CCU

Ladies and gentlemen, good day, everyone, and welcome to CCU's first quarter 2026 earnings conference call on the seventh of May, 2026. Please note that today's conference call is being recorded. I would now like to turn the line over to Mr. Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.

Welcome, and thank you for attending CCU's 1st quarter 2026 conference call. Today with me are Mr. Felipe Dubernet, Chief Financial Officer, Mr. Diego Munizaga, Financial Planning and Investor Relations Manager, and Mrs. Carolina Burgos, Senior Investor Relations Analyst. You have received a copy of the company's consolidated 1st quarter 2026 earnings release. The call, as usual, will start by reviewing our overall results, and then we will move on to a Q&A session. Before we begin, please take note of the following statement. The statements that we will make in this call that relates to CCU future's financial results are forward-looking statements, which of course 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 risk and uncertainties set forth in CCU's annual report and in Form 20-F, recently filed with the U.S. Securities and Exchange Commission, and of course, the annual report that's also available on the CMF and our website. It's now my pleasure to introduce our CFO, Mr. Felipe Dubernet.

Thank you, Claudio, and thank you all for joining the call today. We started the year 2026 with a strong set of results in Chile, our main operating segment, while we continue to face a soft consumption environment in Argentina and a particularly weak business context in the wine business. In terms of financial results, consolidated EBITDA was flat versus last year, growing 0.1%, as the robust 13.7% EBITDA growth in the Chile operating segment was offset by contraction of 18.6% and 50.1% in the international business and wine operating segment respectively. In the quarter, consolidated net sales were flat, growing 0.2%, explained by 1.8% higher volumes, almost fully offset by 1.5% lower average prices in Chilean pesos.

Consolidated volumes were driven by a 3.9% expansion in the Chile operating segment, more than offsetting the decreases of 1.7% and 5.9% in the international business and wine operating segment respectively. Lower average prices in Chilean pesos were mostly due to a negative currency translation effect in Argentina, coming from the 28.7% depreciation of the Argentine peso against the U.S. dollar, being partially compensated by revenue management initiatives. Gross profit grew by 1.4%, and gross margin improved 55 basis points, mainly due to lower direct costs and efficiencies. MSD&A expenses were practically flat in Chilean pesos, offsetting with efficiencies, overall expenses pressures, and restructuring costs in Argentina. As a percentage of net sales, MSD&A grew 23 basis points. In all, EBITDA margin was stable at 16.1%.

Net income was down 6.8% from last year. In terms of our operating segment, in Chile, top line expanded 3.9%, explained by higher volumes as average prices were flat. Higher volumes were driven by high single-digit growth of non-alcoholic categories and overall market share gains in alcoholic and non-alcoholic categories. Alcohol products, which encompasses in this segment beer and spirits, decreased low single digits. Although flavored low-alcohol ready-to-drink products, volumes grew low double digits. Flat average prices were a consequence of a mix effect in the portfolio, mainly due to the growth in non-alcoholic, particularly in water.

Gross profit increased 10.2%, and gross margin rose 278 basis points compared to last year, mainly driven by lower costs coming from the 8.1% appreciation of the Chilean peso against the U.S. dollar, impacting favorably our U.S. dollar-denominated costs and efficiency gains in procurement and manufacturing costs, partially offset by higher aluminum prices. MSD&A expenses as a percentage of net sales grew 31 basis points. Altogether, EBITDA increased 13.7%, and EBITDA margin was up by 173 basis points, reaching 20.0% EBITDA margin. In the international business operating segment, net sales recorded a 6.7% decrease, driven by 5.1% lower average prices in Chilean pesos and a 1.7% contraction in volumes.

Lower average prices in Chilean pesos were a consequence of a negative currency translation effect in Argentina and negative mix effect, partially offset by price actions in line with inflation on a year-to-date basis, although still lagging annual inflation in this country. Volumes in this segment were below last year, explained by Argentina to a mid-single-digit contraction in beer in a stable market share scenario, partially offset by a low single-digit increase in the non-alcoholic category. As a result of the challenging scenario in Argentina, gross profit contracted 10.7% in Chilean pesos, and gross margin decreased by 218 basis points due to cost pressures. MSD&A expenses as a percentage of net sales decreased 54 basis points due to efficiencies. In all, EBITDA contracted an 18.6%.

Excluding the before mentioned restructuring cost in Argentina, EBITDA would have contracted 10.4%. The wine operating segment posted a top line drop of 7.2%, mostly driven by 5.9% lower volumes and 1.4% lower average prices. Weaker volumes were explained by a contraction in both exports and our domestic markets, in line with the industries. The lower average prices were mostly as a result of the appreciation of the Chilean peso against the U.S. dollar and its unfavorable impact on export revenues together with mix effect, partially offset by revenue management initiatives in domestic markets. Gross profit was down 21.8%, and gross margin deteriorated by 589 basis points, mostly due to higher cost of wine. MSD&A expenses as a percentage of net sales were flat.

Altogether, EBITDA decreased a 50.1%, and EBITDA margin was down 508 basis points. Regarding our main joint venture and associated business in Colombia, we posted mid-teens volume growth during the quarter, continuing on a positive path of building business scale. We are focused on building brand equity to enhance profitable growth in the future in this country. I will be glad to answer any question 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're dialed in by the telephone, please press star two on your keypad. That's star two on your keypad. If you're dialed in by the web, you may also ask a voice or a text question. Our first question comes from Mr. Fernando Olvera from Bank of America. Please go ahead, sir. Your line is open.

Hi. Good morning, everyone. Thanks for taking my questions. The first one is related to Chile. If you can explain or give us some color of what were the drivers of the high single-digit growth of non-alcoholic drinks? How do you expect volume to behave in the quarters ahead? That's the first one.

Okay. Fernando, would you like to maybe the second question right now? You have two questions.

Okay.

Okay.

Sure. The second question is regarding the solid growth margin expansion that you deliver this quarter, you know. How are you thinking about costs the remaining of the year, considering the volatility of aluminum prices and the strength of the Chilean peso? I mean, both questions are related to Chile.

Okay. Thank you, Fernando, for your question.

Thank you.

First, your first question regarding the good expansions we have had on the non-alcoholic category. I would say that there are differences between products in terms of growth. As you know, soft drinks in Chile, we have a high per capita consumption compared to the rest of Latin America. This category particularly grew something flat or very low single digit. However, the rest of the categories show a very good growth, especially driven by water. This I think is more related to consumer trends, some innovations we have had, and continued growth of enhanced water or flavored water with natural juices, such as the Mas brand.

In fact, in all these categories, water that also encompasses the enhanced water, we grew double digits. There are other liquids that regain growth, such as juices growing mid-single digits, and also all the functional ones that we could highlight energy drinks and sport drinks. I would say very low growth in soft drinks. However, very high growth in all the rest of the portfolio, and it's more related to consumer trends, I would say. This particularly very good growth in the non-alcoholic category in Chile. Going forward, I would say we It's difficult to do forecast, especially when the consumer is under pressure given, you know, increases in oil, inflationary pressures.

It's difficult to say how this would evolve going forward because as you know, particularly in Chile, oil prices, gasoline prices, were passed through the consumer very quickly. As you mentioned, on linking with your second question, it's a very volatile scenario, not only for us in terms of input costs, but also for the consumer in terms of how its own cost would evolve, and this could impact our mix of products. So far, very good results in the non-alcoholic category. Regarding input costs, it I would highlight that it's not only aluminum, but also oil prices that impact our distribution costs.

These I would say are the main drivers of higher input costs that currently we are having, linked also with all the plastic-related packaging materials such as PET, polyethylene and polypropylene that we use especially for packaging. As you mentioned, we delivered a solid gross margin in Chile, driven by, of course, the appreciation of the Chilean peso, but also efficiencies in manufacturing and in procurement. Going forward, I would say, every day is, today I saw Bloomberg and oil prices were down 5%, but maybe in a week we could have +5%, it's very volatile.

However, we have took actions since the beginning of this rally on prices, especially as you mentioned aluminum, but also oil. We have in end of March, April, increased prices across the portfolio.

Great. Thank you, Felipe.

Thank you very much. Our next question comes from Constanza González from Quest Capital. Please go ahead, ma'am. Your line is open.

Good afternoon, Felipe Dubernet and the rest of the team. I have two questions. The first concern is about Chile, the EBITDA margin. Are there any spend that can be replicable for the rest of the year? Are these levels sustainable for the remaining of the 2026? The second question is regarding Argentina. Do you expect a recovery in volumes in the coming quarters?

Yeah. Regarding EBITDA margin, as you mentioned, yeah, we have had a nice expansion in terms of EBITDA margin for the because of we had a overall better prices than last year in all the categories. We suffer from mix effect, but that is logical. When you sell more non-alcoholic than alcoholic products, of course it will have an impact on price per ton. Okay? Also, unit costs help us to increase margins. Going forward, your question, I repeat what I have answered to Fernando Olvera in the previous question. We are suffering from a very volatile scenario. We are trying to do everything to compensate this new input costs, but we need to be careful because it's a balance between volume and price.

As I mentioned, we have increased prices in Chile, end of March, beginning of April in all the categories. Also we are searching for additional efficiencies in order to compensate the effects. It's very volatile and it's too early. Until the conflict is not reaching an end, and still, we are suffering with this volatility in oil prices, and also aluminum prices and other packaging materials, as I said, where it is difficult to do a proper forecast. Of course, we have scenarios internally that so far with the price increases we did, more or less, we are able to compensate.

However, as I mentioned, we could face or we could find a more soft consumer, in terms of that the consumer not only consume or buy our products, but has other needs. For example, to run the car. Now he's paying more for the gasoline for his car. We need to be very careful. Regarding Argentina volumes, yeah, the first quarter I would say was soft, still soft. We decreased our volumes in non-alcoholic as we mentioned, mid-single digit. The first quarter of last year was a very high comp. In the following quarters, I am sure we'll be seeing a growth when you compare quarter two against quarter two, quarter three against quarter three, and quarter four against quarter four.

This is related because the last nine months of last year were particularly weak in Argentina. Now I think we face a more stable macroeconomic situation since. However, with a lot of inflationary pressures, I would say. We have high inflation in Argentina. We have been able so far to increase prices in line with inflation as we kept a lag from last year. Last year with our prices increases were below inflation. Overall, in Argentina, I would say we have a more favorable comps. However, we don't see an extraordinarily good recovery. However, it's more stable so far.

Thank you, Felipe. I have a follow-up question. Can you give us a sensitivity in EBITDA according to the volatility in prices in oil prices?

I would say in terms of the impact on oil prices, we have direct effects that are completely direct because all the contracts and the drivers are particularly linked to oil prices, such as distribution costs. This has significant impact, and other costs such as glass, that is very energy-intensive. I would say that each $30 per barrel of oil increase, we are talking something like $30 million direct impact of oil prices. This could be compensate on the other hand by the appreciation of the Chilean peso. Each 1% of appreciation of the Chilean peso is about CLP 4 million.

If we have 10% of appreciation of the Chilean peso, we are talking about significant money to compensate. These are theoretical effects because at the end, it would depend how this would evolve in terms of the volatility we are seeing today.

Thank you, Felipe.

Okay. Thank you very much. Just a reminder once again, star two for any additional questions. Star two, you may also ask a text question via the web. We'll give another few seconds for any additional questions to come through. Okay, we have a follow-up question from Fernando Olvera from Bank of America. Please go ahead, Fernando. Your line is open.

Hi. Thanks for taking my question again. I have just a quick one regarding the wine business. You know, if you can share what is your outlook for the remainder of the year and, I mean, and if you have seen any sign that suggests volume stabilization or, even a recovery of the market?

Thank you. Thank you, Fernando. I would say overall, the wine consumption in the world, Chile is not the exception. Overall in the world, wine consumption is declining. At the end, we need to think differently to enhance innovation in order to focus on key markets and key products or key brands, especially in domestic market. The outlook going forward, I would say the export business is different than the domestic one. I think the domestic one will continue to experience a decline on that. This could be transferred, this consumption, to beer consumption or to other kind of alcoholic beverage, such as the low alcohol, ready-to-drink flavored alcoholic products. There's a switch of the consumer.

I would say the outlook is not positive in our view because at the end, we are experiencing what the world is experiencing in terms of this particular category. However, there are opportunities in the export market as there would be certainly consolidation in the industry. Also we have enough scale to operate in different markets in the export business. Because at the end, in terms of market share of our exports, of the total Chilean wine, that is an overall brand in the world, I would say we will be growing. In the domestic, I would say is more a declining, but however, focusing on more profitable products and on innovation.

Felipe, in that regard, have you considered selling the wine business?

No. No, because it has synergies, especially in the domestic market. As I said, the export business will be growing its profitability and market share. Also consider that the wine business, particularly this year, is very affected by cyclical wine costs. The last harvest was almost normal, let's say. However, this year we have a particularly perfect storm. Lower consumption globally, as I said, and particularly domestic, in the domestic business. We have a very high market share. I would say, as I said, strategy is to focus more on a more profitable portfolio, doing efficiencies and because in the route to market, we have synergies so far. Mm-hmm.

Okay. Oh, great. Thank you, Felipe.

Thank you very much. We have a question from Santiago Petri from Franklin Templeton. Hello, and thank you for the call. Can you please provide us volume breakdown in percentage terms between alcoholic and non-alcoholic in Chile and international? Thank you.

Hello, Santiago. Thank you for the question. As we stated in the press release, we made the disclosure between how much was the growth between alcoholic and non-alcoholic. Particularly in non-alcoholic, we grew high single digits, and in alcoholic products, we declined low single digits. This is what we can say. On the other hand, particularly in Chile, we gain both alcoholic and non-alcoholic products market share. In the other market, that is the other important market that is Argentina, we also stated that we decreased the alcoholic volumes by mid-single digits. On the other hand, we grew the non-alcoholic portfolio by low single digits. That's the disclosure.

Okay. Thank you very much. Reminder star two for any final questions. We'll give them a few seconds. Okay. It looks like we have no further questions at this point. I'll be passing the line back to the management and IR team for the concluding remarks.

Thank you all for attending this conference call. In summary, during 1st quarter of 2026, we delivered a robust performance in Chile, our main operating segment, and faced challenging business environment still in Argentina and particularly in the wine business. Looking forward, we will continue working under the execution of CCU's 2025, 2027 strategic plan and its three pillars: profitability, growth and sustainability. Which will be crucial to face the similar moment that the global economy is going through, given current geopolitical conflicts which have materially increased costs globally, increasing inflationary pressures. Our company is not exempt from this, forcing us to act with caution and deploy our resiliency and our adaptation capacity to navigate this uncertain and volatile scenario.

Regarding this, CCU already took at the end of the quarter proactive actions of revenue management initiatives. We will continue reinforcing efficiency efforts and managing CapEx priorities. All of these initiatives aim to offset the negative impact of the current scenario. Thank you all. I wish you a wonderful afternoon.

Thank you very much. This concludes today's conference call. We will now be closing all the lines. Thank you and goodbye.

Good day, everyone, and welcome to CCU's Fourth Quarter 2025 Earnings Conference Call on the 25th of February 2026. Please note that today's call is being recorded. At this time, I'd like to turn the conference call over to Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.

Welcome and thank you for attending CCU's Fourth Quarter 2025 Conference Call. Today with me are Mr. Felipe Dubernet, Chief Financial Officer; and Carolina Burgos, Senior Investor Relations Analyst. You have received a copy of the company's consolidated fourth quarter 2025 results. As usual, the call will start by reviewing our overall results, and then we will then move to our Q&A session. Before we begin, please take note of the following 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 that outperformance or results could materially differ. This segment as well should be taken in conjunction with the additional information about risks and uncertainties set forth in CCU's annual report in Form 20-F filed with the U.S. Securities and Exchange Commission, and also at the annual report submitted at the CMF. It is now my pleasure to introduce to Mr. Felipe Dubernet.

Thank you, Claudio, and thank you, you all for joining the call today. During 2025, CCU posted a strong set of results in its main operating segment while it faced a particularly challenging year in Argentina and in the wine business, especially during the second half of this year. Isolating the nonrecurring gain from the sale of a portion of land in Chile in 2024, consolidated EBITDA decreased 2.9%. On pricing segment, Chile posted a robust 7.8% EBITDA growth, which was diluted by the 29.5% contraction in International Business operating segment and a 14.9% drop in the wine operating segment. In addition, net income was down 16.3%. Under the same criteria and isolating Argentina, consolidated EBITDA would have grown mid-single digits in 2025. In terms of business scale, consolidated volumes reached 36.2 million hectoliters, expanding 7.3% versus 2024. Organic volumes increased 0.6%, fully driven by the Chile operating segment, which expanded 1.1%, recovering growth after 3 consecutive years of contraction. In terms of our strategy, during the year, we moved forward in our strategic 2025-2027, a strategic plan and its 3 pillars: Profitability, Growth and Sustainability. Regarding profitability, as mentioned, our core operating segment, Chile expanded EBITDA by 7.8%, well above inflation and EBITDA margin grew 48 basis points, while we keep growing in high-margin innovation and the dividend efficiencies in every aspect of the business. Regarding our Growth pillar, we strengthened our regional footprint by successfully integrated in Paraguay, PepsiCo's beverage portfolio and snacks distribution. Furthermore, we posted volume growth in our water business in Argentina in a tough business scenario and increased our [ beer scale ] in Colombia. Also to meet evolving consumer trends, we posted double-digit growth in low alcohol and ready-to-drink beverage products in Chile, innovating and consolidating our leadership in this high growing cost category segment, which involves beer, wine and spirits in the context of soft industries. Regarding Brand Equity, we recorded a solid performance in Chile, increasing brand equity levels being key to expand overall market share. Finally, as of sustainability in our Juntos por un Mejor Vivir strategy within the [ current ] pillar, we kept reducing industrial water consumption. Regarding the [ profitability ] pillar of our strategy and in the year that we celebrated 175 years of history, we reached important milestones. We obtained a high level of employee satisfaction, got certified in Chile and Argentina as a Top Employer by the Top Employers Institute, moving up in cadet ranking of citizen brands and got rewarded as one of the companies with best practices in corporate governance by the survey La Voz del Mercado 2025. From a quarterly perspective, Consolidated volumes rose 0.6% fully driven by the Chile operating segment. Our financial results were below last year, mostly explained by a challenging business scenario in Argentina, together with a high comparison base in [indiscernible] country and headwinds in the wine operating segment. This was partially compensated by our main operating segment, Chile, which continued in a positive part of results. Consolidated EBITDA contracted 17.2% where the 6% expansion in the Chile operating segment was more than offset by the 44.5% and 45.2% EBITDA contraction in the international business and wine operating segment, respectively. Net income contracted 25.7%. Consolidated EBITDA isolating Argentina would have expanded low single-digit in the quarter. In terms of our segment performance, in quarter 4 2025, the Chile operating segment top line expanded by 5.5% as a result of 4.1% increase in volumes and 1.3% higher average prices. Volumes were boosted by non alcoholic categories. Average prices were driven by the revenue management efforts, offset by negative mix effects. EBITDA has reached 6% mostly due to a 9.1% gross profit expansion, partially offset by 10.1% higher MSD&A expenses. Regarding gross profit, the rise was driven by higher volumes, lower cost pressures related to favorable prices in some raw materials with the exception of [ our NIM ] and the appreciation of the Chilean peso against the U.S. dollar which is positive on U.S. dollar linked costs, partially compensated by higher costs from our PET recycling plant [ circular ]. On the other side, MSD&A expenses funded mostly associated with higher distribution expenses [indiscernible] larger marketing expenses to support revenue. In International Business Operating segment, net sales recorded a 36.3% decrease, mostly driven by lower average prices and a 4.6% volume contracts, highly driven by a high single-digit contraction in the beer industry in Argentina. The decrease in average prices in Chilean pesos was driven by Argentina, impacted by negative translation effect, pricing below inflation through the year and negative mix effect. The later was partially compensated by efficiencies. [ In all ], EBITDA dropped 44.5%. The Wine Operating segment posted a top line contraction of 16.8% driven by 9.7% drop in volumes, together with 7.9% decrease in average prices. Lower sales was driven by both exports and domestic markets. The weaker average prices were mostly explained by stronger Chilean peso and its negative impact on export revenues and negative mix effects in the portfolio, partially compensated with the revenue management initiatives. EBITDA contracted 45.2% also impacted by the higher cost of wine. Regarding our main joint venture and associated business. In Colombia, volumes reached 2.4 million hectoliters in 2025, increasing 6.1%. We continue to build a robust brand portfolio and sales execution in Colombia which is the path to long-term volume and financial [indiscernible]. Now I will be glad to answer any questions you may have.

