Compania Cervecerias Unidas, S.A.

Good day, everyone, and welcome to CCU's first quarter 2025 earnings conference call on the 8th of May, 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, and thank you for attending CCU's first quarter 2025 conference call. Today with me are Mr. Patricio Jotal, Chief Executive Officer, Mr. Felipe Duvernet, Chief Financial Officer, Mr. Joaquin Trejo, Financial Planning and Investor Relations Manager, and Mrs. Carolina Burros, Senior Investor Relations Analyst. You have received a copy of the company's consolidated first quarter 2026-2025 earning release. The call will start reviewing our overall results. then we will then move on to our Q&A session. As usual, before we begin, please take note of the following statements. Statements made in this code that relate to CCU future financial results are forward-looking statements which involve known and unknown risks and uncertainties that could cause 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 20-F filed with the U.S. Securities and Exchange Commission, and in the annual report submitted to the CMF and available on our website. It is now my pleasure to introduce our CEO, Mr. Patricio, for that.

Thank you, Carlos and Claudio, and thank you all for joining us today. In the first quarter of 2025, you delivered higher financial results versus last year, expanding consolidated EBITDA and net income by 6% and 10.7% respectively, in spite of a highly volatile business environment. In this context, organic consolidated volumes, this is excluding the volumes of aguas de origen and AD, in Argentina and Paraguay, respectively, were down 1.8%, driven by oil operating segments amidst soft consumption in the region. The higher EPA was explained by international business operating segments, largely due to Argentina. We're certain that the scenario for 2025 will continue to be challenging and volatile. Our focus in the coming quarters will be to continue implementing our 2025-2027 strategic plan and its three pillars, profitability, growth, and sustainability, with a special focus on profitability through further efforts in revenue management and efficiencies. At the same time, under the growth pillar, in a difficult context for expanding business scale, we focus on brand equity, sales execution, and innovations to address new consumer trends Lastly, in the sustainability pillar, our goal is to progress in our Juntos por un Mejor Vivir strategy in its two pillars, our planet and our people. The figures that I will refer now for the consolidated and the international business operating segment results consider organic figures. This is excluding, again, the consolidation of Aguas Verdes in Argentina and AD in Paraguay. Regarding our consolidated performance in first quarter 2025, organic consolidated net sales were up 3%, explained by 4.9% higher organic average prices in Chilean pesos, while organic volumes were 1.8% lower. Higher organic average prices in Chilean pesos were explained by all operating segments as a consequence of revenue management efforts. Gross profit grew 1.7% organically, and organic gross margin contracted by 56 basis points due to higher cost of sales. On the other hand, organic MSDNA expenses expanded 2.7% in Chilean pesos, offsetting inflationary pressures with efficiencies. And as a percentage of net sales declined 11 basis points. In all, organic EBITDA reached In terms of our segment, in the Chile operating segment, top line expanded 2.8% as a result of a 4.8% increase in average prices. when volumes were down 1.9%. Average prices were driven by revenue management efforts partially compensated by negative mixed effects in the portfolio. Gross profit decreased 1.1% and gross margin was down 180 basis points compared to last year, mainly driven by higher manufacturing costs and negative mixed effects in packaging and cost pressures coming from higher US dollar denominated costs. MSDNA expenses were 2.7% higher, being practically flat as a percentage in itself, due to efficiencies that compensated inflationary pressures. Altogether, EVDA reached 94,400 million Chilean pesos, a 2.4% decrease, and EVDA margin was down 97 basis points. In international business operating segments, excluding the inorganic volumes from the consolidation of ADO and ID, In Argentina and Paraguay, respectively, organic net sales recorded a 6.3% increase, driven by higher organic average prices, which more than offset a 1.2% contraction in organic volumes. Organic volumes in Argentina were nearly flat, continuing on a recovery path of business sales compared to previous quarters. Meanwhile, Uruguay and Paraguay posted low and mid single-digit organic volume declines, respectively, while Bolivia grew by low single digits. Higher organic average prices were mostly driven by revenue management initiatives in all the geographies, more than offsetting cost pressures coming especially from a weaker Argentine peso against the US dollar and inflationary pressures. Consequently, organic gross profit expanded 10.7% and organic gross margin grew 202 basis points. Organic MSDNA expenses represented in this phase increased 32 basis points, mostly from inflationary pressures in Argentina. In all, organic BPA reached 33,435 million Chilean pesos, a 28.1% expansion driven by Argentina, Uruguay, and Bolivia. The one operating segment posted a top-line expansion of 2.1%, fully driven by a 6.2% rise in average prices, when volumes were down 3.8% compared to last year. Lower volumes were explained by a contraction in the Chilean domestic market industry, while exports from Chile were flat. The better average prices were mostly explained by a weaker Chilean peso and its favorable impact on export revenues and revenue management initiatives in the domestic markets. Gross profit was down 1.6% and gross margin deteriorated by 142 basis points due to cost pressures from a higher cost of wine and higher US dollar link packaging costs. MSD&A expenses were flat, and as a percentage of sales, improved 56 basis points, due to efficiency. Altogether, EBITDA reached 6,592 million Chilean pesos, a 1.1% decrease, and EBITDA margin was down 36 basis points. Regarding our main JDs and associated businesses, In Colombia, we posted better financial results versus last year, despite the slight contraction in volumes, which nonetheless was slightly lower than the previous year. Now, I will be glad to answer any questions you may have.