Compañía Cervecerías Unidas (CCU) 23 Feb 212020 Q4 Earnings call transcript

Good day, and welcome to the CCU's Fourth Quarter 2020 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.

Welcome, everyone, and thank you for attending CCU's fourth quarter 2020 conference call. Felipe and Financial Investor are Novoa, and me Planning Financial Relations with Dubernet, Officer; Chief Nicolás Today Manager.

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

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

by to management and which According us profitability business and regional operating strategy handle time priorities, implementing and supply and maintain community we you, people we and consumers. to to we thank us operation joining the place continue our These for secondly, initiatives year we everyone, pandemic. to the particularly gradually In to the and scale thirdly XXXX, financial COVID-XX safety To Thank clients of allow you today. faced a revenue due recover to three and implemented a hello firm efficiencies. health. continuity, and our products Claudio, put over with challenging these, our interact with, aims all then a these, in

and and a of in volumes, quarter, April during impact strong the fourth negative in the showing spite throughout slight the of follows; our expansion the X.X% XXXX, quarter, the reaching a of a of an as drop in strong first contraction quarter year year. second pandemic recovery quarter, terms volumes in we between XX.X% of X.X% from August, of a third v-shaped growth million in XX% X.X%, hectoliters, XX.X grew the the of In the in

financial income EBITDA XX.X% in partially against revenue the from XX.X%, to margin from Regarding decreasing sharp mainly margin peso external efficiencies At peso the EBITDA consumer materials. to effects Net against and impact health, compensated of decreased debt negative financial the and XX.X%. from we CCU In dropped to dollar, results, regards raw with the initiatives, management level from effects lower and decreased control U.S. ExCCelencia and the due XX%, our depreciation Argentine the in These under we cost were pandemic program year. occasions. net high kept last Chilean financial

which in of solid fourth X.X% the XX.X% the business segment, quarter, to us strong demand operating the During XX.X% a Chile recovery. expansion driven operating was a volumes of were consolidated execution, increase international in to The and result and XX.X% allowed volumes by segment, into higher Operating commercial segments. Wine operational rise an the jump in respond

losses. non-recurring negative including accounting. in CCU above, In XX.X%. by the Bolivia percentage of income basis the XXX The Argentina, effects expenses and an to according negative EBITDA initiatives, impairment hyperinflation improved related MSD&A X.X% properties Net revenue margin terms ExCCelencia X.X%, and volume of results, a translation points. currency grew loss explained effect results our to to the was Net as partially with EBITDA of efficiencies sales impairment program, mainly offset explained EBITDA improved related and from growth higher financial the from increased XX.X% by mentioned management by

increased The from margin as from program. during higher The XXX MSD&A in market due expenses while effects. in along The Operating accounting, to this to ground segment second management Altogether, program. all of hyperinflation CCU in income drop Gross performance higher XX.X%, margin of XXX related negative expansion of decreased in was CCU XX.X% a line and basis Argentina, margin Net higher improved efficiencies negative to prices basis lower average growth basis by contracted cost from average impairments, a which prices decrease a Uruguay, from Chilean and dropped Excluding quarter, market, driven all, The consequence segment, pesos in and driven impact The higher driven of EBITDA an domestic Chilean and lower volumes were environment, to the mainly were Chile gains the and by but effects prices initiatives in Chilean in X.X% growth exports Wine segment, The of to effect points, and posted prices volume The In in in manufacturing the in a markets. XX.X% volume rise revenue, prices. percentage positive figures share. sales during by third Argentine quarter prices EBITDA two XXX consequence quarter. expansion Operating EBITDA XXX categories, lower mix consumer X.X% positive in as X.X%. ExCCelencia points EBITDA the the in negative the with volumes, negative by currency XX.X% domestic contracted of higher to currency and average points. mix quarter expanded decreased. MSD&A margin Operating Postobón, revenue XXXX. a wine. as points of returned a were basis of basis quarter. XX.X% strong and Gross average reflecting consumer after XX.X%. the In a mostly expanded while XX to mainly our XX.X%, as Gross venture increased joint management positive more X.X% to equity, translation in hectoliters, distribution positive EBITDA XX.X% XX.X%, by of mainly XX.X%. The margin in prices have X.X% and in of consequence annual positive the XXXX by scenario, us Colombia improved average with Net due higher the share margin explained contracted Net Business XX.X%, basis and This the Argentina million applying includes XX.X%. MSD&A double expansion a with X.X a pesos consistent sales contracted. main with volumes, Bolivia, challenging was by market we In in in the in sales execution. more line the posting contracted Colombia, an while cost all, XXXX. have XXX industry points, trend brand occasions continuous deteriorated of XX% allowed in from through In the temporary expenses reported our a increased would a two XX.X% we improvement is thanks ExCCelencia due where high expenses. our revenue spite line sales with practically a decreased these of in to Paraguay EBITDA as top initiatives control than and margin pandemic costs. percentage initiatives. points restrictions expenses local marketing Net reached International percentage performance, higher