[Operator Instructions] So our first question is from Fernando Olvera from Bank of America.

The first one is regarding the volume growth seen in Chile this quarter, if you can comment if this was favored by the alliance with Nestle highlighted in the press release. And some additional questions, sir, if you can share what was the performance of beer during the quarter and also how these low alcohol products that you have mentioned will favor volume performance in 2026.

Yes. We -- thank you, Fernando, for your question. Yes, we have a robust growth in Chile growing 4.1% driven, as we highlighted, by the non-iconic category. However, our spirits unit view a mid-single digit thanks to a very good performance on all the non-alcohol ready-to-drink flavored products of that category. So it was a very good quarter where we do overall market check in the quarter. So -- and this drove good growth in the overall set. Regarding the year -- the quarter, in general terms was good. We experienced flat volumes against the same quarter of 2024. And seasonally adjusted, was a bigger quarter than quarter 3, let's say, seasonally adjusted. So experiencing seasonally adjusted growth the [ beer category ]. You are asking a more overall question regarding alcohol consumption. The capital alcohol consumption decreased mid-single digits something like 4%. We are still calculating because it depends on the population estimates. So -- but overall, decreased 4%. Regarding, specifically, in beer, we come back to 2019 per capita consumption. But following, as we highlighted consumer trends we are delighted of the growth, and we are experiencing in all our low-alcohol ready to drink flavored products portfolio, which grew [indiscernible] the 20%, more than 20% and reaching in the Chile operating segment, practically 7% of the mix. And this encompasses proposition on beer as mixers. We are very satisfied of the growth we are experiencing in the [ Stone ] brand and all these different labors. And also in the spirits, where all the low-alcohol flavored products are growing practically 25%. So the consumer is moving towards these products. And fortunately, we have a high innovation grade on that specific category and where CCU has more than 80% of market share of the overall market.

Our next question is from Felipe Ucros from Scotiabank.

Thanks, operator. [Foreign language] Thanks for the space. A couple of questions on my side. One, a little more short term and the other one a little more long term in nature. So the first one on SG&A in Chile, you've been generally posting improvements in your SG&A to sales ratio over the last couple of years. So I was a bit surprised to see you back track this quarter. SG&A grew a little bit faster than sales, and you did mention in the release that it came partly from investments in marketing. So can you comment on this and whether you expect to continue this investment at a higher level? And also, if you could talk to us a little bit about where that investment is going? Perhaps it's just additional spending to give some impulse to the [ RTD ] category that is new for you? Or perhaps it's something you're having to do in beer to keep it at neutral volumes? And then the second question, a little bit longer term, it has to do with the fact that beer has been lagging nonalcoholic beverages for quite some time at this point, right? And there's probably more than one thing at play here. So just wondering if you can comment about the different rates of volume growth that you expect there. In a tough environment, it's expected beer would underperform because it's more discretional. But there's also this structural migration from consumers away from alcoholic beverages. So just wondering if you can comment on the difference between those two factors and how it's impacting you looking ahead.

Felipe, thank you for your question. Regarding the marketing investment, it was mainly driven by the year. As also we had a low comparison base in quarter 4. So it was a temporary -- [ more ] investment in quarter 4 2025 compared to quarter 4 2024, and essentially went to support our premium portfolio. So I think this is to build a stronger premium portfolio because at the same time, price growth in beer was in the quarter in line with inflation, which is very good, a little bit above inflation. So it's a different combination on the P&L, but nothing to worry about. Regarding your question more on the long term, we think in the future, our winning non-alcoholic portfolio will continue to grow with especially water business in both a pure -- plain water. We had a tremendous success on [indiscernible] strong gas proposition. Also, we continue to grow at a high rate on our favored or enhanced water portfolio with [ brand mass ]. So all of these is driving the growth on our colleague that should grow in line with private consumption in our view. And especially the category where we did. Regarding alcohol, the situation, as I mentioned in the previous question, in the year, specifically, we come back to the per capita consumption in 2025 that we had in 2019. But bear in mind that 20 years ago, per capita consumption in Chile in 2014 was 44 liters per capita, in 2019, 52 liters per capita and in '25, 52 liter. So I think overall, this category, we cannot forecast the future, but should stabilize the overall beer category around 0% to 1% growth and would be driven by the low alcohol beer propositions. We recently launched in January with great success Cristal Ultra but also we lead specifically the low alcohol ready-to-drink portfolio of flavored products or mixers, which I mentioned in the previous question, growing a lot. So this would certainly sustain growth in the near future. But again, these are projections and -- but we are following consumers closely all the consumer trends. That's [indiscernible].

If I could do a quick follow-up on the first one. Do you expect this higher marketing spend? I know there was a comparison base, but should we expect it to grow at more historical levels going forward? Or do you expect a higher marketing spend going forward?

No. The marketing range would be the same.

Our next question is from [ Guilherme ] [indiscernible] from [ Apple Capital ]. What is your pricing strategy in Chile going into 2026 for alcoholic and for non-alcoholic beverages? To what extent do you plan to raise prices or do you plan to take advantage of lower cost pressure to be more aggressive in gaining share?

Overall, the company historically is aiming to grow prices in line with inflation. As in the last years, you know our input cost inflation was much higher than inflation. We have some lag in terms of recovering profitability that we have in the past. Still, we have this lag. So overall, our aim is to take every revenue management initiative. But this could be by rising prices, which is the less sophisticated answer to your question in terms of pricing, but also launching higher-margin innovation. In fact, the portfolio that is growing, the low alcohol ready to drink flavored products are at a premium in the case of beer compared to the mainstream beer. So you could increase prices or your revenue per hectoliter in different ways. But bottom line, the aim is not gaining share to pricing or promotions, more sustaining the market share in the long term through brand equity and marketing investments and high-quality produce rather than trying to gain share with aggressive promotions. So the aim is to increase prices. But always, you have a market of competition, but the aim is to increase prices in line with inflation.

Our next question is from Constanza Gonzalez from Quest Capital.

I have two questions. The first one regarding the environment in Argentina. Could you give us more detail about the trend in construction that you are expecting for this year? Some recovery in the volumes? And secondly, I would like to ask you about the CapEx for this year. Thank you.

Thank you, Constanza, for your question. Hope you are doing well. Yes. Regarding Argentina, the alcoholic industry was very soft, I would say, declining industry we are in the year have affected specifically also beer and not -- even wine was more dramatic but in beer, we have a decline in this. And the thing is that towards the end of the year, we saw some runway improvement. During the quarter, we had a terrible November in terms of weather because every weekend we have rain. So with rain, you don't do barbecues, you don't drink beer. So at the end, we have this terrible weather. Despite this terrible November, seasonality adjusted volumes in quarter 4 compared to quarter 3 improved 4%. This is what sustained my statement that we saw a gradual improvement. We don't know, we don't have clarity if we exclude the weather we had in November, maybe this would be an improvement of high single-digit seasonally adjusted. Today, we are seeing, let's say, a gradual recovery in terms of volume in Argentina. It was -- two questions -- second question [indiscernible]. Costa, could you repeat the second question because I had a sound problem.

Sure. I asked you about the CapEx that you are expecting for this year.

Yes. Regarding CapEx, we will be investing depreciation. No more than appreciation.

Our next question is from Aldo Morales from BICE Inversiones. Can you please explain if this negative inflection point in Argentina in ARS seems to continue over the next quarters. Also, can you please explain how persistent could be this negative pricing scenario in wine [ VSPT ]?

Aldo [indiscernible] you. So Aldo, yes, 2025 -- yes, in a broader perspective, in 2023, our prices, our beer prices in Argentina were above inflation. In 2024, slightly above inflation. We saw big numbers. And in 2025, we were below inflation. So 2025 in terms of price was not a good year for beer in Argentina. Although, looking at the future, we have increased prices in December, effective in January so that this would lead some improvement in profitability in the near future, along with gradual improvement. I mentioned that we saw towards the end of last month. Regarding the other question regarding why, this is due to mix effects mainly in exports. As in the domestic market, we increased prices above inflation. So it was mostly due as export prices and was due to mix effects.

Our next question is from Thiago Bortoluci from Goldman Sachs.

Thanks, Felipe, for the presentation and for the questions. I would just like to move back to the discussion on pricing in Chile, right? During your remarks, you mentioned that essentially beer prices are growing with inflation. Your headline prices are growing a bit below inflation, which suggests all else equal that your price mix for nonalcoholic is negative, right? Obviously, there are a lot of moving parts here. I would just like to understand how much of this is mix, how much of this is like-for-like and more importantly, particularly for non-alcoholic, what's the strategy going forward?

Overall prices -- the Chile operating segment increased price by 3.5% in the year. Price effect was something like 4.3% and mix effect something like 0.8% that was the impact of mix [indiscernible] product. In the last quarter, we have more mix effect due, as I said, accelerated water sales during the quarter. Regarding specifically in non-alcoholic, as I mentioned, the pricing strategy would be to at least increase prices in line with inflation.

Our next question is from Martin Zetzsche from Fundamenta Capital. How should we think about margins in Chile finishing in 2026, given the favorable levels for the Chilean peso?

Martin, I will not provide a specific number for margin or during 2026 is forward-looking. But as you mentioned in your question, we are facing favorable effects in Chile, which would certainly impact positively our raw material and this would come more in effect in quarter 1 of this year because we carry out some inventory in quarter 4 of specific raw materials such as [indiscernible] because this is why you didn't see, as a full extent, the benefit of having a lower exchange rate in Chile. However, there are also some [ signals ] in some raw materials, specifically aluminum, where we are seeing high, very high prices, above $3,000 per tonne aluminum comparable of what we saw in 2022. So that's a bit of concern, but this should be more than compensated by exchange rate, as you pointed out. So taking into account this, we should be seeing a favorable EBITDA margin, positive expansion of EBITDA in 2026. But again, this is based on assumptions that could change during the year.

Our next question is from Alvaro Garcia from BTG.

Felipe, I was wondering if you can maybe comment on the nonalcoholic front in Chile, on the performance of Pepsi Max, maybe how it's positioned relative to Coke Zero or to other competitors in China. So maybe specific commentary on maybe some of the better-performing products in Chile would be helpful.

Yes. In Chile, we do have Pepsi Zero, we do not have Pepsi much. To highlight, Pepsi Zero is doing very well, tremendous success in Chile. In fact, the coverage of soft drink category grew in the last quarter low single digit, which for this category of being Chile, a high cost -- high consumption level of [ CSP ] is a very good growth in Chile. And of course, Pepsi has been increasing brand equity and market share in the last few years. So overall, but what is really driving the category, the water business, especially enhanced water products are growing double digit during the quarter and other products such as ready to -- specifically functional brings growing mid-single digits.

Our next question is from Nicol Helm from MetLife Investments. Can you elaborate on your financial policy going forward in terms of net leverage and capital allocation? S&P has maintained the company on negative outlook for some time. Do you expect to preserve the current rating? And are there any specific measures you're taking for this?

Thank you, Nicol, for your questions. If I understood well, you are asking about net financial debt EBITDA ratio? Yes, the aim is to maintain the notch that we are having with the risk [indiscernible] so it's something below a ratio of 2. Today, we are finishing with 2. In terms of net financial debt to EBITDA is to maintain or even decrease if the business do better. But we don't have a specifically policy on that. But however, the aim is to maintain the specific notch that we have within the risk announced.

We'll now move on to our final question from Santiago Petri from Franklin Templeton. Hello. Thanks for the presentation. could you guide us on your raw material cost expectations for 2026? What impact would that have on your margins?

Santiago, yes, specifically, we'll answer the question more for Chile. Starting by the -- what has been positive today, as we mentioned in previous question, is the appreciation of the Chilean peso. We have some sensitivity on that, that each 1% appreciation is something about [ to CLP 4,000 million ] of better results at the consolidated basis because it's also considering the offset we would have in the export revenues we had in the wine business. So is positive on that, but I would not predict, of course, the exchange rate scenario. But if this is maintained, we are talking about a significant amount of money. Last year, the average rate was CLP 953 on this year, now the spot is CLP 960. So we are talking about 10% of significant amount of money. But this, as always, is being compensated by higher aluminum prices that we are suffering and higher PET recycling prices. As you know, we have a loan in Chile where 15% of the plastic bottles should have reached the local recycling PET and prices on that are the higher in Latin America. So to answer your question, we are seeing, overall, a positive scenario on input cost, thanks to exchange rates.

Thank you. We would like to thank everyone for the participation today. I will now hand it to the CCU team for the closing remarks.

Okay. Thank you. Same to you all for attending today. To conclude, in 2025 in context of soft industries, we posted solid performance in our main operating segment, Chile, recovering volume growth after 3 years of volume contraction and expanded EBIT and EBITDA margin. However, consolidated results were weaker due to a difficult macroeconomic scenario in Argentina, together with the contraction in the beer industry in this country and strong headwind in the wine business. We look to the future with optimism as CCU's core strength remain solid. Our focus will be on continue developing our 2025-2027, the strategic plan reinforcing our three strategic pillars, profitability, growth and sustainability with a special focus on profitability through revenue management efforts and efficiency and high-margin innovation growth. Finally, I would like to send my gratitude to all our more than 10,000 employees in a special year for our company as we celebrated our 175-year anniversary. Their dedication and commitment with the said CCU principles: Excelencia, Entrega, Integridad [indiscernible] have been key to navigate challenging times. We will continue to work to ensure sustainable and profitable growth for CCU. Thank you all, and I wish you a wonderful afternoon.

That concludes the call for today. We'll now be closing on the lines. Thank you, and have a nice day.

Good day, everyone, and welcome to CCU's Third Quarter 2025 Earnings Conference Call on the 6th of November 2025. Please note that today's call is being recorded. At this time, I'd like to turn the conference call over to Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.

Welcome, and thank you for attending CCU's Third Quarter 2025 Conference Call. Today with me are Mr. Felipe Dubernet , Chief Financial Officer; Mr. Joaquín Trejo, Financial Planning and Investor Relations Manager; and Carolina Burgos, Senior Investor Relations. You have received a copy of the company's consolidated third quarter 2025 earnings release. The call will start by reviewing our overall results, and then we will move into a Q&A session. As every quarter, before we begin, please take note of the following statement. The statements made in this conference call that relate to CCU's future financial results are forward-looking statements, which, of course, 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 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 CFO, Mr. Felipe Dubernet .

Thank you, Claudio, and thank you all for joining the call today. In the third quarter 2025, CCU posted higher operating results and increased profitability versus last year in a volatile and an uncertain business scenario. Consolidated EBITDA grew 4.6% versus last year, mainly driven by our main operating segment, Chile, which in the context of soft industries expanded EBITDA margin through gross margin improvement and efficiencies, maintaining the positive trend in financial results throughout the year. The International Business Operating segment also expanded EBITDA versus last year. Within the segment, we are facing a very challenging scenario in Argentina, where the beer industry contracted mid-single digit during the quarter. On the other hand, the Wine Operating segment posted a lower EBITDA driven by weaker domestic markets in Chile and Argentina together with a higher cost of wine. Our year-to-date results show that our path to recover profitability remains on track, supported by our 2025-2027 strategic plan, which prioritize profitability through revenue management efforts and efficiencies. Regarding our main consolidated figures in the third quarter 2025, net sales were down 1.1%, explained by 2.2% lower average prices in Chilean pesos, partially compensated by 1.2% volume growth. Gross profit decreased 2.9% and gross margin was down 79 basis points. In addition, consolidated MSD&A expenses in Chilean pesos dropped 4.7% due to efficiencies and a favorable translation currency effect from Argentina. In all, EBITDA expanded 4.6% and EBITDA margin expanded 60 basis points. For the first 9 months of the year, and excluding the nonrecurring gain from the sale of a portion of line in Chile in the second quarter 2024, consolidated EBITDA expanded 9.9%. In terms of our segments, in the Chile Operating segment, top line expanded 1.8% as a result of a 2.4% increase in average prices, partially offset by 0.6% lower volumes. Higher average prices were explained by revenue management efforts in all the categories. This was offset by mix effects between alcoholic and nonalcoholic categories. Volumes were below last year due to soft industries, mainly in alcoholic categories. Gross profit and gross margin expanded 3.6% and 75 basis points, respectively, due to lower cost pressures related to favorable prices in some raw materials, which compensated higher costs from our PET recycling plant, CirCCUlar. MSD&A expenses grew 3.2% below inflation in spite of higher marketing expenses and as a percentage of net sales increased by 46 basis points. Altogether, EBITDA increased 4.8% and EBITDA margin expanded 41 basis points. Isolating costs and expenses associated to CirCCUlar, EBITDA would have expanded 10.2% and EBITDA margin by 117 basis points. In International Business Operating segment, volumes posted a 5.3% expansion, although net sales contracted 8.9%, driven by 13.5% lower average prices in Chilean pesos. The decline in average prices in Chilean pesos was mainly due to the 42.2% devaluation of the Argentine peso against the U.S. dollar and a very challenging pricing scenario in Argentina, where prices grew below inflation and negative mix effects within the beer category. The volume expansion, excluding AV, the recent acquisition in Paraguay was mainly explained by Argentina, fully driven by the water category, while beer volumes contracted in line with the industry. Regarding our other operations, Bolivia and Paraguay posted higher volumes and Uruguay contracted low single digits. Gross profit decreased 16.6% and gross margin contracted 382 basis points. MSD&A expenses were down 19.2% and as a percentage of net sales decreased 552 basis points. In all, EBITDA grew 73.1%, driven by all geographies in the International segment. The Wine Operating segment posted a top line expansion of 1.6%, mainly driven by a 4.8% rise in average prices, while volumes were 3% lower. The higher 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. Volumes contracted due to a 6.3% decrease in Chile domestic market, in line with the industry. partially offset by 4.5% growth in exports. Gross profit decreased 1.6% and gross margin deteriorated by 128 basis points due to cost pressures from a higher cost of wine and higher U.S. dollar-linked packaging costs. MSD&A expenses rose 4.5% and as a percentage of net sales increased 78 basis points due to higher marketing expenses. Altogether, EBITDA decreased 12% and EBITDA margin was down 224 basis points. Finally, regarding our main joint venture and associated business in Colombia, we delivered low double-digit volume growth, outperforming the industry. We continue to build a robust brand portfolio and sales execution, which is the path to the long-term volume and financial growth. Now I will be glad to answer any questions you may have.

