript Q3 2022 | Compañía Cervecerías Unidas S.A.

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Operator

Good day, and welcome to the CCU's 3Q 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Claudio Las Heras, Head of Investor Relations. Please go ahead, sir.

Claudio Las Heras

Welcome, everyone, and thank you for attending CCU's third quarter 2022 conference call. Mr. are me with Today Felipe Dubernet, and Financial Officer; Mr. Chief Investor Anwandter, Financial Manager. and Planning Carlos Relations

a the overall copy quarter received to have You of session. Felipe we move now our then Q&A XXXX company's will review and our performance will on results. third consolidated

please cause of conjunction known submitted are results with Form could Mr. forth we XX-F uncertainties performance about the on available this which to statement. in and It and involve in in unknown to in This our the with forward-looking uncertainties and U.S. Statements risks materially that financial begin, Securities taken statement Before CMF now introduce and the that performance set to relate or additional website. my information cautionary or pleasure results should made and and filed Exchange Felipe call our in actual to Report take note report CCU's CCU's future differ. is statements, annual Annual Dubernet. Commission, risks be the

Felipe Dubernet

for Chile a continue against impacted and the XXXX, of Thank you, adverse quarter third also we particularly you we base In today. joining face results, in financial scenario, thank which us our macroeconomic challenging an negatively comparison where have to Claudio, XXXX. all

main of and from margin the revenue to efficiencies our and terms wine EBITDA segments effects. X.X%, later contraction results, operating efforts segment, three results. the financial the to been by In decreased business international have EBITDA the indicating enough in explained management operating fully XX.X%, contracted offset while the Chile XX.X% improved not that external financial

our dollar costs. dollar, of main currency local First, U.S. U.S. against denominated impacting our the the depreciation

this net caused a and on, In slightly with results totalized by business we like financial drop as and driven and greater based a other higher decreased scale of would this, costs raw X.X% a million our results accelerating in business by geographies. non-operating difficult CLPXX,XXX by gain with in In to pressures and the first, operational business a third, inflation higher mention XX.X% solid packaging costs; net main volumes our expenses. in a strong, third Second, income quarter. associated loss line long-term remains our we an that environment, material expenses momentum lower

grew we XXXX. XX.X% versus However,

Second, improvement robust our a in share portfolio stable growing in categories; main third, market equity. brand a on and constant our a sustained brand

six, cost launched especially X and working are a gains We for focused on optimizing HerCCUles across our business our Transformation pillars: long-term To to encompassing innovations; business. in capital; the brands recovering as units, CapEx plan and revenue XXXX, and invest business in to continue reduce financial we as core Chile, of achieve first, is our in and sustainability maintain second, profitability, high to CCU our recover to deliver company program brand equity volume/margin efforts; together results. fifth, four, focalize the called our a efficiency on this, all focus aiming it with expenses; crucial enhance management scale;

affected by most adverse a As consumption mentioned weaker the environment. the segment has scenario operating above, macroeconomic Chile been the and

a higher compensate by XX XX.X% and domestic revenue versus packaging XX.X% market. growth depreciation net In exports XX.X% prices, XX.X%, U.S. financial a results. Bolivia, all, all strong profit XX.X% declined devaluation In XXX geographies. net impact our in sales the prices and that business Chilean us average prices In volume Paraguay top top segment, net percentage from growing high a all, was materials Argentina oil Argentina, MSD&A the points. of mainly dollar-denominated permitted management year to produce in average higher line strong Chilean better to to volumes of of sales increased XX% Operating rise, the a domestic the inflation MSD&A volumes due as U.S. gross in similar which in expanded average against affecting MSD&A the pressure basis due our digit, to as Wine cost, pressures The export increased In explained and Consequently, an both by prices average as prices in the by XX% and due by peso The In by mainly a the growth cost coming pressures. peso as the as were packaging a profit due X.X%. cost revenues points over peso caused with the up and cost cost management offset XX.X%, by percentage and grew negative mix against decreased the partially of Chilean prices X.X%, segment, its growth X.X%, were of expenses by and Financial expenses positive inflation Business Colombia, the initiatives mostly revenues grew and Argentina, EBITDA were double efficiencies Danone driven along Chilean explained beer while Altogether, in Chilean last by and our our initiatives. sales due driven increased in includes of showed Operating rose expenses latest inflationary which sales prices on higher in of the distribute increased flat in in dollar, to materials. Postobón the Colombian results basis and of contracted were dollar pressure from top flat pesos expenses Gross compensated from Uruguay, expanded U.S. water to result joint line pressures. raw and Our prices. pesos, EBITDA expanded dollar. recovery XX.X%, the International while the and pesos, from a In implementation and and and higher management effect mostly revenue XX.X%. volume venture to average line malt initiatives, percentage in prices, and portfolio, later revenue partially explained led recorded other XX.X%. a revenue and markets, by increase were volumes devaluation contracted Gross the X.X% X.X%. in profit initiatives a net U.S. EBITDA explained X.X%. management

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

Operator

our [Operator Brustolin Instructions] question from from We'll Please Henrique ahead. take first go BTG.