four scale, reached a in since greater In consecutive EBITDA half with with business during terms positive September. financial EBITDA of line months we results, year, second of the and positive with the

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

our we will first [Operator Instructions] Please go And question. take ahead.

JPMorgan. Lucas Ferreira from

Hello, Lucas.

good for scenario question. understand market would to Chile. first my the in a afternoon. bit I everybody, the good Hi, of morning, Thanks and like taking all the better

us provide details could more market. guys you if So the on beer

hand, superfast, the grew mean, in You channel share no were fourth market guys considering quarter? the can during you stronger the Chile where in expect fourth of And gained share, market of what that quarter? And most most these which market that vaccinating market is beer the we for for the right. the gained XXXX any specific was segments in I one

of the reopening could be the also So fast. economy

On there withdrawals. the let's other EFB no are hand, more, say

these question was see on guy do year? what in last your So front. of is growing XXXX? market view And cost effect end in So the of withdrawals second my how in you the the

seeing of I would commodities sugar, skyrocketing, PET most aluminum likely the you're So I considering and prices. guess, most say oil

us guys you for very average give Thank in So, also expectation, wondering XXXX? what's much. your of cost outlook budget you your an if can

Lucas your questions. Hello, for

question and market good of growth Chile very Answer of than experienced packaging. trade-off was your specifically definitively about specifically the grow, quarter during the asked terms beer very the is grew in you has the First also the to channel. more one-way resiliency do of this in packaging, with and packaging return about fact, segment consumer of I the between a closure we all on-premise would occasions a category been fourth resilient and the beer. this in year, Yes, but has along say

good in Also And of year, premium so, all in and at the in brands. we saw the growth bottles. cans, experienced also a premium longneck performance end growing high the one-way we

So, little or is pressure also you in this what but put more on to segments. less a give of supply, terms the bit happened

are course, channels, and still end on the - the in because reused the recovered was during also especially channel year, eased. on-premise there and the of of fully terms gradually because of not restrictions But weekends recovered, the restriction of Chile, In and curfew. once towards it's December

didn't it year ago. the has level a recover So at the on-premise

than the to tremendous off-premise all other of been other a say grew terms more in quarter. trend throughout last In the compared especially supermarkets. And year, the but this would that the channels, channels, has - continued I channel growth has

very good. all, in in industry bullish which Chile So we saw in beer is a

do still we an outlook don't However, give you XXXX, to but first all, have forward-looking, of we uncertainties. for

rest it's well. benchmark we that the of if the about in Latin really saw It's that. mentioned And we You the especially world the in Chile America. very world, at a are vaccination and and happy so, going

that to there are of are lot optimistic, difficult we that but However, to - uncertainties, is still we a need uncertainties predict.

would I good and so, a in a start far, say volume. XXXX strength continued of have in had terms So we

from that funds, played have mentioned categories. will allowance there mean will but certainly last our the what it's in But be have don't we quarter. we You know, not we consumption another - role the has policy, that in calculation in a it about pension not the the exact maybe

exchange better by question world. also the commodity we vaccination, last we'll less commodity also do have you know The that So lower supported hope, maybe in would the certainly of your than don't we Chilean case. price because year costs given restrictions maybe world about mean as economy lower perfect [PET]. not also yes, the such in all cost given a and that front, And and way. XXXX, will it with have is lot the rate see perfect And

a more rate, terms have - than what don't give what We exchange In should dollar. we - in prices. I'm lower a in also have a the prices rate considered rate the now lower that that ago, compensate but are have we But exchange the than because but on for we forward-looking we budget. hand U.S. prices more commodity have price months one we all, higher We more weighs that. nowadays front, on optimistic higher commodity of what that thought much that commodity two exchange

Lucas. Okay,

will mute. go question. take our you on next Please be may Caller, We ahead.