[Operator Instructions] Our first question is from Constant Gonzalez from Quest Capital.

I have a question regarding the international segment, specifically in Argentina. Are you expecting a recovery in prices for the fourth quarter of this year? And also, what are you expecting for 2026? Are you expecting a recovery in prices and volumes? And secondly, could you tell us more about the environment that you are seeing in conception in that country?

Thank you for your question regarding Argentina. Yes, in the second semester, we are facing a much more challenging scenario in Argentina, let's say, decline especially in the third quarter of the volumes, especially in beer, while the water business is growing mid-teens, let's say. The point of that, as you indicated, is that with prices that are below inflation. In fact, we are practically 9% below the inflation this year, year-to-date. We have increased prices in our side, but the scenario is competitive. The market share are rather stable, but we expect in the near future because everybody needs to recover profitability. Price increases, that's key in order to recover the profitability of the industry. Regarding volumes, let's say, we have maybe a more stable scenario in Argentina after the elections, where the government would -- is expected to, let's say, to decrease the uncertainty and its financial issues regarding -- especially the U.S. dollar. On the other hand, it is expected to do some reforms in this new Congress. Regarding the near future, we expect an increase in private consumption, but more than that, in this increase in private consumption that is expected to be next year, 3%, it would be different among different consumption categories. Maybe as you know, many Argentinians changed their car at the beginning of the year. So they have had some records in car sales. And normal people -- so I'm considering myself normal, I do not change the car every year. It's a very bad business. So maybe some of these resources from the consumers would come back to our categories, especially categories that are more linked to have fun as the beer -- responsible, responsible consumption of beer. And to regain momentum in the industry in the near future, along with -- we hope recovery of the overall economy. So we have had a bad third quarter. However, we expect recovery next year, I would say, and also more price adjustments to be at least in the near future in line with increase.

Our next question is from Thiago Bortoluci from Goldman Sachs.

I'd like to turn the conversation back to Chile, right? Obviously, there are different dynamics playing out there. But what I see from the consolidated numbers is your pricing growth moderating, actually printing even a little bit below inflation, while I wouldn't call it for a material decline in volumes, but volumes slightly down meaning -- I know probably these efforts to be less aggressive on pricing, let's say, are not necessarily resulting in a stronger demand. Could you please elaborate more how you're seeing pricing versus volume growth versus competition, market share across the different categories, soft drinks and beer please? And more importantly than that, how much space you see for eventually more pricing to be implemented in each one of those going forward?

Thank you, Thiago. Good to hear about you. Thank you for your question regarding Chile. Let me make very clear on price because I saw your report and then commentary now. Price in general per category are in line with inflation or above inflation. The thing that you are seeing is the entire segment, Chile that is showing a price of 2.7%, 2.4% quarter-on-quarter, but because there is a big mix effect between alcoholic categories and nonalcoholic categories. As the industry in alcoholic categories is declining, I have a negative mix effect in price. Excluding that mix effect, prices are increasing 4%, which is above inflation. So I need to make this precision because I read your report. The competitive dynamic, I would say, is very competitive, Chile, as you know. In terms of market share in the overall beverage industry, I would say we gained slightly share compared to previous quarter and quarter-on-quarter compared to same quarter last year, also we gained some share in both alcoholic and nonalcoholic categories because now we see the market as alcoholic and nonalcoholic, especially when you have industries that are declining and they are shift between industries. So I would say it's very competitive, but thanks to our brand equity, our revenue management strategies, our execution while we have increased prices in alcoholic and nonalcoholic categories, we have been able even to slightly gain share. The point regarding going forward in price always, we have an aim of optimizing our revenue management in all the categories, of course, to regain profitability, of course, there is competition. Alcoholic categories, especially wine, but also beer, the industries are very soft, are declining. The one that is declining the most is wine. But beer is also a decline in the third quarter, the industry. The only one that is growing low single digit in alcohol is spirit, thanks to the ready-to-drink where we lead innovation, will lead the market in this fast-growing category, which are the spirits ready-to-drink. Also, we have low alcohol or nonalcohol beer and all the shandies and the flavored beer such as, as an example, the Lemon Stones brand in Chile, where we led the market and it's also growing. Innovation is key in this scenario, okay? That's the answer, Thiago.

That's helpful, Felipe. And if I may, a follow-up in Chile, right? Obviously, I know this is a harder answer, but would love to pick our brains on that. I guess, across the world, we are seeing, in general, declining volumes in beer, right? 2025 has been an atypical year in some regions, you have adverse weather, you have obviously volatile macro, particularly across South America. What's your assessment of this weakness in beer, particularly for Chile? Would you say something more temporary? Would you say there is a structural component related to the consumption occasions, new generations, preferences? And what is CCU doing itself to try to revert this trend?

Thiago, it's not useful to -- in alcoholic, I prefer to talk about alcoholic categories rather than specific because we have different pictures in different segments, let's say. As I said in my previous answer, the one that the industry is declining more is wine. This is a global trend and has been for many years and also a Chilean trend in the last 10 years. Wine, the per capita consumption in 2014 was 13.5 liters per capita. And in 2024 was 10.5. In the opposite of beer in 2014, per capita consumption was 44 liters per capita and last year for 54 liters per cap. There is no single explanation. We carried out very scientific or [ values ] based on data and on quantitative and qualitative, what are the reasons maybe this year in 2025, we saw a further decline from where we were in 2021 or what we have experienced in previous year. And there are high numbers of factors that came from, and you pointed out correctly, is how much money has the consumer. The economy has not been brilliant in the last years in Chile growing 2% on average or less than 2%, huge adjustment interest rate. Interest rates are declining now. The perspective of the Chilean economy should be better in the next 2 or 3 years. Copper prices are on the roof, thanks to the climate change and all of this. There are a number of projects that Chile with enhanced GDP. So we are positive about the economy in Chile in the near future. And this -- if we have this, maybe we will see a better perspective for overall categories, not only alcoholic but also nonalcoholic categories. But there are other reasons that are linked to alcohol consumption. One example is unsecurity. People feel very unsecure in Chile than it was 10 years ago. The sense of going out to on-premise, having a beer or having a cup of wine and let's say, the on-premise was in Chile 10%. And nowadays, it's 5% to 6%. So -- and this is linked to unsecurity. All presidential candidates, in 10 days, there will be presidential elections in Chile. The #1 priority is unsecurity. And when you ask the consumer, why you are not consuming so much alcohol or why are you not going out and having, as you said, in Brazil, a [Foreign Language] or a [Foreign Language] in French. Now because I feel unsecure to go in the night, so I prefer to stay home and not miss my friends. So -- there are many reasons, Thiago. But we expect because we have studied other realities such as the U.S. market. The U.S. market is declining a lot to beer consumption. But however, there has been some period of history where we have seen rebounds on consumption in specific categories. And the category that is performing very well because it is linked to trends is the ready-to-drink category in spirits, but also variants of beer, where you have flavor, you have low alcohol content, beers that are more seasonable. So innovation is key because we led the categories, especially in Chile, the alcoholic category. And innovation is key to, let's say -- and it's a key pillar of our strategic plan to overcome the situation, let's say.

Our next question is from Fernando Olvera from Bank of America.

Can you hear me?

Yes, we can hear you.

Great. Perfect. The first one is related to costs. If you can comment, Felipe, regarding the outlook on costs for the fourth quarter and 2026 would be great. And my second question is related to CapEx also for next year. I mean, considering the soft demand that we are seeing overall in alcoholic beverages, what is your initial thoughts on CapEx for 2026?

Fernando, good question about the cost and commodities. I will give you a medium term, let's say, 2026 as our cautionary statement, I don't do forecast. But what we are seeing, we are doing the budget right now. We are seeing favorable news in practically all the commodities, except aluminum compared to 2025 and also compared to 2024, not yet at the level of prices of commodities that we had pre-pandemic, 2019. But we are seeing better news in barley, sugar, virgin, PET, resins, pulps that was a big hit, especially on juice in the next 2 years. So we are seeing a material, let's say, better commodity prices with the exception of aluminum. We are talking about an easy a projection about $10 million of better commodity prices in U.S. As I said, my #1 commodity is the U.S. dollar, and it seems stable in Chile, at least Chile, which is account for 70% of the EBITDA exchange rate seems stable going forward. And along with a lot of initiatives in terms of efficiencies in Chile that are linked to procurement, let's say, the strategic sourcing also design to value. We always see at our packaging or our formulations in order without affecting at all quality, however, doing in a more valuable or more cost-effective way to deliver the same benefits to the consumer. The consumer is first. However, we always look -- and we work on new material, new specification to reduce cost. And third is what we call nearshoring that is to have closer production of our raw materials and packaging materials to our breweries or factories, let's say, to decrease logistic costs. And in that side, also we have a strong efficiency program. So we saw a better scenario with the exception of aluminum for next year that is increasing practically in our projection 5%. On the other hand, what is -- and we have highlighted this year, we have had higher cost and expenses linked to the CirCCUlar. CirCCUlar is about introducing recycled packaging in our PET bottles up to 15%. And so far, this has had a significant impact in our EBITDA, about [ CLP 10 million ], roughly $12 million of extra cost and expenses year-to-date. On a yearly basis, this year would cost us something like CLP 15 billion. But overall, the aluminum is increasing, but all the rest is in better shape. We have efficiencies, so we expect a better scenario for raw materials and packaging materials going forward.

No, that's great insight. And what about CapEx, Felipe?

CapEx, I will hand over this question to my colleague, Mr. Joaquin Trejo, Financial Planning Manager.

Thanks, Felipe, and thank you, Fernando, for your question. Regarding CapEx, we actually estimate to close the year slightly below what we published in our annual report between 10% and 15% below the published figure for 2025. And looking ahead, we don't actually see major CapEx needs for capacity as the volume trend is what Felipe mentioned earlier, but rather focusing on technology. We are changing our IT system for sales and distribution and also innovation to address this new consumer trend that Felipe also mentioned in previous questions, and also regulatory requirements. The ratio we like to look at is the CapEx over sales, and we forecast it to be below 6% going forward. And also, this is why the CapEx over depreciation ratio should be at some point below 1% going forward, where the new projects are actually a smaller amount compared to previous years where we had, for example, the CapEx for the CirCCUlar plant. But this is also offset by some CapEx carryover from 2025 that is going to be transferred to 2026. But in general terms, Fernando, that's the trend we foresee.

[Operator Instructions] Our next question is from Claudia Raggio from Provida AFP. Could you give us some color on the sales volumes of beer in Argentina on October?

Yes, I would anticipate that we have had in both alcoholic and nonalcoholic, we saw decline also in October. So we have maintained in alcoholic the same trend we have in quarter 3. And in water, practically flat, small decline in water business.

Thank you. We'll give it a few more moments for any further questions to come in. It looks like we have no further questions. I'll now hand it back to the CCU team for the closing remarks.

Thank you all for attending today. In summary, in the third quarter 2025, our main operating segment in Chile continued in a trend of financial results and profitability in the context of soft industries and higher costs from CirCCUlar. The later was boosted by gross margin improvements, efficiencies and lower prices in raw materials. International Business Operating segment posted higher EBITDA, although results were negatively affected by a challenging scenario in Argentina due to a tough deceleration in consumption. The Wine Operating segment contracted EBITDA due to a higher cost of wine and weak scenario in domestic market, while export grew mid-single digits. We will keep executing our 2025-2027 strategic plan and its 3 pillars: profitability growth, enhancing innovation, and sustainability. With special focus on profitability, supported by both revenue management efforts backed by our strong and diversified portfolio of brands and efficiencies across all operating segments and functions. Thank you very, very much for attending today, and I wish you a wonderful end of day.

That concludes the call for today. Thank you, and have a nice day.

Good day, everyone, and welcome to CCU's Second Quarter 2025 Earnings Conference Call on the 7th of August 2025. Please note that today's call is being recorded. At this time, I'd like to turn the conference call over to Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.

Welcome, and thank you for attending CCU's Second Quarter 2025 Conference Call. Today with me are Mr. Felipe Dubernet, Chief Financial Officer; Mr. Joaquín Trejo, Financial Planning and Investor Relations Manager; and Ms. Carolina Burgos, Senior Investor Relations Analyst. You have received a copy of the company's consolidated second quarter 2025 earnings release. The call will start by reviewing our overall results and then we will move on to our Q&A session. As usual, before we begin, please take note of the following statements. The statements made in this call that relate to CCU's future financial results are forward-looking statements, which, of course, 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 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. For today's conference, as we stated in our second quarter '25 financial report, annual variations and references regarding EBITDA and net income exclude the nonrecurring gain from the sale of a portion of land in Chile in the second quarter 2024. Also, organic variation to which we will refer next exclude the consolidation of ADO in Argentina and AV in Paraguay. For more detail to this, see Footnote 3 of our second quarter '25 financial report. It is now my pleasure to introduce our CFO, Mr. Felipe Dubernet.

Thank you, Claudio, and thank you, all, for joining the call today. In the second quarter of 2025, CCU delivered high financial results and increased profitability versus last year despite the volatile and challenging business environment. Consolidated EBITDA nearly doubled versus last year, mainly driven by our main operating segments, Chile, which expanded EBITDA 59.1% and, to a lesser extent, by the 8.3% growth in the Wine Operating segment. On the other hand, we keep facing a challenging scenario in Argentina, impacting the International Business Operating segment's results. Higher consolidated EBITDA and improved EBITDA margin were driven by volume growth, revenue management efforts and efficiency, more than offsetting cost and expense pressure from inflation. In line with the high operation results, net income posted a lower loss versus last year. Our first half results show that we are taking the right actions to keep delivering higher operational results and profitability in the context of soft volume trends for the beverage industry in the region. For the second half, we will keep executing our 2025-2027 Strategic Plan and its three pillars: profitability, growth and sustainability, with a special focus on profitability supported by both revenue management efforts backed by strong and diversified portfolio of brands and efficiencies across all our operating segments. Regarding our main consolidated figures in the second quarter, organic net sales were up 4.8%, explained by 4.7% higher organic volumes while organic average prices were flat. Gross profit grew 6.7% organically and gross margin expanded 73 basis points. In addition, consolidated MSD&A expenses grew 5.8%, mainly due to the consolidation of Aguas de Origen in Argentina, although as a percentage of net sales, improved 197 basis points. Without the consolidation of Aguas de Origen that we started the consolidation first of July of last year, MSD&A expenses would have increased 0.5%. In all, EBITDA expanded 97.1% and EBITDA margin expanded 150 basis points. In terms of our segments, in the Chile Operating segment, top line expanded 9.4% as a result of 6% increase in average prices and 3.2% higher volumes, where all categories posted positive growth with a better seasonally adjusted volume pace than previous quarters. Increased average prices were explained mainly by revenue management efforts, more than offsetting negative mix effects and were key to expand gross profit and gross margin by 12.5% and 115 basis points, respectively, in the context of cost pressure related to an unfavorable packaging mix and higher manufacturing costs, mainly associated with our PET recycling plant CirCCUlar. MSD&A expenses grew below inflation, expanding 2.1% and as a percentage of net sales improved 265 basis points due to efficiencies. Altogether, EBITDA increased 59.1% and EBITDA margin expanded 339 basis points. In International Business Operating segment, organic volume posted a 9.8% expansion, although net sales recorded an 11.4% contraction driven by 19.3% lower organic average prices in Chilean pesos. The decline in organic average prices was mainly due to the devaluation of the Argentine peso against the U.S. dollar and also due to a challenging pricing scenario in Argentina. The volume expansion was mainly explained by a low comparison base in the second quarter 2024 in Argentina, while volumes seasonally just continue in a recovery trend for the fourth consecutive quarter. Organic gross profit increased 11.6% and organic gross margin was flat. MSD&A expenses were up 10.5% mainly due to the consolidation of ADO and higher marketing expenses. As a percentage of net sales, MSD&A expenses decreased 301 basis points. Without the consolidation of ADO, MSD&A expenses would have increased 5.9%. In all, in spite of volume growth, given the effects mentioned above, EBITDA loss was similar to last year. The Wine Operating segment posted a top line expansion of 6%, mainly driven by 4.2% rise in volumes and 1.7% higher average prices. Larger volumes were led by a 17.4% growth in exports, partially offset by 4.1% decrease in the Chilean domestic market while the industry posted a larger decline. The higher average prices were mostly explained by a weaker CLP and its favorable impact on export revenues and revenue management initiatives in domestic markets, compensated by negative mix effects in the portfolio. Gross profit was flat and gross margin deteriorated by 222 basis points due to cost pressures from a higher cost of wine due to a lower harvest and higher USD-linked packaging costs. MSD&A expenses dropped 3.7% with efficiencies and as a percentage of net sales improved to 174 basis points. Altogether, EBITDA increased 8.3% and EBITDA margin was up 32 basis points. Regarding our main JV and associated business, in Colombia, we delivered low single-digit volume growth in soft industry context. We continue working in strengthening our brand portfolio, our execution to deliver sustainable growth in volume and results in Colombia. Now I will be glad to answer any questions you may have.

[Operator Instructions] Our first question is from Felipe Ucros from Scotiabank.

A couple on my end. So the first one is on the pricing in Argentina. Can you delve a little deeper into your pricing comments? You talk about a difficulty in pricing. So just wondering if you can talk about whether this comes from the competitive environment, with lack of discipline or perhaps it's just the state of the consumer that's keeping you from increasing prices faster and on pace with inflation. And then the second one is on SG&A in Argentina. Operating leverage seemed to drop pretty strongly this quarter, particularly when you compare it to the last three quarters since you acquired Aguas de Origen. So third quarter of last year, which was, seasonally speaking, kind of similar also winter, your SG&A was close to 50% of sales. But this quarter, it was closer to 66%. So pretty stark difference from one year to another. Perhaps the pricing issue has to do with it but just wondering what the drivers are on that de- leveraging pace.

Hello, Felipe. So the first thing is that was key to pricing because at the end of the day, pricing has been very difficult in Argentina, especially in the last, I would say, six months. To give you a reference, last year, beer price in Argentina was compared to inflation in 2024, above inflation by 4.4%. However, this year, year-to-date, is below inflation by 10.5%. So if we take into account where the new government took office in Argentina, let's say the period of 18 months since 1st January 2024, our prices in Argentina are 6% below inflation. As you know also, wages are -- real wages in Argentina are lagging below inflation. This is expected because at the end, the main target of the government is to reduce inflation. So consumer has less Argentinian pesos in his wallet. Argentina is expensive right now. Obviously, this change that, at the end of the day, for the future is for good to reduce inflation in Argentina. Also the good news in Argentina after the announcement of the government mid-April is that we have a new exchange rate policy, let's say. So this is what is affecting overall the industry. Also competition is aggressive because when volumes are difficult to recover. So maybe the good size is that for the fourth consecutive quarter, seasonally adjusted our volumes have grown. However, also, we have had mix effects as we -- as the mix participation of value brands are higher than before. And this has also to do with this deflationary pressure, I would say, in Argentina. So it's very clear that our prices in this period are below inflation. As far as the economy recovery in Argentina and in the future, mainly also a further reduction on inflation, our prices would be in a more healthy perspective, let's say. Regarding the synergies of the water business, no, the synergies are there because at the end, of course, at total expenses level, of course, we have in our P&L the expenses of ADO. There are marketing expenses because these are completely allocated to the category. There is more distribution costs, of course, but also we have, let's say, we are only owners of the 51% of the company, so we have a benefit there because we charge double, [indiscernible] the interest that you need to look. But at the end, you have more marketing expenses because at same quarter last year, we didn't have these. But the good indicator, and this is why we did the pro forma is that if you exclude ADO the consolidation over our MSD&A expenses have decreased 5.9%. And a percentage of net sales, and this is what is very important because in a scenario where you have high inflation and difficulties to prices, our MSD&A expenses organically decreased 600 and 300 basis points. This is the key indicator. So of course, the volumes were disappointing in terms of what we expected as recovery, but what was more difficult was the pricing scenario, Felipe.