Henrique Brustolin

hello Carlos. Hello from of both them Chile. Felipe, Two my side, questions in

margins you one, levels price hikes the the the cost evolved comment a first you on pressures far, run if we on much if prices. the good declining? quarter with negative to you The and to expect had on little about of bit of some throughout now already right that to of a pressures And get that could XXXX? offset a you And or see have margins little at could bit how because quarter that? So just cost one year impact mentioned prices terms how on in comment hike the your QX if enough and were you Q. do end the into a more the on related second so cope little to the you to that and that, rate the bit And going you how these think mix

consumer could mix categories. nonalcoholic in give what also down you was alcoholic impact and of some terms was trade color this and in a if If more those little some performance on bit there

questions two my these are on the side. So

Felipe Dubernet

afternoon, know questions. you for you Henrique, Okay. Good morning where don't or are, good thank I your

your are with had margins we quarter happy absolutely, the question, yes, Regarding three. first we that not in

heavily So margin. are that because we impacting have end, the at the two things

quarter-on-quarter, and go the right So Chilean one the on devaluation U.S. the to was peso related especially and the because is on hand dollar against the dollar material the costs, of packaging XX%. U.S.

impacting suffered exchange high we in especially [ph]. monopoly quarter for So three rate our

future. we saying But Aluminum easing, reach could of October understand. volatile. especially U.S. beginning that the side exchange will that's volatile, may cost Today commodity as very commodities. profit had per quarter. of rate especially of devaluation is the more in picture are been pressures some certainly presenting But in remains you profiting we somewhat CLPX,XXX this a the by cost higher. of because right. we has in some trend better prices, maybe are very But that seeing see practically We aluminum. be from right but We are compensated something drop coming this, we dollar. during this will be Still price, will course, You

But level in bit have the some price there upcoming during materials the certainly be important we some high take a the the risk and malt to of hike. summer. especially little is question, we that second is key raw but supply, Although that risk of will resin, aspect avoid

them especially some You are all are prices, we raising right, ahead. a have been categories, of little bit more in

bit little also or as For certainly behind beer. mix inflation example, a affected and nonalcoholic by liquors others

because results both trade terms now in that we is say September, it's can did price I the the price beer, of November. new what a traditional the supermarkets aspects, September in after X public, published in increase – increase these in October October, we and from So of after and of

of October. So case we additional X% all across of increase October rate the of channels again, nonalcoholic. X% And X% in in year. the in And the increased we to November prices in the the an the X% in range in in in nonalcoholic, same

October price we So mix were have and with price and will I we but somewhat November. increases early certain continue had as number in effect, now by stated, of a jeopardized now increases

quarters, expect because but we materials. in much certainly cannot depletion better margin to a raw of would upcoming I this inventory be specific also for it how the perspective depend So on volumes on project

is But and do results So intention they are many variables, but the never are completely certainly, with and a recover we in difficult is to the we line forecast. this. it

mix against and very with know, the between was you you comparison consumer, very given XXXX liquidity asked that the the of and government year fund a the it unusual as difficult alcoholic is Regarding aid. pension the withdrawal because for, nonalcoholic the

consumption. can that terms quarter, So the XXXX I are both that the a better a alcoholic the compare to for same in about volumes reference But it lot was volume. the of we what XX% in is growth if nonalcoholic against money injected and line, of say

So CAGR about that years X%. is of the for three

no big So there is difference.

been is would mention this stabilized quarters. liquidity alcoholic consumer very course, for to mention beginning especially has products of year, that, a to the and has again, that of more decreasing the or consumer, two the However, products premium more in been of in the of proportion like of at we expensive what beginning reach high last year, categories, I this

at higher I one However, your Henrique. than in answered hope have I level the questions, XXXX. a we

Operator

Carlos Laboy We'll from our question take from next HSBC.

line Your Please go ahead. open. is

Carlos Laboy

thank Yes, you very much.