at Credit Rechia Suisse. Marcella

Marcella, Hello, are you? how

have Hi I questions question. yes, I'm good may. here. I Colombia Thank about you if for my taking two

is could give you positive First, in Colombia, beer? us double I us only? your And the you how the market could EBITDA beer volume this current all you not, could volume almost share are And country X.X in your million if throughout the comment level tell in And already you represent? XXXX. what much delivering share that understand some you there? if share right. is what perspective is hectoliters region finally, if But

about net visibility very you Thank breakeven? So any do the you much. income have

- is difficult saw reaching Thank What was channel XX%, million Yes, quarter consequence, we than restriction. a helps let's you, very year the more we Marcella in your for question. lot. our as due a say especially favorable, volumes And Colombia to two expand are conversion to that in hectoliters. able although heavy a X.X XXXX a us we were

our of brand, the mainstream first XXXX of the was Although Andina. year launch base of the

market sell in returnable of of gain middle very a lot volumes beer. the in and the with growth but share. bottles the year. launch success [ph] Regarding also contributes we XX% especially our But empowered beer Natumalta, the delighted that good of about in Heineken malt And the of Andina Colombia, we brand, through Heineken were by is brand to the a especially

But market month numbers. but bit about the disclose don't the every we more little share, in regarding mid-single year, talking So mid-single a growing. reach are share in we on than digit terms we what during average digit of

positive on delivered think exchange in terms also competition. factors Regarding of the such that correctly and depends rate, this commodity the But end, the EBITDA financial, many you second mentioned we in the costs, as income, At big in net semester. year month. it we

the on positive approaching breakeven on direction in you - give in the we the at We But specifically but will guidance time, know which I moving be net net say. would income. we don't are

will We our go question. take Instructions] [Operator Please ahead. next

guys, Hi, much is very thank my question. [Mohammad Foyston], this for you taking

Mohammad. Hello,

guys inflation And on One XX% the COGS XX% all are two year. think in is I questions. is Hi, hope mid you see Chile. I well. number the or specifically I here almost XX% for have

CapEx, XXXX much see in what much And it increase year. in the how the color on question us hectoliter and mixed the on any expect Can FX? we then you me XX% Hello? have XXXX? versus how should COGS CapEx last Let was in per second give is year I of was

well. I you hope Thank Mohammad you are

So on will answer I inflation question Novoa let the ask CapEx cost question. to touch then and Nic me the

in inflation, main So by It effects, right. cost was were regarding influenced effect you rate. the two exchange was one

throughout As a the devaluation you the Chilean know, faced of year currency. the peso

our dollar. linked XX% the say and material are would to XX% So let's costs raw of about, U.S. say I

first an packaging we question, in has the you way mentioned Also effect. previous switched returnable pointed that correctly, because a cost cost packaging one from I higher has the as also have out you goods. that's of So of mix less to where goods the are effect,

the very has in that exchange practically rate of was flat quarter quarter compared where to main also positively certainly rate ease four, but X%. So last to exchange this started the same minus the year an influence, was influence only

rising this be in all, On was costs, we have the other would commodity in mentioned hope side, quarter what previous I we also it favorable, but and the more question, better. especially

cost of was reason the that So, inflation.

question Now over regarding to your Nico, CapEx. I hand

CapEx Hi this have maintenance Mohammad, we much to around CapEx year, CLP pretty how our are million, CapEx. is you? XXX,XXX Regarding our which

around is million. depreciation our look you If CLP XXX,XXX

that more like and a we we that need this more that related means the Argentina, it's Argentina. especially, selling capacity forward CapEx investment a little growth in with investment and started the this are end are keep maintaining include CapEx If next the investment in we Chile. investment obviously than the seeing year for with are especially we includes, CapEx look in Also volume more need trade. related we of At So that to and capacity the we that in in little the the in this in that we to saw more year, Chile year, seeing going with capacity and Argentina. related

going that it's numbers on in much regarding annual the that our XXth. seeing to thing we CapEx. report are disclose is, to those pretty But We are

take us We'll ahead. next Caller question. have our you Please may mute. on go

Laboy. Carlos Yes, this is

Hello, Carlos. How are you?

And a us channel can the said mean, price brands? in Hi, consumption was us what repeat coverage your can three and tell rollout us for was about maybe channel what insight how the that you conversion? give geographic you Another core Colombia? I that are had lastly, positive done What channel that you'd mix around with tell you on like Colombia, You you? about your what you hoping your areas. could is is - look are pricing? mix and now some for right What your had more question does brand?