No, understood. That's very clear. And if I can do a follow-up, on the other side on Chile, you have very good results on gross margins. Wondering if you can discuss what was the key driver here on the expansion of gross margins in Chile.

Of course. I think -- Okay, Felipe, yes, Chile. Thank you for -- that you notice that Chile, we have got good results. In fact, I think -- we think we have had good results in Chile not only overall but in all categories, let's say, beer, nonalcoholic and also spirits. This is -- first of all, this is, as always, we did a commentary on that. Our brand equity is very strong in Chile. So our pricing power -- so because increasing in this context, the prices, 6%, this is real average prices. It's not effect, it's real average prices. This is much above inflation. And at the same time, we have maintained overall market share and recovering market share, especially in iconic products against previous quarter. So this sounds a good equation, I would say, increasing prices, recovering market share in alcoholic products. We posted in overall alcoholic products low single-digit growth where competition has had negative growth so in a very difficult industry. As I mentioned, last quarter in alcohol beverages. And this is based on sound brand equity. So I, along with this good equation top line, I would like to say also a good effort in efficiencies, especially in logistics. So overall, it's a good quarter in our core operating segment, which is Chile.

Our next question is from Vidhi Vira from Goldman Sachs. Can you give guidance for the second half of 2025 profitability and revenue expectations? Can you share color on the free cash flow you expect to generate this year after interest, tax, net working capital, CapEx, et cetera?

Okay. Thank you Vidhi, for your question. First of all, we don't do forward-looking estimates so I cannot answer this question. On top of that, it's very volatile. U.S. dollar is volatile exchange rate so we have had, at the beginning of a months ago, U.S. dollar was at [ 940 ] We experienced 5% devaluation so it's very volatile. Consumption, as I mentioned in my previous answer especially for Chile, seems to be low single digits, but we need to wait. Pricing scenario has been favorable so far, but we don't know -- of course, we don't know how competition would seem to be. So I can't give you a guidance on a more precise standard. Regarding free cash flow, yes, we have really a good question on operating cash flow not only because we increase our EBITDA but also in working capital, thanks to inventory reduction, thanks to initiatives. Because efficiencies, you can look at efficiencies, on the one hand, in expenses, in cost, but also in working capital. So we are implementing a new planning platform. We do have a new logistic and planning process so that is delivering its fruits. So as a consequence, we experienced inventory -- base inventory reduction. Also good work on accounts receivables, on receivables by the team. Also, in this particular quarter, we changed our operating model with Red Bull, which allow us to free up extra cash flow. In terms of CapEx, we are a little bit behind the phasing of the estimate in public in the 20-F that we would find in the 20-F, but that was more than compensated by these excellent working capital results.

Our next question is from Kevin Cheng from Western Asset Management. Okay. Looks like Kevin dropped. We'll move on to the next question. Our next question is from Lucas Ferreira from JPMorgan.

My first question is on your expectations on COGS for the rest of the year. There was an important drop in aluminum prices, right, in the beginning of the second quarter. Wondering if some of these already was reflected in this quarter's results, or if you expect that drop to be something in favor of the company in the third quarter. And then if you can comment a little bit, especially in Chile, how you see the -- your expectations. You had an important improvement in margins year-over-year in 2Q. If that's still the case for the second half, second half of last year. Especially in the fourth quarter, right, company had a good improvement in profitability, if you think this is offering tough comps for you? Are you comfortable to once again, especially in the fourth quarter, reach the near 20% margin in Chile?

So we are seeing more commodity. Yes, we are seeing a little bit higher aluminum prices, as we mentioned, 5% more than last year so at $2,500 per ton. So we are not seeing -- so -- and as we don't hedge, we prefer to be a bit cautious on that, especially given the trade discussions that the U.S. government is having with China, Brazil and other countries. There are other raw materials that are in a better shape, let's say, sugar, reducing 14% compared to last year so far, and somewhat also barley reducing 60% compared to last year. So we are seeing more rather stable aluminum price going forward. On the other hand, we are a little bit worried about, as I mentioned in my previous answer, to the U.S. dollar because around [ 970 ] last -- so it's -- and for the quarter was [ 933 ] for the entire quarter 2. So now we are facing U.S. dollar pressure. Of course, towards the end of this year, margin will depend on a lot on how we sustain our prices. And I would say that finance are positive because second quarter was very, very encouraging. We are in our best ever run equity levels in all categories with our service. So consumers are preferring despite prices, our products. So at the end of the day, this is a sound foundation of the business. So what will happen, as I mentioned in my previous answer, I will not give you a forward-looking view. But if we sustain this level of prices, we have, of course, some pressures on -- given the recent -- this weak devaluation of the Chilean pesos, but the volumes that we maintain, what I -- the commentary I made this quarter, I think we are growing low single-digit volumes. So we could have a good second half.

Our next question is from Orazio Elera from MBI Inversiones. How do you see the situation in Argentina? Is there any green shoots in terms of profitability?

Orazio, I think -- I know I prefer to have interaction, but it seems that I have answered the question. So we are facing a difficult pricing scenario. Argentina is in a deflation mode. If we continue this trend, I think, is something that Argentina has had to do, let's say, with these inflation levels because I don't know, two, three years ago, we have hyperinflation, we increased prices, volume didn't suffer, but we couldn't get dividend from this operation. And now we are in a moment of change. So the green spot, as I think you asked your question, if this new macroeconomic program achieved to a good end would be good in the long term for our business. We have a solid foundation in Argentina in terms of brand preference, completely aligned with our market share position. We have a good operation that is making efficiencies. We incorporate a new more scale, adding the water -- the retail water business. So for the long term, I saw if the macroeconomic plan in Argentina works, and the country has more investment, I'm seeing a better future. Now we are in the middle of the transition from a hyperinflation economy to a deflation. And of course, our P&L is suffering because it's difficult with the consumer where the salaries are lagging inflation to further increase prices. Also competition is aggressive. But as I said, the things that are under our control is the brand equity and the good work we are doing there.

Our next question is from Ewald Stark from BICE Inversiones.

I saw that in exportation volumes in [indiscernible] Increased by 14% year-over-year. So I was wondering what do you expect going forward? Do you still expect volumes to increase by double digits given that you are taking an active approach in opening distribution channels?

So yes, on why our main priority in the export business was to recover scale. Remember, we have a terrible 2023 with the global destocking of inventory. And this is, I would say, it's a very encouraging quarter where our volumes grew by 17.4% with very good performance in Japan, Brazil and South America, while the U.S. market continued to be very complicated. Going forward, we expect, let's say, for the overall year, to continue the recovery we did in 2024 and let's say, something like mid-single-digit growth in our exports. But the second quarter was very good, also above our expectations somewhat. So as I mentioned, in other business was below our expectation, the volume in Argentina. But on the other hand, export of wine was above our expectation. This is the multi-category. As I said, there are some business that we do good performance, some quarters, some business we do. This is why CCU is a leading multi-category company in order to have a good diversification.

Our next question is from Álvaro García from BTG. Can you comment on the dynamics of beer versus soft drinks in Chile?

No. Both categories have practically the same growth, low single-digit growth, I would say, beer and nonalcoholic. In the case of spirits, we have a very solid growth because we are the market leaders in the new trendy categories such as ready-to-drink with our neutralised brand. We are a sound leader there. So both were in line in terms of low single-digit growth. In the case of beer also outpacing our market share in quarter 2 of what we had in quarter 1. So with a good market share recovery in beer across all the brands. So that was good. In the case of nonalcoholic we grew low single digit. despite an unfavorable mix for us as Colas continue to take more of the whole nonalcoholic beverage or within soft drinks, Colas where we are not the market leaders are taking more portion of the mix. But this has been a trend since the pandemic. However, we -- our Pepsi brand continue to gain brand equity, which is important to compete against the market leader in costs. But despite all of this, we experienced this low single-digit growth in a very competitive, by the way, scenario in nonalcoholic, also in beer. But in nonalcoholic that usually that sometimes is more rational, has been very competitive in the last quarters.

Our next question is from Constanza Gonzales from Quest Capital.

Thank you for taking my questions. I have two . The first one is in relation with Argentina. You said before that you cannot give us a guidance for the year, but could you give us more details about the pass-through to prices of inflation in the month of July? And also just for clarify, in the short term, the priority of the company is to keep the market share in Argentina instead of increased profitability?

Yes, I mentioned to you that the gap in the last 18 months of beer prices in Argentina compared to inflation in the previous question also, that I answered, was 6% low. We expect towards the end of the year to reduce this gap. It was difficult in the 18 months to be in December this year in line with inflation, especially looking at the salaries evolution in Argentina without losing volume and scale. Argentina for us is a mature business. We don't want to gain share through aggressive promotions. So we -- as I mentioned in the previous question, I think we have our fair share compared to our brand equity, let's say. So answering you, if we maintain our brand equity, we will maintain our share. I think what else -- I think this was your -- the answer to you. So that's it. On the other hand, the water business presented better. I didn't mention, but in the accumulated 18 months, water is just 3% below inflation. This is why soft drinks and nonalcoholic beverage are suffering less in the P&L compared to alcoholic beverages because also alcoholic beverage in the past has had more exposure to devaluation of the currency. Also, remember another thing that we have had a big chunk in terms of devaluation in April. So if everything continue in the current impact, let's say, that the government announced, that this is already predicted, let's say. And we expect that inflation levels continue to lower in Argentina. This is the plan of the government. And for the long term, as I said, this is good. Argentina is a special country. Argentina is coming -- is getting out. It's not cheap. Argentina is getting out from a hyperinflationary economy to a normal standard economy. And this is the price we are somewhat paying as the consumers in order to have a better future.

Our next question is from [ Martin Caldente ] from BTG. He has few questions. I wanted to ask how the implementation of the r- PET law has impacted your operations so far and how you're preparing for the upcoming more demanding targets? What kind of operational and financial implications have you seen? And to what extent have you passed these additional costs through to consumer prices? And secondly, how are you currently seeing the outlook of key raw materials such as sugar, fruit pulp, PET, aluminum and other relevant inputs across your main categories?

Okay, thank you. Again, we have [Technical Difficulty] using the platform. But here we go, I think the second part of the question, I already answered. Where we saw better prices in sugar. We pulled, especially sugar. PET is, I would say, is stable, [indiscernible] PET. The PET we import from China. Aluminum, I said, we are seeing a 25% price stable, let's say. So -- but as I mentioned, input costs are subject to the U.S. dollar. And this is not a good week for us regarding the U.S. dollar going forward. The first part of the question regarding “CirCCUlar and the r-PET Law regarding packaging recycling or PET recycling or PET bottle recycling, I will hand over this question to Joaquín Trejo to give you some color on that.

Thank you, Felipe, and thanks, Martin, for your question. Yes, the impact of the r-PET law can be seen in the cost and expenses associated with our PET recycling plant CirCCUlar. To give you more color on that, in the second quarter, the impact is approximately MXN 3 billion. This is mainly due to two factors: one, the manufacturing expenses; and second, the additional cost of the recycle we've seen over the building we see. And on a year-to-date basis, it's about MXN 7 billion more or less. And obviously, this is significant impact considering our total sale because we are talking about more or less 7% of the EBITDA of the Chile operating segment in the quarter. So yes, definitely. And regarding prices, we think it's difficult to pass this on to consumers. In fact, the prices of the nonalcoholic categories in the second quarter grew in line with inflation. So I would say that passing on the cost to prices is difficult to do so as long as consumers actually don't or do value that. So I would say that, yes, it's a challenge because prices in nonalcoholic categories in Chile grew in line with inflation in the second quarter, not above or well above inflation.

Our next question is from Fernando Olvera from Bank of America.

The two are related to Chile. Regarding the billing performance that we have seen year-to-date, I was just wondering how does this compare versus your initial expectation at the beginning of the year. And my second question also related to Chile is, based on the strong pricing that we have seen, how your market share has performed on beer so far this year.

Fernando, nice to hear your view. So regarding Chile volume performance, as I said, we grew low single digit. And year-to-date, I would say we are flat in terms of volumes. Also because the comparison of the first quarter of last year was a little bit high also the second quarter. But we have capped but with a good seasonally adjusted trend, I would say, only stable because it's stabilized, in the case of beer. So in the last, I would say in the last three quarters, let's say, seasonally adjusted industry volumes in Argentina were stable. So of course, we have less volume or per capita consumption compared to 2021. Remember you about the pension fund withdrawal and the consumption part in Chile, let's say. But -- so we are seeing a stabilization of the beer volumes. Nonalcoholic, on the other hand, we are seeing a positive trend, seasonally adjusted with a very good -- because seasonally, so the quarter was much better than same quarter last year, even seasonally adjusted. And we continue, seasonally adjusted, to see better volumes in the last, let's say, four quarters, okay, in nonalcoholic. So in conclusion, I think it's possible to have a low single-digit growth in beer towards the year. And in the case of nonalcoholic between, let's say, low single digit and mid-single digits, a little bit higher. But this is in the overall equation. On the other hand, we are doing very well in spirits, especially because of the ready-to-drink products. I don't know if I answered your question.

Yes, that's great. And Felipe, and regarding the market share now on beer?

No, I already mentioned in the previous question about the share. Overall, it's stable compared to last year, I would say, stable, which is very encouraging is that it's not stable because it's growing, is our brand equity in the year. This is why the pricing power we have.

Our next question is from Thiago Bortoluci from Goldman Sachs.

I have two, but let me start with Chile, right? When I put together, Felipe, a few of the things that you said, you said stable market share in the year. You said consolidated prices moving above inflation with nonalcoholic growing at inflation, right, which implies you are growing materially above inflation on the year, right? What is driving this momentum for beer, in your view? Like you are growing real prices still keeping market share. Is this about to do with competition moderating? Is this to do with channel mix? What is your assessment on this? I'll pause here and then I have another one in international.

So as you know, the beer business all over the world have suffered from very high inflation in the last year. The driver is our priority in recovering profitability in our businesses. And the category that suffered the month after the pandemic because of raw materials, because of exchange rate, is beer, particularly beer. And the driver is that we have a solid brand equity so it's internal driver at the end in order to increase prices. So we need to recover the profitability we had before the pandemic and that's clear. So we continue our revenue management efforts, working on our mixes. So the good news is that the mix has not deteriorated in beer in the last two years. Despite having a more soft industry, mixes remain the same. And of course, we have a higher market share in mainstream, lower market share in premium, but in spite of this, our market share is almost stable. Of course, in the first quarter, we lost a little bit market share, but we recovered then in quarter 2 while increasing prices. So that's good news, I would say. Did I answer your question?

Clearly. And then if I may, a follow-up in International. We all understand quite well what's happening in Argentina, right? We know the activity momentum, inflation and all the volatility there. But none of this is new to the story, right? Everything was already in place in the beginning of the year with one exemption that is clearly the FX, right, that moved a lot. Now this is more of a conceptual question, right, rather than getting the number. What changed from the first quarter to the second quarter for us to see a shifting to double -- well, mid-teens EBITDA margin in the first quarter to negative 20s EBITDA margin in the second quarter? And again, I know I understand the FX part of this equation. But apart of this, how should we think about the underlying momentum, right, particularly when I compare your performance on a quarter-over-quarter basis?

Our pricing when you compare with inflation deteriorated in the second quarter, along with devaluation of the currency. Let me first start with the devaluation because this is something in the second quarter you need to take into account. And we disclosed this in our press release, if you saw, there is a table, which is the exhibit 7, which is the impact of the hyperinflation accounting. And this impacted us a lot, impacted us around $3 million at the EBITDA level, the impact of the IAS 29, which is the update in the quarter of the first quarter. So the first quarter result is adjusted into the second quarter result. Sorry to mention this, sometimes it's complex to you to take into account that because this hyperinflation accounting is a unique country coming up. So this has an impact also in our results. But anyway, despite the accounting matters, let's say, which deteriorated, I think the pace of the recovery slowed down, although we have a recovery, but it slowed down. The recovery in quarter 1 was much higher when you compare seasonally adjusted with quarter 4, but it seems the consumer has less purchasing power, let's say, -- salaries are below inflation. So it is difficult this thing. Also the mix deteriorated in Argentina. That is part of the equation. So we saw -- and this trend has happened between quarter 2 and quarter 1, to be honest. So a lower pace of volume recovery the gap of pricing compared to inflation wide OpEx, aggressive competition also. But we have to continue to work on efficiencies, on expense control. We think in the coming months, maybe with this good trend in terms of inflation in Argentina along the consumer recover is purchasing power, there would be a more favorable scenario in order to start to close this gap in terms of pricing against inflation.

[Operator Instructions] We have a follow-up question from Vidhi Vira from Goldman Sachs. Can you share color on the health of the consumer in Chile? How are you seeing volumes and pricing evolve in July 2025? Are you in a position to increase prices in the second half of 2025 to maintain and improve profitability?

Yes. I think the sense of the consumer of Chile, as I mentioned, alcoholic beverage, especially beer, stabilized. So it's too early to call how would be the volume. Our business is very -- is a very seasonal business, okay? So it's difficult to anticipate quarter 4, which is very important. The comps in July because of price increases of last year, but seasonally adjusted volumes of July were better than quarter 2. This is the only thing I can mention, that's right. Seasonally adjusted beer volumes were better than quarter 2. In nonalcoholic, also it maintain seasonally adjusted -- the July seasonally adjusted was in line in quarter 2. So we continue to see, let's say, this low middle-digit zone in nonalcoholic, okay? Regarding pricing scenario, Chile is a very competitive market. I cannot forecast that. Always if there are opportunities for management, believe me, we will take them. We'll take them along, see other KPIs, but as market share, our brand equity, it's not just to say, okay, price, how is volume July 2025 were stable. We haven't seen something changing on sustaining our prices already achieved. So a good thing would be, let's say, to further enhance our revenue management. But I cannot commit on that because it would be -- it's a very competitive market.

Thank you. It looks like we have no further questions. I'll now hand it back to the CCU team for the closing remarks.

Hello Everyone, to attend this conference call. In summary, in quarter 2 2025, we almost doubled consolidated EBITDA for a robust expansion in our core operating segment, which is Chile, and a high single-digit EBITDA expansion in the Wine Operating segment. As I mentioned, we still face a very challenging scenario in Argentina. But for the future, we think it is for good, as I said. Revenue management and efficiencies were key to achieve this quarter 2. Moreover, we were able to deliver volume growth in all operating segments and core categories in a context of soft industries. To conclude, and I would like to mention that at the end of this call, this is a very symbolic year for CCU as we are celebrating 175 years of history. We will continue implementing in this year our 2025-2027 strategic plan, supported in our multi-category strategy and our vast business experience to ensure sustainable and profitable growth for our company. I wish you a wonderful afternoon. Thank you, all of you.