As the of why leader, system, wanted in you waiting as wait November these on insights timing a it catch-up until earlier to like with drinks, you share sure follower earlier price soft increases increases? us can October on the as for probably category I'm and them on category some a much again, playing looks to beer. Coke one price that And well? by you're take

Felipe Dubernet

and results, is suffer weeks than two published that been in public this is from competitors same public. and the pressure this It has ago us, the cost

Of independently, course, management course, the by and ourselves, we of increases price efforts. our we revenue do it do

can example, that from the management. between So along although level a that we the pressure. to is some I Also, grains. difference we at SKUs such But channels have right pressures our aluminum promotions suffer price far would carryover prices. structure revenue industry there is some the market day, lot, or the ago. could will of or say this But some a not that as we that are inflationary prices Ukrainian commodities same [indiscernible] the the level shares, some are more a lower they the but that increases, price are sell inertia others that a sell whole until but much we – there. end had the are for are such maintained pressures, or higher is we war, October, at they of indicate what the after There cost than with There are affect a related market increased devaluation because year so as, there

Carlos? Okay

Carlos Laboy

back very of and volume in the price you drinks increases? beer expect much. these Do soft Thank you declines on

Felipe Dubernet

X% suffering many terms Chile, Chile high important especially Chile, don't a in for question. Argentina of of to X% are phenomena. because separately have are very – let's that But it's first to and know say, it's One, like recession, a both economists talk in analysis. because something saying different inflation. X.X% is This a we this Look, all recession. time is we we different, many, the inflation between used for – economic years, can

forecasted is this XXXX. So is what for

So in we the be how but recession. would much and also elasticity, combination cannot a predict consumer the with would evolve how

previous Chile, our Carlos. been the is in very TDR in question, As last three or which growth in I the has good, mentioned our average X% years

rate, expect single will a XX a to not – XX last in years faced have years XX to years recession – let's the – lower But least country. move at We in XX an inflationary I low say, context the to years, in for in we or XXXX, move the say, digit. let's would at time, years, same XX

would don't we But or to the the more close recover Chile. I a What had executing, XXXX, increases in low or – and be the we and say, could revenue we I the certainly, committed faced haven't price we perspective So lower later the – volume But at gross that we efficiencies, sure through margin. to you how the we would face need the fix much single maintain be but we can margin given also is this efforts are one are we a in mentioned, is It least. as scenario okay – talk But if growth, – margin, three-year XXXX, should first, than management to volume X% are good. think direct good on. rate to I to it's we too early call, would digit. that before to still drop more in know, be very

Okay Carlos?

Carlos Laboy

really That’s you. Thank helpful.

Operator

from take next We'll Instructions] from [Operator Goldman our Thiago question Bortoluci Sachs.

Please open. is line ahead. Your go

Thiago Bortoluci

hey guys. Good everyone. afternoon, up opening Thanks for Yes, questions.

I and and little number forward? Thank eventually understand you more efficiency a investing of to you going cope will a fruits new highlighted guess, So for efforts efficiency extract step SG&A what efficiency. pillars pricing. right? forward? recomposition to see important order bit role sure, how in about these play capture Chile also equity? brand better next story in much. keep like eventually For an up a SG&A opportunity efficiency you of better with margins, where is momentum But part the the going forward, also just your in I the would very to low-hanging mentioned to on to from year, to is will And And the and better balance plan of capture going necessity

Felipe Dubernet

are of see you. pillar of in focusing where to and what other So course, expenses. third nice is Thiago, [ph] we plan our this costs is transformation the focus sales – we

the and we have this launched we then carrying fact, in So been a we is more that the Transformation program key plan one – of we as to that we efficiencies. plan CCU, aspects called XXXX, year, out move “HerCCUles, okay? ExCCelencia since former call And we the Plan but comprehensive now

expenses Of on expenses, we in and working and manufacturing general administrative are G&A expenses. from fronts that, course, many distribution procurement, or

have So terms – expenses to we percentage to order in of and back in as the come levels a net of sales. previously

our was percentage sales very of expenses. plan CCU as ExCCelencia net last the X, points year basis XXX – a fact, has In successfully since of XXXX been reducing

and year, increases, until year. all as not net indicator we able especially expense given been pass that last three, higher of the this However, much than is price of have our the yet to quarter sales inflationary percentage pressures

we As sustainability and to need key not business. support the you focus brands of jeopardize real because our not on mentioned, or the to these decreasing for are the efficiencies

and convenient, encompasses with – the renewable we for or gaining energy electricity in our this also many in by have you next – cutting electricity using energy first we maintaining – electricity, year rates, contract on our can XXX% announced focusing brands. So also efficiencies we more say, not of terms initiatives, are we power. marketing, preserve the a if we much especially enter let's but marketing will of I will new do – cost want, preference details

an So it's economic a but win-win aspect. environmental between aspect, also an

Thiago Bortoluci

be we And Now, fair assume have this this may should peso this that next to in revenue? I follow aggressive nominal just net that clear, it if total be understand nominal to you eventually Or your right? just this. implying growing guys terms, targeting be could the in is Chilean terms? more on even ambitions in G&A is of in year, for SG&A decrease than terms up Would but less still a