Yes.

around all, have of region. Brunei which all we first country, core So, portfolio, Bogotá other [ph] we is have the are we the but a in area where

So higher in shedding Bogotá. we have a

which non-alcoholic joint is venture However, operator. remember beverage is with beer business main our the a Postobón, in Colombia

our the distribution So Postobón we to use do distribute products. of - we

of the coverage full a country. have we So

is, a higher the returnable because of However, Colombia area with returnable one-way. core than is especially packaging, much proportion is we which that have

I the in market, pandemic, more to a we - higher answering we the in the I say. and increase started that we channel And the but on that have that fall are on-premise channel So, presence. sales, Bogotá, presence mix, the in say recover new but comment was as would my stronger would during sense, are supermarket this down

grew our However pandemic being That's bit, the distribution channel, are said the answer. specifically a the supermarkets that, we but increasing on-premise more. in in day-by-day little

question. we go take ahead. will our Please, next Please

you my taking regarding have of is one couple important first margins in maybe or is very logistics? results of important a margins question. for And the bit would transport there's you the that in a on showing your your any I strategy But thanks - little stable I after Also, expense that more one maybe have a us present a a catch-up commodity on to having variable. one expenses, of having if which decreases you these and Hello, and in And showed was questions. saving both there can in you outlook impact Argentina, results side front. in give also been know like are impact

if cost so, glad and whether you'll you a you're know the management your try different on some you in impact market? that possibilities months? us there be this if - countering to business, can seeing and was regarding good be Thank give outlook I'll and finally are it negative expecting of also this the So profitability revenue coming explanation on on pressures will if wine to you. also by And in manage in maybe an

Can me because… name you your please give you. Thank

Thiago from Duarte, BTG.

thank how you Thiago, hope Thiago. are hello you, are you Okay, well?

expenses, Okay you distribution the in about transport because about domestic a…. - it's ask Thiago, - yes specifically I asked distribution right, you or side, expenses think transport worldwide

the… Regarding your we see as businesses

inbound one China, experiencing, higher okay this with things and cost transport on you are the is that particularly okay. hand, on have materials Okay, of raw

have, that prices Chile, in on to four, of oil terms exchange in know, and one are also decreasing compared we hand, linked in rate. quarter domestic, same oil such XXXX of So good quarter the do we during variables you to as relatively price

somewhat So, it was favorable.

would now, this However oil increase bullish commodity would scenario prices certainly I given say.

a us So, Argentina needed this we last second generation. you to quarter. lot more fleet, experienced quarter with that results. negative a we and tough right, change higher big - in EBITDA volume but hire specifically with Jumping we a have Argentina year, in had yes so especially along now, in helps are the to third because in We especially very non-cash

management volume lot. the a started is say initiatives, improve end this XXXX. a while the We towards of the very would I to did it at collapsed. of So revenue year, And encouraging has not lot

we a four. very in very also in a increase XXXX start is had good fact, in we quarter Argentina. And prices, have where good In which able so news for we that, volume had to XXXX, January were good

more of So are last nowadays was optimistic, given the pressures, let's were we terms we year as say from suffering harvest in wine, wine of ago. cost famous. Wine, the XXXX of not that in Argentina cost are we

certainly So, and affected bad harvest then now also now the affect February we had that during also XXXX - would especially that that is starting. weather

in that to through side only So - the of domestic way it's management, the is revenue compensate the business. more easy

rather the business other side Chile, the would also export of and is the a the this than other in by business markets, - say business on be U.S. Let's dollar. weaker

that So, we the and can way to only management efficiencies. through revenue compensate wherever is also

question. ahead. We [Operator Please will take our Instructions] next go

questions Ucros of have from Hi, Nicolás, Scotiabank. is asked. this my been Felipe, Felipe Most

second gained of you about doing the see I doing? the versus you be talked those? above because much a talk government that how could Argentina? conversations how going? prices talked color, expect and able bit intervention of one controls about each a little So same you a Andina also are government Thank little some region. price evolved? how XXXX? really a receptive you Heineken, really, or What give more about market wondering, you on on you much follow-ups how us little with channel to increase share How that's bit well, been not within the it changes do And you little my brands expect has or you. of you inflation about think are as you've little and you that how side? bit Should for Can a consumer then the Can channel? expanded do talk bit have Colombia. question, how gains with I is a And to was if couple

questions. two Thank for you, Nicolás the

we performance portfolio expanded we - equity also packaging, Regarding especially have we good returnable Colombia premium only on building being to and very well. by also expanded the I bottles. a brand we where mentioned, lot This expanded on as packaging And a that Andina one-way side. thanks is our saw being are in was the very to Heineken one-way brand -