That concludes the call for today. Thank you, and have a nice day.

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 Las Heras, 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 Jottar, Chief Executive Officer. Mr. Felipe Dubernet, Chief Financial Officer. Mr. Joaquin Trejo, Financial Planning and Investor Relations Investor Relations Manager; and Carolina Burgos, Senior Investor Relation Analyst. You have received a copy of the company's consolidated first quarter 2025 earnings release. The goal is to review our overall results, and 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 scope that relate to CCU's 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. These statements should be taken in conjunction with additional information about risks and uncertainties set forth in CCU's annual report in Form 20-F with the U.S. Securities and Exchange Commission, and the annual reports submitted to the CMF available on our website. It is now my pleasure to introduce our CEO, Mr. Patricio Jottar.

Thank you, Claudio, and thank you all for joining us today. In the first quarter 2025, we 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%, given by all operating segments amid soft consumption in the region. The higher EBITDA 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 efficiency. At the same time, under the growth pillar, in a difficult context for expanding business scale, we'll 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 de Origen 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 MSD&A expenses expanded 2.7% in Chilean pesos, offsetting inflationary pressures with efficiency. And as a percentage of net sales declined 11 basis points. In all, organic EBITDA reached CLP 130,006 million, a 4.8% organic increase. In terms of our segments, in the Chile Operating segment top line expanded 2.8%, as a result of a 4.8% increase in average prices while volumes were down 1.9%. Average prices were driven by revenue management efforts, partially compensated by negative mix effects in the portfolio. Gross profit decreased 1.1% and gross margin was down 180 bps compared to last year, mainly driven by higher manufacturing costs, a negative mix effect in packaging, and cost pressures coming from higher U.S. dollar denominated costs. MSD&A expenses were 2.7% higher, being practically flat as a percentage of net sales, due to efficiencies that compensated inflationary pressures. Altogether, EBITDA reached CLP 94,400 million, a 2.4% decrease, and EBITDA margin was down 97 basis points. In the International business operating segment, excluding the inorganic volumes from the consolidation of ADO and AV, 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 scale 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 ARS against the USD, and inflationary pressures. Consequently, organic gross profit expanded 10.7%, and organic gross margin grew 202 basis points. Organic MSD&A expenses as a percentage of net sales increased 32 basis points, mostly from inflationary pressures in Argentina. In all, organic EBITDA reached CLP 33,435 million, a 28.1% expansion, driven by Argentina, Uruguay and Bolivia. The U.S. operating segment posted a top-line expansion of 2.1%, fully driven by a 6.2% rise in average prices, while 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 deliberated by 142 basis points due to cost pressures from a higher cost of wine and higher U.S. dollar lean packaging costs. MSD&A expenses were flat and as a percentage net sales improved 56 basis points due to efficiency. Altogether, EBITDA reached CLP 6,592 million, a 1.1% decrease, and EBITDA margin was down 36 basis points. Regarding our main JVs and associated businesses, in Colombia, we posted better financial results versus last year despite a slight contraction in volumes, which nonetheless was slightly lower than the industry. Now I will be glad to answer any questions you may have.

[Operator Instructions] Okay, so our first question is from Fernando Olvera from Bank of America. Your line is now open. Please go ahead.

Hi, good morning everyone and thanks for taking my question. First I would like to explore volume performance in Chile. If you can give us some details of how different was the performance between non-alcoholic and alcoholic beverages and specifically on beer. Also, if you can comment about the performance between premium and mainstream? That's my first question. Thanks.

Thank you, Fernando, for your question. Look, according to Nielsen, our overall market share in the Chile operating segment is stable. Now, making double click, we have gained some market share small in non-alcoholic and we have lost some market share small in beer. Taking into consideration, according to Nielsen data, overall alcohol industry is decreasing in its single digits. These are sell-outs volumes to consumers. Companies publish selling volumes to clients including different channels and thus are not necessarily reflected in market share. But again, market share is total, that Chilean operating segment is stable with a small increase or gain in non-alcoholic and a small decrease or loss in beer.

Okay, and regarding the recovery going forward on volumes, how are you seeing such trends?

Excuse me, regarding mainstream and premium. So, regarding mainstream and premium stable. Look, looking forward, there is a big concern not just in Chile but in the world regarding alcohol patterns of consumption. Probably you have heard about this because it is something which is being discussed in every company producing and selling alcohol all over the world. Look, huge figures. Let's take the consumption of alcohol at 100 degrees. To make this calculation, you take beer and calculate 5%, wine calculate 12%, spirits and calculate 35%, tea is 40%. If you are considering other spirits and you calculate the per capita consumption of alcohol at 100 degrees. This figure in Chile in 2019 was 5.3 liters of alcohol per capita per year, 5.3. In pandemic it increases a lot and after pandemic it began to decrease. In 2023 it was still 5.3, same level than pre-pandemic. But in 2024 it decreased to 5.1. And beginning 2025 the trend is to decrease. The same figures for United States, 7.4 in 2019 pre-pandemic, 7 in 2024. So the decrease in United States has been even higher than in Chile. And global in the world as a whole 3.1 liters in 2019 and 2.8 liters in 2024. There are many hypotheses why it is occurring. If you want, we could discuss on this. My main concern regarding the future are volumes on the alcoholic categories. Indeed, I don't see a disaster, a big decline. But the trends are not favorable. We are making a lot of things to change the trend. Of course on responsible consumption basis. But this is a concern.

Okay. And if I may just one last question. If you can give us more color on the lower tax in Argentina. Which I understand that caused the sharp decline on consolidated taxes. And if this effect is expected in the coming quarters? Thank you.

Felipe could you elaborate on this? Could you clarify that this is related to. This is for the import taxes you mean.

Yes, I mean at consolidated taxes you mentioned that it declined significantly year over year. Due to lower tax in Argentina. Because of inflation. I understand.

I understand your question. This is related to the use of inflation for tax purposes. So usually in Argentina until 2019 we didn't use the inflation for tax purposes. Since 2019 we started to use that. We have some provisions related to that. As Argentina has become more stable in terms of macroeconomics. Or liberating as you know the exchange controls. We decided to release some provisions related to that in the use of inflation for tax purposes. This is the explanation.

Okay. And this effect this benefit is expected in coming quarters Felipe?

Yes. Yes. Because it is gravel.

Okay. Perfect. Thank you.

Look Fernando, one more remark regarding trends of alcohol consumption. My remark before showing a decline in Chile and the United States and worldwide. On the alcohol consumption. It is a long term consideration. If you make double clicks in quarters Q2 last year in Argentina was very poor and Q2 in Chile was very poor. So we expect to have a much better result regarding alcoholic volumes in Q2. But leaving it apart. Because it is a consideration on the basis of 2024. The trend is not favorable. For the industry, according the business.

Okay. Great. Thank you so much.

Thank you. Our next question is from Alvaro Garcia from BTG. Your line is now open. Please go ahead.

Can you hear me?

Yes, we can. Please go ahead. Alvaro we cannot hear you now. Okay. Perhaps you can send us a text question or redial.

Can you hear me there?

Now we can. Yes.

Sorry about that. Wrong mic. Hi Patricio, hi Felipe. I have a couple of questions. One on, how you are thinking about margins in Chile in a stronger Chilean peso environment. Into the second half of this year. Obviously you have had a lot of questions over the last couple of years on sort of where you can take margins over the medium term. And we seem to be getting in a better sort of input cost environment for you. So that would be interesting. And then my second question is on Argentina. I was wondering if you could talk about pricing. Because we were a little bit surprised. I mean I know you are consolidating a water business. Which obviously has much lower pricing. But I was wondering if maybe you can comment a bit on pricing. There was a little bit of a surprise let's say in our model there. What you are seeing from a pricing standpoint as inflation comes down? Thank you very much.

Thank you Alvaro for your two questions. I will begin with Argentina. And then I will jump to Chile. Look it's a big question mark. Because I mean for many years’ prices were key in Argentina. And we had no difficulties to increase prices in line to inflation. Even higher than inflation. Because if inflation amount is 10% and increase prices by 11% or 12%. Nothing happens. Consumers are there paying for your products. Now inflation is decreasing a lot. And after the liberation of the exchange rate. The exchange rate remained almost stable in Argentina. So there are different opinions. What is going to happen with inflation in Argentina? Some people think that inflation will continue to be 2% per year. Some people are saying that it will move to zero very rapidly. And there are opinions also saying that probably we will have negative inflation. That is the first remark. Second remark. There are some services which are adjusting their prices. So there is a hidden inflation which will come from those services. Which prices have been controlled? So we expect that the price increase of the industry -- of the consumer products industry will be lower than official inflation for this effect. So we don't know. We are not sure. I prefer to think that inflation is going to be very low. That it is going to be very difficult to continue increasing prices. And that we have to compensate this with input costs. Which are helping. And with strong efficiency programs on SBA. This is what we are doing. If inflation continues to be 2%. Indeed, we will have to increase prices. Otherwise we will have a huge gap. Which is impossible to find. But again. This is executing every single day. But summarizing. If inflation continues being high 2% to 3%. We will continue increasing prices. In line with inflation and more. It is possible. If inflation collapses and goes to zero. We will not be able to increase prices. In both cases we are making strong efforts in reducing expenses. Regarding margins in Chile. We have been increasing prices to compensate the prices that we didn't increase in the past, when the cost of raw material the input cost jumped a lot. We are recuperating margins quarter after quarter and we continue with this trend on one hand. Input costs are helping. And we are being very extreme. On being efficient in our expenses. Altogether we expect to recuperate margins. Having said that. The comparison basis in Q2 2024 was very weak. So we will have a good Q2. But this is something exceptional associated to the weak basis of comparison for 2024. But in the long run, it will start to give great margins.

Great. Thank you. A follow-up on the Argentina element. Would you say that in the first quarter, you passed a little less price than usual? Or was it just pretty standard from a core organic standpoint?

Yes. Definitely less. In 2024 we passed more than inflation to prices. And in Q1 the trend continues, in Q2 it's extremely difficult to increase prices. This is the reason why I think that inflation is going to collapse very soon. I personally think that inflation will move in the range of 0% to 0.5% for maximum 1% per month. Because we realize in our categories. We see the market that prices of consumer goods are very stable and it is very difficult to increase prices.

That’s clear.

We need to see. This is what we are seeing today.

Thank you.

[Operator Instructions] Our next question is from Felipe Ucros from Scotiabank. Your line is now open. Please go ahead.

Thanks operator. Well, Patricio, Felipe and team thanks for taking my question. My first one is around costs. The release mentioned. That you experienced higher manufacturing costs in Chile. I was curious about the language about it being around manufacturing rather than raw materials. Can you expand on what exactly were the drivers for these costs? And then I will have a follow-up after that. Thank you.

Indeed, Felipe. There is one time -- Felipe, why don't you elaborate?

So, the manufacturing costs were due to two reasons. One was about inventory depletion. As we have reduced inventory, at the end the allocation of fixed costs was higher than a year ago. So it is an accounting issue or matter. On the other hand, higher labor costs. That we experienced in Chile. Because of some -- we needed to improve our operation plan. Because we incurred in overtime and this was due to higher labor costs. And also included some write-offs of some lines. That we are not using anymore because they were too old and we replaced by new technology. So we incurred on extra depreciation costs. As we have allocated write-offs in the Chile operating segment in the depreciation line. So we have two write-offs that Patricio mentioned. One is related to write-offs in the Chile operating segment and the second is, we have less inventory than last year in Chile. So it was affected by the allocation of fixed expenses as an accounting matter. And the overtime. That is an inefficiency. Because of let's say, not too good sensor operation, but we have a project. That is called [indiscernible]. That we did some disclosure on that and we are now report that we are working on improving our plan. So we oversee that in the following quarters we should deliver efficiencies and be more efficient in manufacturing.

Very clear. And my next question was actually around efficiency. You managed to maintain your efficiency levels despite having negative volumes. Which is not easy to do? So it seems like your efficiency program is beginning to work. Can you expand a little bit on how far along you are in that program and how much more you expect?

Okay. Thank you for your remarks. More than beginning to work, it has worked for many years. Here we have the figures but the MSD&A has declined by 5 or more percent in a longer period of time. But we are putting much more pressure today on this. As we expect volumes of alcoholic products to be tough in the future. As I mentioned before and as I expect that in Argentina we have tough times. So tougher times regarding prices. The combination of these elements supplies us. So calling our premium to be much more stern when executing efficiency programs. We are moving in that direction.

Let me ask a follow-up on the efficiency side. Are you reducing marketing expenses in any way? Or is that part of the SG&A, kind of the plan is to maintain it consistent and draw the efficiencies from other lines.

No. Particularly on sales efforts we are replacing a lot of functions made by sales people through technology with a lot of success. In a few words, typically for many years our salesperson had four responsibilities. Number one, to recommend that the client looks to buy. Number two to execute on place the order. Number three to execute in the point of sales. And number four, to keep a good personal relation with the client. On these four activities, the first two are completely -- could be completely replaced by technology. Today, our artificial intelligence programs are much smarter than our sales force to recommend the client to buy number one. There are much more efficient ways to place the orders through digital on the other. Sales force is still. Extremely important. To execute in the point of sale and to have the personal relation with the client on the order. We need less sales force to do this and more technology. We are moving rapidly in this direction. If you look at our MD&A especially in Chile, which is the main operating segment. They were below inflation by 2.7%. While marketing expenses were above inflation. So it mean that we are making efficiencies as Patricia said, in sales but also in distribution. Distribution also necessary because it is a big chunk of money there. As you know current efficiency warehouses. There we are perfectly in the good path. Let's say efficiency program. As I said, if we maintain this path of growing our expenses less than inflation while maintaining or investing better in marketing. That is a good sign, Felipe. In fact, we measure four times per year the brand equity of each one of the brands of our portfolio and the brand equity of each one of the brands of our competitors. And the indicators. Of Q1 2025 for like key categories show us that our brand equity indicators are one of the highest. Historically in the last 10 years that our portfolio today is extremely healthy. And this gives us a lot of confidence on having good volumes, good market shares, good prices to continue improving our profitability.

Very clear. Thanks a lot for the color.

Thank you. Our next question is from Ewald Stark from BICE Inversiones. Your line is now open. Please go ahead.

Good morning. Thanks for taking my question. In the press release you mentioned that competition and the context remains highly volatile and you expect to do so in the coming quarters. I wanted to ask how do you expect competition -- how aggressive do you expect competition to be in Chile in the remaining of the year?

Thank you Ewalk for your question. Look, competition has always been very tough. I know the categories where we participate in Chile and other countries. I think that this is not going to change. At the same time this my main comment. The good element -- the tough element of having tough competition difficult to make money, to increase prices, to increase margins. But we would like to do this particularly to efficiency. The good thing of tough competition is that it promotes per capita consumption. Which is key. Because as I mentioned before the alcohol consumption all over the world is under pressure for many reasons. And a lot of competition, a lot of innovation, a lot of marketing, a lot of execution at the point of the sales contributes to offset those trends. Let me give you one example which is a very clear signal of this. Per capita consumption in Chile in beer. We compete strongly in beer. Per capita consumption in beer in 2014 10 years ago it was 44 liters. Per capital consumption beer in 2024 10 years after was 54.2. 10 more liters per capita. In the United States in the same period, per capita consumption has increased from 34 to 46, 74.5. To 59 liters. In the world from 25.4 liters to 22.7 liters. So it’s we have been competing in a very tough way. There is more categories for many years, it will continue. But I think as mentioned, it is good for categories. We are not afraid of this. It obliges us to improve our capabilities day after day. And finally as I mentioned before. The high level of brand equity. Measures quarterly. It got a maximum level in the last 10 years. In the last many years in most of our categories. So we are very glad on that. It will allow us to be a strong competitor in Chile and the other countries where we participate.

Thank you. Our next question is from Constanza Gonzalez from Quest Capital. Your line is now open. Please go ahead.

Good morning, Patricio and Felipe. Thank you for the call and for taking my question. I have a question regarding Argentina. For example, considering that you are seeing a recovery in the economy. Do you expect that volumes in the next quarter are going to increase? And the second question with this the degradation of the economy, do you expect to bring more dollars from Argentina to Chile. How is going to be the process. I would like to appreciate if you can give us some color about that change? Thanks.

Indeed, Contanza. Look, regarding volumes in Argentina, pre the presence of Mr. Milei, when inflation was very high, there was a lot of money in the pockets of consumers. Before the adjustment the running rate -- the volumes of the last quarter adjusted by the industry, let's say it was 100. In the worst moment in 2024 that was Q2 and Q3 volumes of the industry decreased and maintained by 20%, were if handed before were 100%, today we are in 90%. Now just in the middle of the road between pre-adjustment and the worst moment after adjustment. My remark number two. The worst moment of the adjustment was Q2 and Q3 2024. So we expect to have a good growth in volumes compared to those figures. But again 90% is less than 100%. So the industry is stabilizing in a level which is 10% better than the worst moment and 10% lower than the pre-adjustment movement. And then on your second question, I will ask Felipe to elaborate.

Now this was regarding the new measures announced on April 14 by the Argentinian government. Yes, the central bank announced an agreement first with the international monetary fund. Which is good. But also included comprehensive financing package. A new regulatory framework for exchange rate controls. These announcements of course for the futures are very positive. Because for results or income delivered from financial statements, from 2025 and thereafter, we would be able to bring dividends from Argentina. Which is good news for the future. I cannot tell you, if we will bring or not, it will depend on our results and other accounts. And also it was announced a new bonus for our reconstruction of a free Argentina delivering in Spanish. That would allow us to settle some accounts with some commercial partners, that we have foreign rate exposures in our P&L, which is positive. But also to pay some unsettled share sales from the holding company to Argentina. So. First is to settle the accounts, would be the first objective. And then of course for the future is positive, that we could bring dividends from the results from 2025 and thereafter. So we see with very good eyes this new announcement of the government.

Okay. Thank you for your answer. I have a follow-up question. In relation with the shingles in trends. What is, -- I'm sorry, which is the level of margin EBITDA that you feel comfortable for the long term?

See, we do not make projections publicly for the long term. But we are trying to recuperate the EBITDA margin in the year business both in Chile and Argentina.

Okay. Thank you. Thank you for your answers.

Thank you. We have a follow-up question from Fernando Olvera from Bank of America. Your line is now open. Please go ahead.

Great. Thanks for picking up my question again. I would like to hear your thoughts about the weak demand in wine, in both local market and exports. Is there any other reason beside a lower demand of alcohol? And also how do you expect volume to behave the remaining of the year given that you will face easier comps? Thank you.

