Compania Cervecerias Unidas, S.A.

everyone, and thank you for attending CCU's first quarter 2023 conference call. Today with me are Felipe Duvernet, Chief Financial Officer, and Carlos Andante, Financial Planning and Investor Relations Manager. You have received a copy of the company's consolidated first quarter 2023 results. Felipe will now review our overall performance, and we will then move on to our Q&A session. Before we begin, as usual, please take notice of our cautionary statement. The statements made in this call that relate to CCU future performance or financial results are forward-looking statements, which involve known and unknown risks and uncertainties that could cause actual performance or results to materially differ. These statements should be taken in conjunction with the additional information about risks and uncertainties set forth in CCU's annual report in Form 20F filed with the US Security and Exchange Commission and in the annual report submitted to the CMF available on our website. It is now my pleasure to introduce Felipe Duerme.

Thank you, Carlo, Claudio, and thank you all for joining us today. During the first quarter 2023, CCU posted the recovery in financial results. with a stable EBITDA from previous year in a tough economic environment. This better performance was mostly driven by our main operating segment, Chile, as a consequence of the implementation of our recovery profitability plan, Hercules 2023. The upward trend in results during the last quarters showed us that we are in the right path. Nonetheless, we are aware that the results of the first quarter of this year are only the beginning, and to consolidate this trend, we will continue focusing on the six pillars of Hercules 2023, which are, first, maintaining business scale, then strengthening revenue management effort, third, enhance the CCU transformation program to deliver efficiency gains, number four, optimize CapEx and working capital, Five, focus on core brands and high volume margin innovations. And six, continue investing in our brand equity. Before describing the performance of the quarter, it is important to mention that results from the first quarter 2022 were still highly influenced by a particularly positive scenario for consumption in Chile, as consolidated volumes during that quarter were up 7.1% versus first quarter 2021. After that, volumes contracted compared with the same quarter of previous year, 2.9, 2.8, and 5.5% in the second, third, and fourth quarter of 2022, respectively. Therefore, in spite of decreasing volumes in the first quarter of 2023, we are still on track to maintain business scale in 2023, in line with our pillar number one of our regional plan, Hercules. During first quarter 2023, our revenues expanded 4.5%, boosted by 8.1% growth in average prices in Chilean pesos, partially offset by a low single-digit drop in volumes. The lower volumes were caused by contractions in all the operating segments, mostly due to a high comparison base, as mentioned before, especially in Chile, a weaker consumption environment in Argentina, and lower wine exports. The better average prices in Chilean pesos were mainly explained by revenue management initiatives in all our main geographies and categories, despite negative mixed effects, in line with pillar number two of our regional plan, Hercules. gross profit jumped 9.6% and gross margin rose 227 basis points. The later also associated with lower cost pressures as a consequence of more favorable cost in some key packaging materials. MS and DMA expenses as a percentage of net sales deteriorated 317 basis points, mainly as a consequence of the low base of marketing expenses in the last year first quarter due to FACI and higher distribution expenses. This was partially compensated with efficiencies through all our operating segments which will be more reflected during the rest of the year in line with our third pillar of Hercules. In all, Edipta reached a 0.2% increase and EBITDA margin contracted 80 basis points. The slight expansion in EBITDA is surely a good start to recover our financial results, although more efforts are needed to consolidate the profitability improvement in an inflationary scenario. Regarding net income, it fell 9.6%, associated with a lower non-operating result, mostly due to higher financial costs and a higher loss in equity and income of JVs and associated. Additionally, in the first quarter of 2023, we deliver a stronger cash generation. Net cash inflow from operating activities expanded versus last year, while net cash outflow from investor activities were stable versus last year. This is in line with our fourth pillar of Hercules. Furthermore, we reduce our portfolio complexity while brand equity remains in high levels, especially in our core brands, and continue to be key to gain and maintain market share in our main categories. This fulfills our pillar number five and six of Hercules. In the chain operating segment, our result posed a positive turning point after four consecutive quarters of contractions in Avista. Top line expanded 6.4%, driven by 7.6% growth in average prices, while volumes dropped 1.1%. Prices were higher due to revenue management efforts in all our categories. partially offset by negative mixed effects in the portfolio. Volumes were resilient through the quarter, although decreased mainly associated with the tough comparison days. Gross profit expanded 14.9%, and gross margin improved 350 basis points, also as a result of lower cost pressures and efficiencies in manufacturing costs. NSMDNA expenses as percentage of sales deteriorated 357 basis points, mainly by lower comparison-based marketing expenses in the last year first quarter due to phasing and higher distribution expenses. Consequently, EBITDA increased 6.8% and EBITDA margin was stable. In international business operating segments, which includes Argentina, Bolivia, Paraguay, and Uruguay, net sales recorded a 4.7% rate as a result of an increase of 13.9% in average prices in Chilean pesos, partially offset by a 8.1 contraction in volumes. Industry volumes were weaker in all the geographies, but mainly in Argentina, as a consequence of a difficult economic context. The better average prices in Chilean pesos were explained by prices increases in line with inflation in Argentina and revenue management initiatives in all the other geographies. Consequently, gross profit expanded 9.3% and gross margin grew from 52.9% to 55.3%. MS and DNA expenses as a percentage of net sales deteriorated by 161 basis points, due to a lower scale in Argentina. Altogether, EBITDA expanded 7.9% and EBITDA margin improved 53 basis points. The wine operating segment faced a particularly challenging scenario during the quarter. Rennies were down 17.7%, fully explained by weaker volumes. Average prices were flat as revenue management efforts in domestic markets were offset by negative mixed effects in export volumes. The lower volumes was mostly attributable to exports, which contracted in the low 20s, associated with inventories, adjustments from our clients and distributors. On the other side, domestic volumes in Chile dropped mid-signal digits. As a result of all the above, gross profit deteriorated 32.5% and gross margin contracted 699 basis points. MSN DNA expenses dropped 1.9%, although as percentage of net sales deteriorated by 508 basis points due to the lower revenues in oil. due to lower revenues. In all, Edipta reached 3,496 million Chilean pesos and 69.5% fall. Regarding our main JVs and associated business, in Colombia we started 2023 with a low single-digit decrease in volumes, while in Argentina, our water business with Danone showed a low pin expansion in volumes. Both businesses are relevant for our regional multi-category beverage strategy, being committed to continue gaining scale to build profitability in the future. Now, I will be glad to answer any questions you may have.

Thank you very much for the presentation. We'll now be moving to the Q&A part of the call. If you have any questions, please press star 2 on your keypad. That's star 2 on your keypad for any questions. If you are dialed in via the web, you may also ask a voice or a text question. We will now give a few moments for the questions to come in.