expansion also, lot in brand has also Some such channel. share gain where a our so new a the are of effort is not of we equity gaining channel, business Andina, a it's to of Heineken, terms share. that lot us but help is an I by the portfolio market explanation is in only potential of brand a as and terms And building of in gain, the this mentioned

announced a to And that. all portion this secondly, were the you price also, positive mainly XX.X% a margin XX.X%. from of And but nice until we prices Argentina of reason why add as in to is our the were we year. are very is which it increasing past And shape this of So, were first this means that published prices de-listed mentioned, the numbers it the We have in I we profitability is starting program January, because was able a whole also was January. good the related is to we we EBITDA. increase means Colombia. saw to And in margin, [Maximos] from Argentina business. where we that increase to recovering step-by-step And able precious de-listed in were beer the able international are had to EBITDA the January, that March. program. We as significant a in from end expansion business,

Please ahead. question. take our we'll go And next

Nicolás this Itaú. Hi, Hi, Barbara with hi there. Angerstein Felipe, is everybody

mom comment the pop supermarkets? it different. supply in it channel and levels surprising on because Nacional It in disruptions - to on wanted could caught my commented versus pop previous you. and of and of Can that you is complaint bit quite news supermarkets low as comment little therefore Económica you please? this have some mom attention a on you Thank occasions, Fiscalía inventory inventory lack stores a a see there is And their published seems if Just profitability on and the smaller with last presented that doesn't there. - week

Barbara, the the are the the Yes, Fiscalía claim I refer Hello or end hope any data can during and you off-premise antitrust I complaint well. not a What from the that times we it her because us. say not was to against at not the you specifically grew quarter or only is, the an I do the channel. whole supermarket have inquiry moment will detail channel Nacional Económica at quarter, know, the four industry three last

need had in double-digit. issues because supply the we recognize However, grew we to we year

is And international has mix maybe pandemic you throughout one-way before, from by if packaging. shortage industry, one on bottles year consequences was worldwide on returnable the of to saw know, by very This been the switch everywhere. a the Secondly, the reports there pandemic. affected of as a the mentioned you cans I the

supermarket any with a quarter, for but tight supply during without - off-premise channel any channel. product fact times the that the without the have any in in combined don't have the discrimination. we the And - product all we we So channels, growth the every have is fourth higher channels grew in three channel sold all

Okay.

be that volumes impossible keep it's that selling the that issue an they up so to much they So to with it are sell? seems more

four Yes, we are volume issues size. high change had supply very being evolving mix quarter with it's a along strong very with violent know during positively, of you but that along

take ahead. question. We go Instructions] will Please [Operator next our

Thanks question is, Colombia like I agreement? you assessment new developments any to already I has from call. you. have My know pressure on Hope some I Petri well? you from all This problems. that is competition Santiago had it agreement If the are know, But between been Templeton. if the Thank your apologize for any, answered, or there communication and Andina? of would

you are very agreement hope there Santiago, I Hello, well. is Yes, that and a it's too between public ABI. Andina distribution

many, early think multi-category it that brand or model what We in we suffered been share to equity. we we for has need it's that. doing on we business And because CCU they model And distribution doing we and years. XXXX. have execution been are on that, terms But empowering on let's doing. all, First quarter of validates to do market But haven't are category, give the our for prepared has focusing say many in in started any that comment any have too of commentary sales, to in don't November. what or many, continue specific

have remarks. [Operator at any to no for Instructions] questions back host Felipe, I we further time. your this additional to closing the would conference like turn or

operate, continue call. while Okay, to all countries XXXX, operating this conference the you thank attending and community all able we our we you very keeping much for In were to protect people, in the scale the recuperate efficiencies. growth sales At management same our we revenue and company. by our and set the initiatives gradually of volume financial profitability over time, to protected time, through the delivering support businesses ground

will we and XXXX, continue during a ahead scenario. uncertain to challenging Looking face

keep on the focusing the in the and pandemic, for are this double will recover we will optimistic that. we three set objectives quarters. our However, In to context, coming we profitability on efforts

together if Finally, have effort I a much you united, would take time XXXX. to we like very challenging better afternoon. and employees, that and work particularly and will difficult a year each life. very us in share of good convinced this Thank am overcome care the a to to of other, I thank from we stronger which emerge commitment CCU allow all

that today's And concludes presentation. Thank you participation. your for

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