Thank you Fernando. I mentioned before the trends to reduce the alcohol consumption on the whole alcohol category. But if you double click the wine category has been the one suffering the most. Figures, this is Chile. 2019 the per capita of wine is really stopped investments in wines. The per capita in Chile 2019 12.7 liters. 2024, 10.5 liters. 2025, continually declining. The United States wine as 2019. 9.8 liters. 2024, 8.4 liters. The world as a whole which impacts on our ability to export per capita in 2019, 3.8 liters. 2024, 3.3 liters. Among all the categories the one suffering the most is the wine. The beer and spirit categories have been able to defend themselves. I think that because the wine categories are much more conservative and the beer category has been bringing a lot of innovation and the spirit category has been much more innovation, particularly on flavors alcoholic products which are growing a lot. Low alcohol flavor sparkling those categories are increasing a lot and we are promoting strongly those categories based on beer business. Spirit are also based on wine, we have been able to defend volumes and profitability by doing this. And we expect those categories to grow a lot in the future. Regarding this year, we prefer not to make public estimations. Of course we have our own estimations, but we prefer not to make them public. But again, the trend is complicated as I mentioned before particularly for wine. But we are trying to offset these trends by pushing a lot of those flavors or the low level of alcohol, non-alcoholic products, beer without alcohol. Sparkling wine without alcohol. We expect those categories to grow in the future and we are pushing a lot. With a lot of margin because those categories make sense because they bring volume and they also bring margins. At the very beginning you have to invest in marketing, you have to generate a little bit of additional costs in your operation. But we are convinced that they will be extremely important in the future. Not only in the future in the near future. That's it.

Okay. Great. Thank you so much for the color.

Thank you. We have a question. From Santiago Petri from Franklin Templeton. Good morning. Thanks for the call, do you perceive a change in consumption habits towards beer consumption globally? Why are sodas doing better than beer? What is your outlook for beer consumption in the future?

Thank you Santiago for your question. It's a key question that probably you texted this question before my last remarks. But again I will repeat some figures and give you information on this. All over the world in the last 10 years, let’s compare pre-pandemic with post-pandemic. Beer in all over the world the per capita was 23.9, in 2024 it was 22.7. So a decline but not as important as in the case of wine. In the case of Chile, per capita in 2019, 52.2, in 2024 54.2. So we have been able to move in a different direction than the world in the beer category. Among other reasons in the tough competitive environment that we have in Chile, so apply all competitors to be very smart promote our volumes. So we have been able to move in the right direction. In 2025 the trend is not good. As I mentioned before and it shows. I would say that this is the key challenge for all the companies producing alcohol all over the world. And we are facing this challenge. But indeed it is a challenge.

Thank you very much. I will now be passing the line for the CCU team for the closing remarks.

In summary, the first quarter 2025 we were able to deliver higher financial results expanding EPA. And the income in a challenging business environment for volumes and continues costs pressures. Ii line with our priority of recurring profitability, we implemented revenue margins across all operating segments, while continue to deliver efficiencies. Furthermore, in 2025 we are celebrating 175 years of history. We have overcome many challenging times by being a dynamic and innovative company. Capable of adapting to transformations in Chile and the other countries where we have expanded our operations. This past business experience, will be key to navigating the current uncertain business scenario, especially in terms of consumption trends and the change rate politics. Thus we continue implementing our 2025-2027 strategic plan, supporting our multi-category strategy to ensure sustainable and profitable growth for CCU.

This concludes the call for today. Thank you and have a nice day.

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 would like to turn the conference call over to Claudio Las Heras, 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 Dubernet, Chief Financial Officer; Joaquín Trejo, Financial Planning and Investor Relations Investor Relations Manager; and Carolina Burgos, Senior Investor Relation Analyst. You have received a copy of the company's consolidated fourth 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 statement. 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 risks and uncertainties 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's my pleasure now to introduce Mr. Felipe Dubernet.

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 continue 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 segment. In addition, we experienced cost and expense pressures coming from the depreciation of our local currencies against the U.S. 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 CLP 387,267 million, increasing 2.1%. When including the nonrecurring gain, EBITDA increased 9.6% versus last year. At the same time, and also excluding the nonrecurring gain, full year consolidated net income expanded 32.5%. When including the nonrecurring 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 posted 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 impact in our results from the challenging scenario described above. The initiatives mentioned above were executed under the regional plan, HerCCUles, 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 the 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 continued strengthening its regional footprint. In July 2024, we started consolidating our 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 preference, especially being 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 CirCCUlar. Now I will move into the quarter. In quarter four 2024, CCU delivered a solid set of results. Consolidated EBITDA reached CLP 182,621 million, 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 of IAS 29 from IFRS in Argentina, generated a loss of CLP1,095 million in quarter four 2024. Nonetheless, even isolating this mentioned effect due to the hyperinflationary accounting, consolidated EBITDA expanded robustly by 34.9%. In terms of quarterly volumes, excluding the inorganic volumes from the consolidation of Aguas de Origen and the association with Vierci Group in Paraguay, volumes were down 0.1% in quarter four 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 volumes 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 CLP74,153 million, up by 77.7%, driven by the better operational results and a better non-operating results, 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 four 2023. EBITDA expanded 23% and EBITDA margin grew 208 basis points to 19.6%. In the International Business Operating segment, excluding the 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 chart, 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 mix effects. EBITDA posted 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 questions you may have.

Thank you. So we will now move to the question-and-answer session. [Operator Instructions] So our first question comes from Fernando Olvera from Bank of America. Please go ahead sir. Your line is now open.

Great. Good morning or good afternoon. Thanks for taking my questions. I have two. My first question is if you can comment what was the performance in Chile between premium and mainstream beer and how much represents premium of your beer volume now? How do you expect the mix to behave this year? And my second question is how are you thinking about the price elasticity in Chile? Thank you.

Yeah. So I understood -- in your first question, I understood the first part of the question. We have some communication problems in the second part. So let me answer the first part of your question, what is premium and mainstream, so how was the mix? This is your first question regarding that?

Yes. And basically, what is your outlook for this year, in these two categories? Thank you, Felipe.

So I would say between premium and mainstream is rather stable, the mix in the comparing quarter four 2024 and quarter four 2023. The outlook in Chile, so quarter four, the industry was, I would say, soft because although we have a mid single-digit growth in Chile. During the quarter, 4.7%, we grew the volumes. It's worth to say that the comparison base of last year, as we mentioned in our press release at that that time, due to weather conditions was a low comparison base. So if we exclude that, we could conclude the industry is rather flat. So I would say, soft. What we expect in the future, it's too early to call, because only we have one month, but what we – it was slightly positive, I would say, compared to the first quarter of last year, but it's too early to call, but it would be a soft industry for sure. I would say the economic growth in Chile is expected to be 2% in the long-term. So I do not expect a big jump in the industries. I would say, a similar year in terms of growth of what we experienced a little bit more growth, maybe, but low single-digit growth would be something reasonable. Okay?

Okay. And regarding the second question, how are you thinking about price elasticity, thinking about that soft volume?

Yes. At the end of the day, if you look at the overall quarter -- excuse me, in the overall Chile Operating segment, we grew the volumes and volumes are, let's say, running at a very similar rate. So I would say that, the price elasticity, of course, we aim -- we increased prices by 4.9%. This is in part as we have discussed in many phone calls that we need to recover our margins due to this big jump after the pandemics of the input cost because we still have a lower gross margin compared to 2019. For example, that is the year previous to the pandemic. So we need to continue to do revenue management efforts and price elasticity, I think there is something -- but at the end, it's exactly same we have. So remember, in 2019, for example, we used to sell in the last quarter, 6 million hectoliters, just as a data. And in the 2024 last quarter, we sold 6.6 million hectoliters, while we have increased the prices in line with inflation, so it's not the same price. So there is so we could increase price while increasing the industry. Because if you see the numbers, we are, against 2019, 15% above in terms of volumes. So the first pillar HerCCUles was to maintain the scale and still we are more than maintaining the scale despite the price increases. These price increases were not enough to compensate the input cost. But we have increased the prices while increasing the volumes.

Okay. Great. Thank you, Felipe.

Thank you. Our next question comes from Ewald Stark from BICE Inversiones. Please go ahead, sir. Your line is open.

Felipe, thanks for taking my question. I have a question regarding Argentina. So far in 2025, how have you seen Argentina performing, and what are your expectations going forward? Thanks.

Thank you, Ewald, for your question regarding Argentina. In Argentina, after the big decrease in volumes occurred in quarter two and quarter three, where we saw high 20s decrease in decrease in volumes between 25% to 28% volumes compared to the second quarter of the previous year. In quarter four, we saw an improvement. So we were -- we decreased our volumes in a much lesser extent, the volumes. So, we saw gradual improvements in Argentina. Just to give you a flavor on that, this is seasonally adjusted volumes in quarter one 2024, our seasonally adjusted volume, this is not including the inorganic volumes of -- were 5.8 million hectoliters. So, in quarter four, it was 5.6 million. So, we haven't yet recovered the quarter one volumes. However, in quarter two, which was the bottom was 5.2 million. So, we continue to see some improvement in January, but as I like to mention, it's too early to call. But we think it would gradually recover a higher scale Argentina. Would Argentina recover the scale we had in 2023? No. But certainly, we will -- the industry as inflation is more controlled. And as it is projected a higher economic growth, should continue to recover in the way to recover the scale we had previous to the macro adjustment in Argentina.

Okay, perfect. And do you have any sense about when 2023 volumes could be achieved going forward, maybe 2026, 2027?

It's difficult to predict. I would say, maybe. But you mentioned exactly what could be reasonable between two to three years. It would depend on many factors. Because in Argentina, you have still many macro challenges. Would the government release the cepo at the end of the day? So, we are in a good path in the -- with sequential improvements, I would like to say, but to predict when we would recover the scale in Argentina because at the end, Argentina today manage a completely different micro and macroeconomic reality. It's a country that -- maybe the first question, you may ask me or we may think is when hyperinflation would end in accounting -- for accounting purposes. Because yes, we saw very good results in inflation, with improvements. But salaries need to recover, employment need to recover, so the macros need to recover. And then we could answer the question regarding when would we recover the scale in Argentina. But we are in the past, quarter four results showed that, early January results show that we continue with the sequential improvement that we are saying that is happening since quarter three. Quarter three more moderate, quarter four better and we expect quarter one to be a little bit better and continue to recover the scale.

Okay, perfect. Thanks. Have a nice day.

Okay. Thank you. [Operator Instructions] So we have a question from Martin Zach [ph] from Fundamental Capital [ph].

Should we expect margin recovery during 2025 and 2026? Would that recovery come on the back of price increases going ahead of cost inflation?

Yes. Yes. Thank you, Martin, for the question. Yes. At the end, we are -- so the last quarter results are encouraging, especially in the case of tile. As you compare, we recovered our margin path. So for example, in 2024, we have exactly the same margin as we had in 2021 when we had an extremely high volume. In general terms, it's a tough scenario. It's very volatile. So it would depend a lot on external factors, especially the exchange rate. So if you ask me that question at beginning of the year with the Chilean peso at CLP 1,000 per U.S. dollar would be very difficult to improve EBITDA margin. But we will continue our revenue management efforts as well as our efficiencies effort in order to show sequential improvement in margins. These are key. As you mentioned in your question, revenue management is key, not only increasing prices, but also rationalizing promotions is key in that sense. So certainly, the improvement of margin will not come from volumes, so it should come from revenue management, but also from efficiencies. But we should be seeing an improvement. And this -- I'm talking regarding Chile. In the case of Argentina, if part as -- we as I mentioned in the previous question, we continue with the sequential improvement. We should be we recover margin certainly.

Okay. Thank you. It looks like we have a follow-up question from Fernando Olvera from Bank of America. Your line is now open. Please go ahead.

Hello, guys. Thank you for taking my question again. Maybe if you can comment about the wine division. I mean, your volume is still far from the peak reached in 2021. So how do you expect volumes to behave this year? And what is your outlook on export and the corresponding domestic markets? And also, if you can comment about Colombia, about volumes in Colombia, how are you seeing the behavior this year given the solid growth that we saw in 2024? Thank you.

Okay. Regarding the Wine division, I would maybe divide your question in three answers. Because we operate in different markets. So first of all, exports. Exports as we haven't yet recovered the scale we had previous to the pandemic, we are below the 2019 volumes by 13% in exports from Chile. 2024 was the first step in terms of recovering that as we grew 4%, 3.9%. Speed is moderate. We think we will continue to recover, especially by the implementation of our commercial offices in China, US and UK. This initiative certainly will improve our execution in these three key markets, along with the recovery of other markets such as Korea. So in general times, we should be recovering growing this year and in the way to recover this market. It’s tough. It's a very competitive market. We have experienced this destocking in 2023 of all our clients. And going forward, 2024 show growth, and we -- but we need to -- but we are still far from recovering the scale we had previous to the pandemic. So another important lever is innovation, innovation is key in a category that globally doesn't grow. So innovation is key. Jumping now to Chile domestic. In that case, it's the opposite to export market because we have a higher scale than previous to the pandemic, so we have preserved the scale, despite an improvement in margins as we have increased prices. So -- but in that sense, we are -- this is a very good business that we are in very good shape. We are the market leaders and innovation has been key in that. Argentina, suffering from what's happening in Argentina in terms of volume. This year, we suffered in the domestic Argentinian market in 2024. So overall, the perspective is growing exports, maintaining our leading position in Chile. So but essentially the recovery of export volume is key going forward.

Excellent. And regarding Colombia...

Regarding Colombia, we grew high-single digits, gaining share with an excellent performance of Andina Light, also an excellent performance of Tecate. There is still job to be done in our execution. The team in Colombia is working hard. Also with our partner, Postobón, in improving our -- especially our sales execution and also while increasing our brand preference there. But we are very happy about the performance of Andina Light.

Okay. So do you expect the good performance to continue?

And as I mentioned, we reached a positive EBITDA, which is very important to continue to invest behind the brands.

Okay. Perfect. Just a quick one about the massive blackout from yesterday in Chile. I mean I was just wondering if that blackout affecting, some way, your operation, if it was highly affected or not?

No, not significantly. So first of all, the only -- we lost one shift of production, because production, you don't have back ups for the full production, only for the essentials, for example, to keep the beer in the fermentation plants, you have backups. All the distribution is not a heavy user of electricity. So you have full backup. So we completely delivered our customer orders without any disruption. We lost one shift of production is not significantly -- as we could extend some shift going forward and completely recover this shift that we lost. But our contingency plans worked perfectly in the IT side, in our data centers and also in the distribution to completely deliver the products to our clients.

Great. Thank you, Felipe.

Okay. Thank you. Our next question comes from Constanza Gonzalez from Quest Capital. Your line is now open. Please go ahead.

Good afternoon, Felipe, and team. Thank you for taking my questions. I have two. The first one regarding CapEx, what is the CapEx that you are expecting for this year? And I appreciate if you can make the separation between investment and maintenance. And the second one is just regarding CapEx, too. Do you have any targets regarding the EBITDA that you prepared to invest in the near future? Thank you.

Hello, Constanza, thank you for your question regarding CapEx. Yeah, what we can say is that CapEx against depreciation would be going forward a little bit above inflation above depreciation our CapEx would be a little bit depreciation. So -- but much lower than what we saw in previous year, let's say, 2019, 2022, where was a period of big expansion in terms of volume capacity. So we moved from 1 point -- between 1.4% on average, 1.3% to 1.7% was the peak in 2022. We are moving to ranges between 1.1% and 1.2% going forward. So because as I mentioned, we saw a soft industry at least in 2025 and maybe in two years, we need to recover, as I mentioned, we need to recover the scale in Argentina. So we saw a more moderate CapEx going forward. So CapEx, as percentage of sales were in ranges between 7% to 7.5%, on average 2019, 2022, 2023, 2025, we saw something around 5.5%. That's for CapEx. Could you repeat your second part of the question?

Of course. Do you have any target regarding CapEx versus EBITDA? Or it's not a measure that you follow?

The metrics I mentioned are the metrics we use. CapEx as a percentage of net sales, as I mentioned, we don't have -- because CapEx, you need to be flexible enough if we have a jump in industries, you need to invest in capacity. Main CapEx, the mix of CapEx now is moving to efficiencies, is moving to regulation. As I mentioned, a big jump in CapEx last year was due to the construction of Circular [ph], which is a plant to recycle PET bottles, okay? So it's more linked to environmental and efficiencies rather than capacity. So I think our level of CapEx should be in the average of the industry what we have seen is between 5% to 8% depending on what are the needs. But there is no specific, but I think this would be the level of the CapEx that's a little bit above inflation between 1.5 times depreciation -- excuse me -- not inflation, depreciation.

Thank you, Felipe. I have another question. Regarding net financial debt over EBITDA. Are you evaluating some range in the next year? Or are you comfortable with where your current levels?

Yeah. In general terms, we are within the range. We don't have a public target on that, but I think it's -- when we compare with the industry, comparing with other sectors, I think we have a reasonable level as far as we kept our investment grade, which is key. That's important for us. We still are keeping our investment-grade level, we need to be in that range. As I mentioned, we have maybe less CapEx the next three years because we are moving from 1.5 times inflation to 1.2 times -- excuse me -- depreciation, again, I said inflation, depreciation, or moving from above 7%, especially dominant saving CapEx. This indicator will continue to improve. In fact, in the last quarter, we moved from net financial debt-to- EBITDA from 2.2 times to -- 2 times to 1.8 times. So, we are in the good path. But it's key for us, is having our investment-grade.

Thank you so much for your answers.

Okay. Thank you. Our next question is from Alvaro Garcia from BTG Pactual.

Can I ask about Chile cost inflation outlook specifically and your outlook on how this might impact the rationality of pricing in Chile over the next year? Thank you.

Okay, Alvaro. Thank you for your question. Regarding cost inflation, as I mentioned in the previous question, it's very volatile because it's very different in this business. With CLP1,000 per dollar exchange rate, is very different than CLP940. These are CLP60, and you know it's 1% of devaluation, is a lot of money in our P&L that we need to compensate with efficiencies or with pricing. Because, as I mentioned, we will not have great news from volumes. So, at the end, that's key for us. If the dollar going forward is maintained in a range of CLP940, every price increase we do, at least in line with inflation, would be a good news in terms of overall margin. And this is the aim. Usually, in the long-term, CCU is aiming to increase price in line with inflation. Our ability to increase prices would depend in several factors. And one of the factors is competition, of course, but more than thinking about the competition, we need to think about ourselves, and this is -- what is key, and it was a big pillar in HerCCUles and continue to be a very important KPI for us is brand itself. The stronger our brands are, the more our brands are in the heart of the consumer, the better -- the better price we can get for our brands. Even if the competition does promotions or discounts, we need to rely in our brand equity in order to sell at better prices. Of course, is key, as I mentioned, the volatility in the market. But if we have a scenario of CLP940, I would say it is reasonable to increase the prices in line with inflation a little bit above inflation.

Okay. Thank you. Our next question comes from Francisca Taverne from LarrainVial.

Have you seen competition regarding price increases in the beer market in Chile? Have they followed in the last months?

Yes. We have been the last quarter, increasing prices in some specific packages. So -- because we have some packages that are less profitable than others. So we have touched these packages, especially the large size packages, and this has been implemented, especially in the beer category in Chile. So as still, I think every company has suffered a lot in terms of margins of the levels we had before the pandemic, we need to continue to recover profitability. Usually, competition or the whole industry has increased the prices along the path. So -- and this is what I said. At the end, it's a combination of overall industry price, but also brand equity matter in not only in the price list, but also in rationalizing promotions. This is key in a very competitive market as Chile.