Felipe Dubernet

expect along – forecast the if this our especially We – saw that gas been at but our energy so quarter, you so we as do MSD&A – with for of expense lot, has don't electricity year. example, in level, third a this today, but but due to and manufacturing increasing cost,

expenses. when look bit little inflation a from both are we you So far away

We inflation. are with practically line in

For which next for ease comparison year beneficial. be inflation will a price little should in bit

with below the be – end So inflation. trend current line would in at

from forecasting percentage January somewhat sales. But me, to inflation But through the order to the us, year of in efficiencies December, we essentially, as this. are for excuse inflation expenses want net – efficiency indicator to program main is beat next We for relevant X.X%. have

Thiago Bortoluci

Understood. Thank you very much.

Operator

our next question Scotiabank. from We will take from Ucros Felipe

is open. go line Your Please ahead.

Felipe Ucros

face for asked, had other detail which seemed good have questions. on if Thank for end, the pricing. a ones maybe and of my volume us one you couple been give guys a a Colombia, but Maybe could you have both on to taking performance, on I little just on this

you still territory? specifically, mix the on area of focused on Or are performance? capturing can a Thank and just shift? the you. On are both by you you're maybe this expanding some it's getting color actually your volume same you give that obviously Or us if

Felipe Dubernet

Felipe. you, Thank

know, two, in brand that I'm our difficult because results achieve the branding preference say. the market increase. in the of better would have theme gives development was Because to as I all, brand three, what the because we about brand But main of a quarters, or the the consumer, share I Colombia along of continued of the but heart is think especially we network you business, First to us have tough having of quarter Colombia, in a our distribution excellent equity quarter it's the the delighted Postobón. really fundamental of without brand, Unidas this

team, these We of have with execution a but especially the the times. in brand good preference,

than market the potential market in new capture preference reached in share, good we that front. is the more more higher but our So our order in This to is have brand commercial a at is much brands end, record share. which very because

we say that. would happy with – I we So are need

hand, other the the in exchange X,XXX. margin On is pressure we Today, have Colombia. rate

Colombia in devaluation high. So the was three quarter in

the of and it X,XXX, about X,XXX are devaluation XX%. the is but So we worried was that. [indiscernible] three in But quarter now was

be revenue Colombia compensate the new So management profitability. efforts should in certainly done to

So that is very important.

Regarding a the territories, But so in all the portfolio. with of the territory, returnables in proposition where different given Postobón, special the we priority have territory is. especially network [ph] the yes, where distribution present our Colombian we are in Promarca a in all plant

that can I So about Colombia, you the color give is Felipe.

Felipe Ucros

ask not AmBev, lot, That's have you Thanks. non-hedgers [indiscernible] the doesn't or hedgers price little, follow-up; guys of it's right? intensive do is which it increases? you can it right? about color. you less create also – if good but to then a active a with little all I And problem at compare competitors, a but I other hedging, bit, Does in hedging. your does maybe And hedge much more that to timing wanted You are a notably when

Felipe Dubernet

competitors although have So hedge. increased also they prices,

high now and a October, [indiscernible]. dollar I say it's in temporary effect very I or a of U.S. because September see the So would dollar beginning if would is

the catch company hedge of the policy at only policy And not same. same. end, the We remains or do the flows. the sheet. We our So balance our protect remain the

Felipe Ucros

you. Thank Understood. Okay.

Operator

the Felipe. go on I are over further There to the back questions call will line. Please hand ahead. no

Felipe Dubernet

the as operating attending same affect our this share the brand adverse main in optimistic time, Thank as and segment, we scenario, highlighted, future equity long-term in profitability combine for and our scale, conference recession, I Chile, you, The strong. current in I remains where quarter three, largest fundamentals continue as negatively the Nonetheless, business results all call. segments, XXXX, at and inflation to especially you market economic our we the remain especially of operating key mentioned. for

recovering six-pillar our Thank recovery, and company priority. have a strategic by as plan, are results profitability a XXXX, and our We focused making executing financial our afternoon all you on wonderful HerCCUles evening.

Compañía Cervecerías Unidas (CCU) 9 Nov 222022 Q3 Earnings call transcript