Compañía Cervecerías Unidas S.A (NYSE:CCU) Q2 2022 Earnings Conference Call August 5, 2022 10:30 AM ET

Company Participants

Claudio Las Heras - Head of Investor Relations

Patricio Jottar - Chief Executive Officer

Felipe Dubernet – Chief Financial Officer

Conference Call Participants

Fernando Olvera - Bank of America

Felipe Ucros - Scotiabank

Operator

[Abrupt Start] Before we begin, please take note of the cautionary statement. Statements made in this call are related 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 additional information about risk and uncertainty set forth in CCUs annual report in form 20-F filed with the US 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 Mr. Patricio Jottar.

Patricio Jottar

Thank you, Claudio and thank you all for joining us today. We are facing a challenging and volatile macroeconomic scenario. In this context, we need to focus on maintaining business scales and recover our margins. On the positive side in terms of business scale, despite of a decline in our consolidated volumes in the second quarter, considering a high comparison versus 2021, we reported double-digit growth when compared with pre-pandemic volumes, this is the second quarter of 2019.

That's our business scale, scale remains strong through a constant improvement in brand equity and excellence in face execution. On the negative side, regarding margins, these were negatively impacted by strong external effects coming from higher price in commodities, a sharp depreciation in our main local currencies against the US dollar and higher inflation levels, impacting our costs and expenses, ultimately offset by price increases in all our categories and geographies.

In summary, during the second semester, we will decisively continue with our revenue management efforts, along with efficiencies to recover our profitability sustained on a solid business scale.

Regarding our consolidated results, our revenues expanded 18.8%, bolstered by 22.4% rise in average prices in Chilean pesos, while volumes contracted 2.9%. The better average price in Chilean pesos were mainly explained by revenue management initiatives and price increases.

EBITDA weighed 32,4701 million Chilean pesos, down 47.3%, and EBITDA margin decrease from 13.1% to 5.8%. The weaker financial results were mainly associated with, one, high cost from raw and packaging materials, two, the depreciation of our main local currency against the US dollar impacting negatively our US dollar denominated costs, partially compensated with export revenues. And three, costs and expenses pressures associated with an accelerating inflation in our main geographies and higher oil prices.