Okay. Thank you. [Operator Instructions] So our -- we have a question from Sergio Winter from Falcom Capital. In your press release, you mentioned that HerCCUles is already concluded, is there any other plan or measure to continue working on efficiencies in 2025?

Sergio, thank you for your question. Maybe we haven't been very clear in the press release, but we are mentioning that, of course, HerCCUles as a name, as an idea, as a brand ended in 2024. It was a three-year plan in order to recover our results against 2022 that was, in fact, a very disappointing year in terms of results. And in fact, we recover EBITDA growth we -- and especially net income growth that was above inflation in that period. So now going forward, as we mentioned, our focus will be on developing our 2025-2027 strategic plan, reinforcing our three pillars: profitability, growth and sustainability. So HerCCUles ended. But many elements of HerCCUles are still present and will be still present in our in our 2025-2027 strategic plan. In the upcoming annual report that we will issue according to the regulation going forward, we will be more specific and give more color on different KPIs of that new strategic plan 2025-2027. But many elements of the plan would continue, especially in terms of profitability, where we need to continue to recover gross margin because this is what suffered the industry, as well, reducing our expenses as a percentage of net sales in, let's say, kind of efficiencies at gross margin level and efficiencies also at expenses level in order to protect our bottom line going forward. But it is worth to say that HerCCUles was a successful plan in order to recover to some extent, despite the external effects we had, the contraction in Argentina at the HerCCUles [ph] path in the delivery of the results that are shown especially in the last quarter.

Okay. Thank you. We are not seeing any further questions. Thank you, everyone, who asked questions. I'll be handing the line back to the CCU team for closing remarks.

Thank you, all for attending this conference call. To conclude, in 2024, we posted a strong turnaround in our financial results during the second half of the year, expanding EBITDA and net income versus 2023 in a challenging business scenario, at the same time, we strengthened our regional footprint. Looking ahead, we are cautious about 2025 as the business scenario will remain volatile and uncertain. Our focus will be on developing our 2025-2027 strategic plan, reinforcing our three strategic pillars: profitability, growth and sustainability, with a special focus on profitability through revenue management efforts and efficiencies. Finally, I would like to extend my gratitude to all our employees, the dedication and commitment has been key to navigate challenging times. We will continue to work to ensure sustainable and profitable growth for CCU. I wish you a wonderful afternoon today. Thank you.

That concludes the call. Thank you, and have a nice day.

Good afternoon, everyone, and welcome to CCU's Second Quarter 2024 Earnings Presentation Call on the 8th of August. Please note that this call is being recorded and all participant lines are in listen-only mode. After the presentation is completed, there'll be an opportunity to ask questions. So without further a due, I would now like to pass the line over to Claudio Las Heras, Head of Investor Relations at CCU. Please go ahead, sir.

Welcome everyone, and thank you for attending CCU's second quarter 2024 conference call. Today with me are Mr. Patricio Jottar, Chief Executive Officer; Mr. Felipe Dubernet, Chief Financial Officer; Mr. Joaquín Trejo, Financial Planning and Investor Relation Manager; and Carolina Burgos, Senior Investor Relation Analyst. You have received a copy of the company's consolidated second quarter 2024 results. At usual, Patricio will now review our overall performance and we'll then move into a Q&A session. Before we begin, please take note of our cautionary statement. The statements made in this call that relate to CCU’s 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 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 Mr. Patricio Jottar.

Thank you, Claudio, and thank you all for joining us today. In the second quarter of 2024 CCU's financial results were much weaker than last year, as they were heavily impacted by two effects, a particularly difficult context for demand in Chile and Argentina, and the depreciation of our main local currencies. In Chile, the industries of our core categories particularly there, decreased largely explained by adverse weather conditions with unusual low temperatures and record rainfall during the quarter, particularly in May and June. In Argentina, we faced a sharp contraction in economy and in the beer industry associated with a challenging context for consumption. It's important to mention that we maintained overall market share in both countries. In terms of our main local currencies, the Chilean peso, an Argentine peso depreciated 16.8% and 255.1% against the U.S. dollar respectively, increasing our U.S. dollar denominated costs impacting our operating results. In this scenario. Under original plan HerCCUles, further actions in terms of revenue management and costs and expenses control are currently in place. These actions in a more normalized context of volumes growth should help us to return to the profitability path. During the second quarter of 2024, our revenues contracted 8.6%, fully explained by 12.7% volumes dropped partially compensated by 4.6% higher average prices in Chilean pesos. Lower volumes were largely cost by a weaker demand in Chile and Argentina as I explained before. Average prices were higher due to revenue margin initiatives in all operating segments. Gross profit was down 15.8% and as a percentage of net safe deteriorated by 338 basis points due to higher cost pressures mainly coming from depreciation of the Chilean peso and the Argentine peso mentioned above. MSD&A expenses expanded 1.7% and as a percentage for net sales deteriorated 464 basis points mainly of a consequence of lower volumes and its negative impact in fixed expensive dilution. In all EBITDA reached CLP10,053 million of 78.7% decrease and EBITDA margin contracted 629 basis points. Net income reached a loss of CLP15,888 million. These figures do not consider the non-recurring gain from the sale of a portion of land in Chile without favorable effect before taxes of CLP28,669 million and after tax at CLP20,928 million, including this non-recurring effect EBITDA totalized CLP38,722 million and net income reach a gain of CLP5,040 million. The following analysis also does not consider this non-recurring event. In the Chile Operating segment, top line contracted 5.5% driven by 8.4% volume drop partially offset by 3.1% growth in average prices. Volume contraction was caused by weaker demand due to unfavorable weather conditions in the quarter particularly in the beer business. Nonetheless, we saw a much better performance in July being a good sign for volumes looking ahead. Average prices were higher driven by revenue management efforts in all our categories, partially offset by negative mixed effects in the portfolio. In this regard, in July, we implemented additional price actions, gross margin decreased of the result of high cost pressure, larger coming from our U.S. dollar denominated costs. MSD&A expenses were flood due to efficiencies that helps to compensate higher U.S. dollar denominated expenses. Consequently, EBITDA totalized CLP26,587 million contracting 39.7%. In International Business Operating segment, which includes Argentina, Bolivia, Paraguay and Uruguay, net sales recorded 22.1% drops as a result of 27.2% reduction in volumes partially offset by 7% rise in average prices in Chilean pesos. Weaker volumes were mostly concentrated in Argentina. On the other hand, Paraguay and Bolivia expanded volumes, while Uruguay dropped due to a high comparison base explained by an uncommon draft in 2023, which boosted package water consumption in that year. The better average price in Chilean pesos were driven by revenue management efforts in all the countries. Partly offsetting strong cost pressures mostly coming from the sharp depreciation of the Argentine peso against the U.S. dollar, and its impacting U.S. dollar denominated cost. Consequently, gross margin deteriorated from 46% to 37.5%, and SG&A expenses increased 3.3% and as a percentage, net sales deteriorated mainly due to the lower business scale in Argentina. Altogether, we reached a loss of CLP 24,372 million. The Wine Operating segment continued in a recovery tent with revenues expanding 12% driven by 11.9% high average prices. Volume showed a strong recovery in export from Chile, which expanded 9.1% while the Chile domestic market was down 5.4%. The better average prices were boosted by the weaker Chilean peso and favorable impact on export revenues and revenue management initiatives in our domestic markets. Gross profit rose 28.5% and gross margin improved 511 basis points. MSD&A expenses increased 12.4%, mainly due to higher marketing expenses related to exports, which are denominated in U.S. dollars and as a percentage for net sales remained flat. In all EBITDA increase 59.2%. Regarding our main joint ventures and associated business in Colombia. Volumes increased mid-teens guiding better financial results. In Argentina, our water business with a non-recorded the contraction in volumes due to the challenging scenario for consumption. Nonetheless, financial results improves versus last year due to efficiencies from a successful go to market and back office integration with CCU Argentina. Now, I will be glad to answer any questions you may have.

[Operator Instructions] First question comes from Mr. Felipe Ucros from Scotiabank.

Good morning Patricio, and thanks to this case. A few questions on my side. Maybe start with the first one on weather. You discussed in your release and your remarks that weather had a little bit to do with the poor volume performance in beer and non-alcoholic beverages. But in my mind, when it's cold and the consumer drinks less beer and non-alcoholic maybe the consumer drinks more red wine. But the results locally show that in wine Chile was also negative. So just wondering if you could comment on how those weather effects move the portfolio and whether we should consider that there's more pressure from generalized consumption rather than weather, or if you think weather was a bigger effect here? And then I'll do a follow up.

Look, if we double click the volumes in the domestic industry -- this, we find differences among the different categories. In fact, while we are keeping market sharing general in terms in the different categories. So the figures of CCU represents figures of the industry. In the case of beer, -- so the whole Chilean segment decreased by 8.4% is volumes, as I mentioned before. But there are difference in the case of beer, the decrease was in the mid-teens, while in the case of non-alcoholic, the decrease was middle or mid-single-digit. So something like 5% in the case of non-alcoholic, something like 14% in the case of --. So as you could see, very strong difference in both cases, we are keeping marketers. You are right, when the weather is not good wine and spirits benefit from this. In fact, the volumes of spirit decreased by something like 5% and the volumes of wine domestic market, I mentioned it in my introduction, something like 5% also. May and June were extremely, extremely bad in terms of temperature and in terms of rain. In fact, the temperatures on the second quarter, particularly May and June, were the worst in the last 20 years and growing by far the worst in the last 20 years. Making a strong effect particle in beer, which is very sensible on temperature, on weather, and creating or producing an effect also in the other categories, but not as much as in the case of beer. Looking forward, we don't know what is going to happen with weather, but of course we assume that weather is going to be normal, not hot, not cold. July was a very normal month in terms of temperature and in terms of rain average on the last 20 years and volumes assume some growth, not too much, a single-digit, 2% something this 2% to 3%, which is normal in an economy which is not performing well as the economy of Chile. So we feel comfortable regarding the future, regarding volumes. And again, we think that May and June particularly in Q2 2024, were extremely, extremely extreme because of the conditions I just mentioned.

Thanks for the clarity on that. And my second question is on competition. Last quarter, I asked about the rationality in the market, and asked if your competitors were moving prices with inflation, and it seemed that they were not moving at the speed, or at least not the same magnitude as a CCU. You announced in your release that you increased prices in July. Have you seen your competition follow you this time around?

Look, Felipe, I think that there is a lot of rationality in our markets and it happens that the pressure on direct costs have been tremendous. I mean, if you take a longer period of time, let's say 2019, 2024, our direct costs have increased in beer, non-alcoholic by 66%, 68%, and we have been able to increase price in line of inflation a little bit less in the case of beer, a little bit more in the case of non-alcoholic. But we have not been able to catch up with the enormous pressure on a direct cost. We need to continue making efforts on to improve prices, to recuperate margins. And we are moving in that direction, and the industry as a whole is moving in this direction.

That's clear. Any indication that your competitors have followed after your increase in July?

Say the, I mean, I prefer not to double click on the extremely short term, but I would like to say that the industry as a whole is facing the same pressures on direct costs and is moving in the direction of recuperating margin. In fact, it's not just until it's all over the world. But they prefer not to discuss on what is happening today in the market, but they remain positive on our ability to recuperate margins let me say this.

Yes. It’s a very short term to kind of gauge that. Last question on Argentina and shifting to other topics. It's been a few quarters since you left the Coke distribution system in Argentina and you started using your own. Just wondering if you can give us an idea of how smooth the transition has been and whether you're happy where you are on that distribution today.

Look, we are extremely happy. We made all the integration of the distributions in August, September, October, 2023. It was very important for us, because as you probably know 22% of our beer volumes in Argentina were distributed by the Coca-Cola system and we wanted to have control of our 100% of our distribution. Buying incorporating the non-water products in our distribution, we created enough critical mass to have our own distribution system in all the territory. And today, we do not depend on the distribution of Coca-Cola in the South and in some parts of the North of Argentina. It was very smooth. We reduced a lot of full-time employees. We reduced a lot of distributors. This is a 100% paid in our P&L of 2023, and the results are extremely good and satisfactory. We're very happy on our ability to run a joint distribution, putting together today beer, wine, cider, and water. And we're extremely happy on this. Particularly in the case of water, we are running at a positive EBITDA and positive net profit in the year the water business. We're not consolidating this. We expect to consolidate beginning August or September, 2024. I mean, in this month or next month. We're not consolidating this, but while we consolidate, we expect to have possibility EBITDA and positive net profits, mainly because we transform all the fixed costs of the water operation into viable costs by incorporating it in our platform. How is the year 2024 in terms of volumes for the categories? In Argentina is extremely poor. I mean, the beer category is decreasing volumes by 30%. The water business or the water category same thing. We are keeping roughly speaking our market shares there. But when volume decrease by 30%, everything in terms of results becomes very extreme. And this is what we are facing. We don't know when the consumption patterns are going to change in Argentina. Hopefully, in Q4 2024, this is what we expect. We don't know, but in the meanwhile, we are capturing again, all the efficiencies of having just one distribution network.

Next question is for Mr. Pedro Seixas from Neuberger Berman. We'll come back to Mr. Pedro Seixas in a moment. In the meantime, we'll take Mr. Alvaro Garcia from BTG Pactual.

A question on Columbia, the volumes there were quite strong relative to how the economy is doing. I was wondering if you can comment on initiatives in Columbia for that JV. And then just to follow-up on Argentina, you mentioned share was stable. I was wondering if you can comment if that was volume share, value share. My sense is if you maybe lag on pricing now and gain volume share, you could be in a much better position coming out of the crisis. But any clarity there would be very helpful.

Regarding Columbia, yes, it's true. We are growing our volume by 50%. We're gaining a little bit of market share and I mean, we make public the results in terms of head profit. But EBITDA has being positive year to date and we expect to have a much better result in the last part of the year, because most of the volume comes on October and November and December. I mean, it's tough -- it has been tough, our project in Columbia, but we're moving in the right direction. We're very happy on this. Regarding Argentina, yes our, I mean our volumes and as our market share in terms of volumes are in terms of value, are in the same direction. Looking in 2023, our prices will increase by 11% more than inflation, 10% or 11%. I mean, inflation is 200%. It's very difficult to know exactly or to compare exactly your price with inflation. But let's say that we gain a little bit, or we took a little bit of advantage on inflation. In 2024, we are losing 6 or 7 points compared to inflation. So if you put together ‘23 and ‘24, we are 3 points above inflation. The industry as a whole is moving in the same direction, but it's not a good idea to decrease prices in order not to lose volumes. Because if you do this, at the end of the day, it's going to be extremely difficult to recuperate prices. I prefer to move prices in line with inflation and do our best efforts to keep our scale and trust that the economy will resume normality and growth we expect sooner than later, but it's really very difficult to know when it's going to happen.

We'll go to, um, Mr. Pedro Seixas, Neuberger Berman. He typed this question. I was wondering if you could elaborate on how much exactly the FX fluctuation impact the 78% drop in EBITDA. How much of the 78% was to do with the FX depreciation and how much was to do with the volume decline?

We have the precise calculation. I will ask Felipe to we have -- I will ask Felipe to give you the right figures Pedro.

Thank you, Pedro, for your question. At the consolidated level, our EBITDA reduced from CLP47 billion last year second quarter to CLP10 billion the second quarter of this year. So the different CLP37 billion. Of this the external effect as we call. So that's the combination of exchange rate in Chile. So the Chilean peso depreciation against the U.S. dollar offset somewhat for due to some positive effect on raw material cost in U.S. dollar. This affected in total about CLP16 billion in a negative direction. So this was the heat of our results in quarter two. By exchange rate, somewhat compensated with better prices in PET, aluminum cost and malt cost. On the other hand, all operating variables such as price that was positive but not enough to compensate the input cost, and volume very negative. We reduce the volume overall at the consolidated level by 13% and compensated with some efficiencies, especially in logistics. The impact of this operating result was about CLP21 billion negative. So the main causes of the EBITDA decline were due to first external effects about CLP16 billion and volume offset somewhat by price. And efficiencies of about CLP21 billion negative, thus is the breach of the EBITDA.

[Operator Instructions] We'll open, Nicolas Donoso, we did notice your question from your line in case you have a question. Your line is open. Nicolas Donoso from Compass Group Asset Management. [Operator Instructions] We have a question from Fernando Olvera from Bank of America.

My question is related to cost. If you can share, what is your outlook for the remaining of the year? No, given that packaging and sugar costs are down, although the Chilean peso has depreciated no versus the U.S. dollar. And I have another question, but I'll wait.

We'll ask also Felipe to discuss from cost of raw materials and what we expect for the next -- for the rest of your year.

In terms of raw material, some water, you are right. The sugar has been softened a little bit, but it still is higher than last year. So we continue to be higher and we saw at a better outlook in the future in the last time. The other downside that we have in raw materials, higher cost is pop, orange juices are at the record highest cost, especially due to Brazil. For the rest is the same trend that we have, I think they would be stable. So what is more unstable? And it's very difficult to give you an outlook because I don't know, in the last two months, the Chilean pesos moved from high 900, let's say close to 1,000 to below 900. So this week also was especially volatile in line with the overall markets. So it is difficult to predict. So I prefer not to give an outlook. We used in our projections 940, but at the end, if you go into Bloomberg, you'll find a full array of projection. Also remind that it is very sensible to copper prices. So not only how the financial markets move or how the fed rates would move going forward, but also on capital prices, so difficult to predict. So this is the reason why we took actions in terms of prices because all the market, all the players, we are facing the same input cost pressures and we think that would continue towards the end of the year. We don't see nothing better of what we have seen in the last quarter. So that's important to work on revenue management and price.

Highlighted in the press release that recovering profitability is your short-term priority. So can you share what additional measures? Are you already implemented or are you or you are about to implement to recover margins? And how do you ambition this recovery on margins?

Indeed, it's our short-term priority. I mean long term, you need to move 3 pillars to yield up a good business in the long term. You need to move the pillar or to work in the pillar of profitability, growth and sustainability. And of course, we put emphasis on these 3 pills growth, profitability and sustainability. Having said that, the priority for the next 6 months and the priority today is profitability and we're putting all our behind it. Cost expenses, number one, we have our HerCCUles plan devoted to be much more efficient on one hand, revenue management initiatives on the other control of full-time employees and some efficiencies regarding full-time employees controlling on SKUs and some efficiencies regarding SKUs and some digital transformation programs, particularly in terms of the way we sell and the way we distribute. If you want us to elaborate more on this, indeed, we could. But those are the main elements, and we are fully focused on this. That's our first priority for the more, but first priority today, and it was our first priority yesterday, and we're working on this. And we expect to improve our financial results in the second half of the year, important. I mean this is our number one priority.

Our next question comes from Ms. Constanza Gonzalez from Quest Capital.

I have a question regarding Argentina. Could you clarify about what are you expecting in volumes and prices in the next quarter? Or if you are expecting some recovery on the end of this year or the beginning of 2025?

Thank you, Constanza. Extremely difficult to know exactly, look, if our volumes were handed before the beginning of crisis, and today, at 70, we expect to keep in the level of 70 during Q3, and we expect to start it in the level of 85 in Q4. But this is just an expectation because we really don't know. And if we do this, if we're able to establish 85, we could make profitable end of the year. But again, this is what we expect, we don't know exactly. Regarding price, as I explained before, we expect to move in line with inflation.

