Compania Cervecerias Unidas, S.A.

Good day, everyone. Welcome to CCU's fourth quarter 2024 earnings conference call on the 26th of February, 2025. Please note that today's call is being recorded. At this time, I'd like to turn the conference call over to Claudio Lazaras, the head of investor relations. Please go ahead, sir.

Welcome, everyone, and thank you for attending CCU's fourth quarter 2024 conference call. Today with me are Mr. Felipe Duvernet, Chief Financial Officer, Joaquin Trejo, Financial Planning and Investor Relations Manager, and Carolina Burgos, Senior Investor Relations Analyst. You have received a copy of the company's consolidated four-quarter earnings release. Felipe will now review our overall results, and we will then move into a Q&A session. As usual, before we begin, please take note of our cautionary statements. The 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. This statement should be taken in conjunction with the additional information about risk and uncertainty set forth in CCU's annual report in Form 20F filed with the U.S. Security and Exchange Commission and in the annual report submitted to the CMF and available on our website. It's my pleasure now to introduce Mr. Felipe Gubernet.

Thank you, Claudio, and thank you all for joining us today. Before moving into the quarter, I would mention some highlights of the full year 2024. In 2024, CCU delivered higher financial results versus 2023 after a strong turnaround during the second half. Also, we continued to advance in our strategy in a particularly challenging and volatile business environment. Through the year, we faced a low 20s contraction in the beer and water industries in Argentina, and a modest economic growth in Chile that led to flat volumes in the Chile operating sector. In addition, we experienced cost and expenses pressures coming from the depreciation of our local currencies against the US dollar. In this context, and excluding the non-recurring effect of the sale of a portion of land in Chile in quarter two 2024, full-year consolidated EBITDA reached 387,267 million Chilean pesos, increasing 2.1%. When including the non-recurring gain, EBITDA increased 9.6% versus last year. At the same time, and also excluding the non-recurring gain, full-year consolidated net income expanded 32.5%. When including the non-recurring gain, net income increased 52.3% versus last year. The strong turnaround in the second half of the year where consolidated EBITDA surged by 27.7% was mainly explained by a solid performance in the quarter four in all our operating segments, more than offsetting a challenging first half where we passed a 26.5% decline in EBITDA. as of June 2024. This upward trend was driven by effective initiatives in revenue management and efficiencies in all our operating segments, enabling us to more than offset the negative impacts in our result from the challenging scenario described above. The initiatives mentioned above were executed under the regional plan Hercules. which we started in 2022 and ended in 2024, being key to align the company under six pillars with the objective of recovering financial results, resulting in positive EBITDA and net income growth, the later well above inflation in that period, despite an unfavorable external context with devaluation of the currencies and low economic growth in the region. Regarding our business strategy, during the year, CCU continues strengthening its regional footprint. In July 2024, we started consolidating Aguas de Origen, our water business with Danone in Argentina, which will continue bringing synergies to our operations in that country. In October 2024, we increased our scale in Paraguay. through a partnership with the BRC Group, which includes the PepsiCo license for the production and distribution of beverage, as well as the distribution of snacks. With this association, Paraguay became the second country where the PepsiCo license is part of CCU's brand portfolio, in addition to Chile. At the same time, we continue investing in our brands, achieving a strong brand especially here in Chile and kept reinforcing our digital transformation to support sales execution and drive operational efficiencies in the future. Finally, we were the first to inaugurate a modern PET recycling plant bottle to bottle in Chile named Circular. Now I will move into the quarter. In quarter for 2024, CCU delivered a solid set of results. Consolidated EBITDA reached 182,621 million Chilean pesos, a 65.2% increase. This result was driven by all operating segments. It is important to mention, as we mentioned in that moment, that in quarter four, 2023, the application IAS 29 from IFRS in Argentina generated the loss of 24,018 million Chilean pesos in consolidated EBITDA versus a gain of 1,095 Chilean million pesos in quarter 424. Nonetheless, even isolating this mentioned effect due to the hyperinflationary accounting, consolidated EBITDA expanded robustly by 34.9 percent in terms of quarterly volumes excluding the inorganic volumes from the consolidation of hours the region and the association with the bfc group in paraguay volumes were down 0.1 percent in quarter 4 2024 fully explained by an international business operating segment which continued to contract versus last year due to argentina almost fully offset by an expansion in the Chile operating segment while wine bonds were flat. I would like to mention anyway that Argentina continued to improve its scale compared to previous quarters. Consolidated net income reached a gain of 74,153 million Chilean pesos up by 77.7% driven by the better operational result and a better non-operating result, particularly in Argentina. In terms of our segments, in the Chile operating segment, top line expanded 9.9% as a result of 4.9% increase in average prices and 4.7% higher volumes. Average prices were boosted by revenue management efforts partially compensated by negative mix effects, while volume expanded mainly due to a low comparison base in quarter for 2023. EBITDA expanded 23% and EBITDA margin grew 208 basis points to 19.6%. In the international business operating segment, excluding inorganic volume from the consolidation of ADO and AV, in Argentina and Paraguay, respectively, organic net sales recorded a sharp increase, driven by higher organic average prices, which more than offset an 11.5% contraction in organic volumes. Higher organic average prices were mostly caused by a low comparison base due to a negative impact on revenues from the sharp Argentinian pesos devaluation against the US dollar in last quarter of last year. And to a lesser extent, revenue management initiatives. EBITDA more than tripled versus last year, driven by all the geographies. The wine operating segment posted a top line expansion of 21.4%, driven by 21.7% rise in average prices, where volumes were flat. Exports expanded during the quarter. being almost fully compensated by the drop in the Argentine domestic market, as Chilean domestic volumes were flat. The better average prices were mostly explained by a favorable comparison base, a weaker Chilean peso, and its favorable impact on export revenues, and positive mixed effects. EBITDA posted a 16% growth, and EBITDA margin was down 74 basis points. Regarding our main joint venture and associated business in Colombia, volume reached 2.3 million hectoliters in full year 2024, increasing 7.8% and we reached positive EBITDA. Now, I will be glad to answer any question you may have.