Next question comes from Ms. [indiscernible] from Compass Group.

My question is if you have another nonrecurring asset that can be put on sale as the land that we saw this quarter?

No, we expect not to have something like this in the second half of the year.

The next question comes from Lucas from JPMorgan.

I hope you hear me well. My first question is -- yes, so my first question is in light of this very uncertain scenario for commodities effects the company wouldn't be able to reconsider its policy not to hedge commodities and facts. So how do you see the benefits of the cost of hedges versus the ability of having a bit more, let's say, predictability on these lines? So that's the first question. The second question is just to clarify, third quarter, the company is seeing an improvement in volumes. If you can give us more information on how the premium segments performed this bad weather situation in the second quarter? And if you see sort of a premium accelerating more now in the third quarter versus the whole industry. In other words, if on top of the price increases you're implementing, if you believe that mix should also be helpful to improve your average price?

Thank you, Lucas, for your question. Look, regarding hitting now, we have a very clear policy, and we do not hedge raw materials. I mean because you have 12 termites, you had or you do not yet -- if you do not hit you face the spot curve of prices. If you hit, you face the future curve of prices. And if you face the spot price, there's the price, if you want to face the future curve of price, you have to pay the cost of intermediaries. So at the end of the day, you lose money. And if you ask me, but if you hedge when it's a good idea and if you do not hedge when it's a bad idea, I think if I would be able to do this indeed, we would do it but we do not have visibility indeed. So we are very clear on this. We do not hedge and we will not hedge. Regarding premium, it's very it's very strange that has happened because let me take the beer category in Chile, for example. Before the pandemic in 2019, premium was 25% to 27% of our volumes. After pandemic premium is in the level of 50%. In the best moment, it was something like 60% in 2021. When the withdrawals of money from the pension fans, people have a lot of men in their pockets and the premium down to 60%. Now premium decreasing to 50%, but still much better than much better than it was in 2019. And we have we have decreased the percentage of premium in the last month from 53% to 50%, 49%, and we expect it to stay in that in that level. I prefer we assume that no major changes are going to happen in the rest of the year.

We have a question from Nicol Helm from MetLife Investment Management. Okay. We'll come back later. Next question is a follow-up question from Alvaro Garcia from BTG Pactual.

Sorry about that. I meant to ask about COGS and then I meant to ask about the Chile volumes, but both of those questions have been answered.

[Operator Instructions] Okay. It looks like we have no further questions at this point. I'll be passing the line back to the management team for the concluding remarks.

Thank you very much. To conclude, I would like to reiterate that our second quarter of 2024 results were very weak and were negatively impacted by a particular difficult context for demand in China and Argentina and the depreciation for main local currencies, which resulted in higher cost pressures. Given this scenario, we are confident that our multi-category beverage strategy based on focus on synergies should help us to return to the profitability path, which is our short-term priority going forward, as I mentioned during the conference call. Thank you very much for attending.

Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you, and goodbye.

Good day, everyone, and welcome to CCU's First Quarter 2024 Earnings Conference Call. Please note that today's call 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, sir.

Okay. Yes, sounds good.

Claudio, please go ahead.

Welcome, everyone, and thank you for attending CCU First Quarter 2024 Conference Call. Today with me are Mr. Felipe Dubernet, Chief Financial Officer; Mrs. Carolina Burgos, Senior Investor Relations analyst; and Mr. Joaquín Trejo, Financial Planning and Investor Relations Manager. You have received a copy of the company's consolidated first quarter 2024 results. Felipe will now review our overall performance and we will then move on to our Q&A session. As usual, before we begin, please take note of our cautionary statements. Statements made in this call that relate to CCU's 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 risks and uncertainties set forth in CCU's annual report in Form 20-F filed with the U.S. Securities and Exchange Commission and in general report submitted to the CMF and is available on our website. It's now my pleasure to introduce our CFO, Mr. Felipe Dubernet.

Thank you, Claudio, and thank you all for joining us today. Before moving into the performance of the quarter, I would like to mention that quarter 1 2024 results indicate that the business environment in the region will continue to be challenging and volatile. In addition to the devaluation of the currency in Argentina, we faced a low 20s beer industry contraction in that country. In Chile, the Chilean peso devaluated 16.6% versus last year, negatively impacting our cost base. In this context, we continue with our 6-pillar regional plan, HerCCUles, taking further actions in terms of revenue management efforts and cost and expenses control initiatives to continue the recovery path of our financial results and profitability. These efforts will be reflected in the following quarters during the year, helping us to gradually compensate cost pressures. It is worth noticing that the Wine Operating segment posted a turning point in volumes, especially in exports and financial results. During quarter 1 2024, our revenues expanded 1.9% in Chilean pesos, driven by 6.6% higher average prices in Chilean pesos while volumes dropped 4.4%. Average prices were boosted by revenue management initiatives in all our operating segments and a weaker Chilean peso against the U.S. dollar, impacting favorably export revenues of the wine business. Lower volumes were largely caused by weaker consumption in Argentina. Gross profit was down 0.8% at the consolidated level and as a percentage of net sales deteriorated 129 basis points to 47.2% due to higher cost pressures, mainly coming from the devaluations mentioned above, increasing our U.S. dollar-denominated costs. Also, we have had higher sugar prices being partially offset by lower prices in aluminum and especially in PET resins. MSD&A expenses expanded 5.1% and as a percentage of net sales deteriorated 107 basis points. In all, EBITDA dropped 8.3% and EBITDA margin contracted 185 basis points to 16.6%. Regarding net income, it dropped 10.6%, in line with the lower operating results. In the Chile Operating segment, top line expanded 2.9% driven by 3.8% growth in average prices while volumes dropped 0.9% with overall stable market share. Average prices were higher due to revenue management efforts in all our categories, partially offset by negative mix effects in the portfolio. In spite of higher cost pressures due to the devaluation of the Chilean pesos, we were able to sustain this margin, which slightly decreased from 47.5% to 47.3%. MSD&A expenses grew 7.5% and as a percentage of net sales deteriorated 137 basis points, mainly explained by higher marketing expenses due to pricing, higher depreciation, and larger U.S. dollar-linked expenses. Consequently, EBITDA contracted 3% and EBITDA margin was lower, from 20.5% to 19.3%. Following with the following segment, in the International Business Operating segment, which includes Argentina, Bolivia, Paraguay, and Uruguay, net sales recorded a 1.6% drop as a result of a 14.7% reduction in volumes, explained by Argentina, partially offset by 15.4% rise in average prices in Chilean pesos. The beer industry contracted in Argentina as a consequence of a challenging economic context, impacted consumer demand, while all the other geographies, Bolivia, Uruguay, Paraguay, posted positive volume growth. The better average prices in Chilean pesos were driven by revenue management efforts in all the countries where we operate. Gross margin deteriorated 586 basis points to 49.4%, mostly associated to cost pressures coming from the 311.8% depreciation of the Argentine peso against the U.S. dollar, together with inflationary pressures. MSD&A expense as a percent of net sales were flat due to efficiencies which helped to offset a high inflationary context and a lower business scale in Argentina. Altogether, EBITDA contracted 27.1% and EBITDA margin was down 471 basis points, both more than explained by Argentina as the rest of the countries recorded a solid EBITDA growth and improvements in the margins. In the Wine Operating segment, revenues were up 11.6%, mostly driven by higher average prices largely boosted by the weaker Chilean pesos and its favorable effect on export revenues. Volumes also contributed to the top line, increasing 2.7%, mainly explained by exports which were up 3.9%. On the other side, domestic volumes in Chile were flat. Gross profit rose 34.7% and gross margin improved 662 basis points, also due to a lower cost of wine. MSD&A expenses increased 15.8% due to higher marketing expenses related to exports, which are denominated in U.S. dollars, and as a percentage of net sales deteriorated by 118 basis points. In all, EBITDA reached CLP 6,667 million, a 90.7% growth, and EBITDA margin reached 11.3%, increasing 470 basis points, showing a recovery of this operating segment. Regarding our main JVs and associated business, in Colombia, we started 2024 with a low single-digit increase in volumes and gains in profitability due to the appreciation of the Colombian peso. In Argentina, our water business with Danone, as a result of the route-to-market and back-office integration with CCU Argentina, posted a positive net income versus a loss last year despite a steady contraction in volumes. We are working to keep gaining scale in both businesses, which are relevant for our regional multi-category beverage strategy in the region. Now I will be glad to answer any questions you may have.

[Operator Instructions] We acknowledge the questions already from Bank of America, Scotiabank and BTG. Our first question comes from Mr. Felipe Ucros from Scotiabank.

Let me ask you first about our competition in Chile. Just wondering, with the sudden moves that the Chilean peso had throughout the quarter, what you have seen in terms of competitive pressures. Do you see generally a rational sector that prices to offset these effects of FX, or is discipline lacking a little bit in the sector? And then maybe if I can do a follow-up on wine, great quarter here. And it's just -- it wasn't just the FX, right? Volumes also ticked up. Now you're back above 2019 volumes on a comparable basis. So just wondering if you could comment whether the key driver is restocking, after so many quarters of industry destocking, versus how much you think this was actually driven by final consumer demand. And of course, if it's demand, what regions you're seeing as the key drivers here.

Okay. Thank you, Felipe, for your questions. So I would start by the competitive pressure in Chile. As I mentioned in the previous call, we are cautious about 2024, especially regarding consumption, as it has remained challenging through the first quarter, although a little bit better if you compare to the previous quarter, quarter 4, where we have had unfavorable weather conditions. Let's say, first quarter was better in terms of weather conditions for our business. Competitive as so, as it is consumption challenging, what we have seen is an increase in terms of promotional activity of our competition. And this led to that they sell at lower prices or flat prices against last year, not even selling with prices in line with inflation. In our side, we kept the pace of having prices at least in line with inflation, and overall, we have protected our market share. However, some categories, we have lost, but marginal loss, but especially due to promotions. So the answer to that is that on the other hand, we have FX pressures in our cost, as you mentioned. And this also put us in a challenge in order to protect our margins. So we took further actions end of March to increase prices in some categories. And if this continue, of course, we will continue with the revenue management initiatives while looking also, at the same time, our market share. The very good news is that we are managing outstanding brand health in our portfolio. So especially in our beer portfolio, brand health is in a record. So this could support our better prices without losing extremely high market share. So going forward, I think competition will continue. However, the industry is under pressure in the cost side, especially for U.S. dollar. But also aluminum prices are increasing and forward-looking aluminum will also increase. So in that sense, we should be careful about pricing promotions and all this equation of competitive pressure. But the priority is HerCCUles. HerCCUles is about maintaining a relative scale, given this challenging consumption scenario, while at the same time protecting our margins. But the good news is that we have very strong brands [ in ] itself that will certainly help us, okay? Your second question regarding wine. Yes, last year was an adjustment year in terms of inventory reduction on the supply chain and the distributors, especially in the Northern Hemisphere. Now we come to a normalization. We started in quarter 4 to see the first positive signs that this adjustment has ended, has reached a final at the end. And if you look at the numbers, the overall growth versus 2019 has increased by 1%, so we recovered already the volumes of 2019 as you mentioned. Going forward, we continue to see growth, but limited growth as we have seen in the first quarter. We are very confident of some initiatives of the Wine business regarding some key markets, especially China, where we opened a commercial office there. That will certainly improve our execution in that market, and also in other key markets also, we are improving a lot our execution.

Our next question comes from Mr. Fernando Olvera, Bank of America.

The first one is a follow-up on Chile. Think about this gradual volume recovery expected going forward. Can you comment how volume performed month by month during the quarter? And even any insight that you could share of April would be great. And what are the difference on performance between nonalcoholic and alcoholic beverages? That's the first question. And my second question also on Chile, given the slight contraction in gross margin after the 12 months of improvement, how do you expect gross margin to perform in coming quarters taking into consideration precisely FX volatility, packaging, sugar costs? That's my second question.

So I would say that during the quarter, the run rate in terms of volumes were practically, each month, the same in Chile. So no big difference between months. Maybe in some categories, especially February was better in water because of the fires we have in the central region of Chile. But I would say in terms of the overall volume trend in Chile, that was minus 0.9% in all the months, was equal. Regarding and [ split ] between alcoholic and nonalcoholic, I would say that nonalcoholic was rather flat in terms of volume. In nonalcoholic, we saw a decrease especially because of competition promotions, but not so different between each other. So I would say flat volumes in alcoholic and low single-digit decrease in alcoholic products, mainly because of intensive promotions of competition. That is the highlight. In terms of margins, yes, we -- as you mentioned, we experienced a nice recovery in 2023 increasing our margins. Now we have new upcoming pressures, new pressures that are there, especially the exchange rate. This is, a year ago, exchange rate in Chile was CLP 811. It reached during quarter 1 as an average CLP 946, so that is heavy devaluation. It's CLP 10 of higher exchange rate. It hits us more or less $3 million in terms of at EBITDA level. And the receipt is still the same, and it is HerCCUles. It is about enhance our revenue management efforts, as I previously mentioned. We took actions in some categories and we'll continue this level of [ actions that ] continue to be while protecting our market share and volumes, but we need absolutely to protect our margins. Also efficiencies and cost control initiatives are important in order to protect our margins, at least to protect our gains we did in 2023 in terms of margins recovery. It's a challenging year in terms of input cost. You mentioned sugar. However, in the last week eased a little bit but not enough to compensate the U.S. dollar exposure pressure that we have. However, I'm concerned about [ aluminum ] prices going forward also that affect our packaging materials. The only one that is more stable is PET, but we face a tough environment in terms of input costs.

Our next question comes from Mr. Henrique Brustolin from BTG Pactual.

I would like to just start with a follow-up on Chilean volumes. If you could comment if there were any specific movements within the beer category in Q1 -- you mentioned last year, for example, a trade down, so premium beer losing space to the core mainstream portfolio -- if you continue to see that happening or if the weaker category, I mean, it's widespread for all the product segments. And also, if you could give a little bit more color, comps [ in Chile ], they should start to get easier, volume comps in Chile throughout the year. So how you are thinking about volume performance in the coming quarters in the country as well and I mean, the strength of the category as a whole. These are the first ones in Chile. And the other one, I would just like to hear a little bit more about how you are seeing results in international for this year. Of course, visibility very low there, but all things considered, how you are thinking about the volume performance? And if things don't change much from what the macro conditions were in Q1, if we might continue to see somewhat similar levels of margin pressure throughout the year but also the strong prices that you were able to deliver. These are the two ones.

Yes. We have some sound problems but I will try to answer your questions. The first one was regarding the beer category and the trends in terms of mainstream and beer. It was a highly promoted quarter in terms of competition. And usually, there were promotions in the premium portfolio. So we haven't seen a radical change in terms of mainstream and premium as premium was promoted. When we promote premium, of course, you [indiscernible], let's say, in some way the trends. So we haven't seen -- so however, the premium has been reduced after the peak we experienced in 2021, beginning of '22, right after the pension funds withdraw in Chile. Looking forward, the following quarters -- we don't do forward-looking -- but as far as the Chilean economy could -- last estimates are predicting GDP growth of 2% to 2.5%. We should be seeing the margins, industry volumes grow, especially maybe in the second semester, I would highlight. But nothing above GDP growth. So that's for Chile. International, let me split between Argentina and the other businesses. The other businesses are showing robust volume growth related to market share gains. So we are happy about the performance in Paraguay, Uruguay also, and also Bolivia, especially with the launch of Amstel Beer in Bolivia. So the question now is about Argentina. We think that as of today, we reached the bottom in terms of consumption as inflation levels are being reduced. So for the first time in many years, we see a downward trend in Argentina in terms of inflation. So this 20% decrease that we have seen, us and competitors in the beverage industry, maybe has reached a bottom. This is -- but in such volatile and such heavy adjustment of the Argentine macroeconomics, would be difficult to predict this and what would happen. We could experience a recovery, yes. But now the question is how quick would be this recovery if we are willing to see a more positive macro in Argentina going forward, but it's highly risky to predict what would happen in Argentina sometimes. The answer -- our answer is again HerCCUles, so we need to reemphasize our cost and expense control initiatives while carrying out revenue management initiatives, because we are facing a scenario where certainly the industry will overall decrease this year. However, the first quarter or the first half of the year, we expect to be tougher than the second one. But again, it's too risky to predict.

[Operator Instructions] In the meantime, I will read the question from Santiago Petri from Franklin Templeton. "Hello. Could you please give us some color on the competitive environment in beer in Chile? You mentioned in your statement that the market share was stable despite lower volumes, while the competitor of yours reported higher beer volumes in Chile."

Santiago, good to hear about you. So yes, the competitive environment is tough in all categories. Remember, CCU is a multi-beverage company, it's not only a beer company. So overall, our market share in beverage was stable, let's say, even with the marginal gain in market share. However, in alcoholic categories, we have had some marginal loss in market share, I would say, not -- it's not significant. And we are not worried about that, because our -- as I mentioned on the brand health indicators are outstanding. Of course, as I mentioned, this was completely due to heavy promotional activity of the competition. So that is what happened in the first quarter, to be clear.

We'll give another minute or so for any additional questions to come through. [Operator Instructions] Okay, we have a question from Thomas Stark from [indiscernible]

I have a question regarding [ vineyards ], and it looks like receivables increased by more than 30% while sales only increased 11%. Can you provide further details about its sales conditions made on trade, please?

I think you are asking about working capital? Yes, because we have seen an increase in receivables. Look, we -- so there are several effects. One main effect is that with the route-to-market integration of the water business in Argentina, that is a business that has not consolidated. However, we do the cash collection of this business. Due to the route to market integration, we are having most receivables linked to the adding up the water business receivables to our consolidated balance sheet. This is 1 effect. The second effect is -- has increased a little bit the due debt, but it's not linked to bad debt. It's more linked because the end of the quarter, the end of first quarter was during Easter. So Easter weekend, usually customers go on holidays on Thursday and do not [ send ] the transfer of demand. So nothing to worry, because at the end this was fully recovered in the first week of April. So there is something linked to having Easter at the end of the quarter. Also, another effect was [ phasing ] towards the end of the month in Argentina. So 3 effects: the consolidation of the receivable of the water business as we did the route-to-market integration; secondly, it was due to the holiday, the Easter holiday at the end of the quarter; and third, it was the [ phasing ] in Argentina. Of course, we -- but nothing related to bad debts or things like that level, okay?

It looks like we have no further questions at this point, so I'll pass the line back to the CCU team for the concluding remarks.

Thank you all for attending the conference. In summary, our results were negatively impacted by a challenging economic context in Argentina and the depreciation of the Chilean peso against the U.S. dollar, which resulted in higher cost pressures. In this context, we continue with our 6-pillar regional plan, HerCCUles, taking further actions in terms of revenue management efforts and cost and expense control initiatives to continue on the recovery of our financial results and protect our profitability, which is our priority. Consequently, the 6 pillars of HerCCUles -- maintain business scale, strengthen revenue management efforts, enhance the CCU transformation program to deliver efficiency gains in cost expenses, focalize and reduce CapEx together with optimizing working capital, focus on core brands and high-volume margin innovation, and continue investing in our brand equity -- are key to gradually offset negative external effects and weaker consumer demand to fulfill our strategy of delivering profitable and sustainable growth. Thank you very much, and have a wonderful afternoon.

This concludes today's conference call. We'll now be closing all the lines. Thank you, and goodbye.