Compania Cervecerias Unidas S.A. 2026 Q2 Earnings Call

Please go ahead, sir. Welcome, and thank you for attending CCU's second quarter 2026 conference call.

Today with me are Mr. Eduardo Ffrench-Davis, Chief Executive Officer, Mr. Felipe Dubernet, Chief Financial Officer, and Mr. Diego Munizaga, Financial Planning and Investor Relations Manager. You have received a copy of the company's consolidated second quarter 2026 earnings release. As usual, the call will start by reviewing our overall results, and then we will move on to a question and answer session. Before we begin, please take note of the following statement. The statements made in this call that relate to CCU's future financial results and forward-looking statements, which involve known and unknown risks and uncertainties that could cause our 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 submitted to the CMF and in our Form 20-F filed with the U.S. Securities and Exchange Commission, both documents available on our website. It is now my pleasure to introduce our CEO, Mr. Eduardo Ffrench-Davis.

Thank you very much, Claudio, and thank you all for joining us today. It is my pleasure to share with you our second quarter 2026 financial results. For the first time as CEO of CCU, company in which I have worked for more than 20 years, and I am proud to lead at a time that we need to look to the future with a strength and conviction that has always characterized us, as we face a particularly challenging context. Nonetheless, we have always shown a longstanding track record of adaptability and for sure execution. Therefore, to continue successfully shaping our future, I would like to mention some relevant changes that we have defined. We have defined the strategy Vamos por Más, which is built on our four main pillars. The first pillar, increase our focus on businesses. The second one, boost operational synergies.

The third one, act with greater agility. Fourth one, accelerate our transformation. These pillars are oriented to generate growth and to respond to the new demands and challenges of the market. To support this strategy, we will execute changes in our organizational structure, as well as strengthening our internal processes and capabilities to remain at the cutting edge of new trends while enhancing our technological transformation. This transition will be implemented gradually throughout this year, with our main focus being to ensure operational continuity and for sure performance. I am confident in the commitment that has always characterized all the CCU employees, and together, we will prepare CCU to successfully navigate current and future challenges. Regarding our second quarter performance, CCU delivered a solid 59.4% consolidated EBITDA expansion, mostly driven by a robust set of results in our main operating segment, Chile, which expanded EBITDA 26.2%.

The international business operating segment also contributes to a higher EBITDA by posting a 25.8% lower EBITDA loss, as we continue facing a sub-consumption environment in Argentina. On the other hand, the wine operating segment contracted EBITDA by 61.9%, sharply impacted by unfavorable trends for the wine category globally and a higher cost of wine. I will now pass the call to our CFO, Felipe Dubernet, who will give you further details about our performance by operating segment during this quarter.

Felipe. Thank you, Eduardo, and good morning, everybody.

Consolidated net sales grew 4.8%, almost fully explained by 6.4% higher average prices in CLP as volume declined 1.5%. Higher prices in Chilean pesos were mostly a consequence of revenue management initiatives in all our operating segments. In terms of volumes, the 2.5% increase in the Chile operating segment was offset by decreases of 7.4% and 13.7% in international business and wine operating segments, respectively. Gross profit grew 6.8%, and gross margin improved 76 basis points. MSD&A expenses rose 3.3% due to higher distribution expenses associated with higher oil prices during the quarter, and restructuring expenses in Argentina and in the wine operating segment. This was partially offset through ongoing efficiencies initiatives, mainly in logistics. As a percentage of net sales, MSD&A expenses decreased 62 basis points. In all, EBITDA grew 59.4%.

Regarding net income, we recorded a higher loss from second quarter of 2025, mostly due to a non-recurring, negative effect of CLP 6,068 million from an impairment loss related to our business in Bolivia and lower income taxes in second quarter of 2025, coming from a non-recurring positive tax effect in Argentina. In terms of our segment, the Chile operating segment expanded top line by 1.5%, explained by 2.5% higher volumes, gaining overall market share versus same quarter of last year, partially offset by 1% decrease in average prices in Chilean pesos. During the quarter, the non-alcoholic categories grew mid-single digits, outweighing the low single-digit decline in alcoholic categories, which encompasses beer and spirits.

Flavored, low-alcohol, ready-to-drink products led by brands such as Stones in beer, Mistral Ice, and Cantal in spirits, continue to show excellent results, with volume growing double digits in the quarter and representing 8.3% of total alcohol in this segment as of June 2026. Average prices contracted due to mix effect in the portfolio, partially offset by revenue-managing initiatives in all categories. Gross profit increased 9.4%, mainly driven by lower direct costs, mostly coming from the 5% appreciation of the Chilean pesos against the US dollar, impacting favorably our US dollar-denominated costs, partially offset by higher aluminum prices. MSD&A expenses grew 3.5%, below inflation, although as a percentage of net sales increased 71 basis points due to expenses pressures coming from higher distribution costs, partially offset by efficiencies. Altogether, EBITDA recorded a 26.2% increase, and EBITDA margin expanded 264 basis points.

I would like to mention that during the quarter, CCU acquired a 49% equity interest that Nestlé Chile held in our subsidiary, Aguas CCU-Nestlé Chile S.A. After this acquisition, CCU reached 100% ownership in this subsidiary, allowing us to further consolidate our leadership in a steadily growing water industry in Chile, which is expanding low double digits as of June 2026. Following this transaction, we will maintain our strategic relationship with Nestlé, continuing the distribution of the ready-to-drink coffee-based beverage products and water brands in Chile. In the international business operating segment, net sales increased 15.7%, driven by 24.9% higher average prices in Chilean pesos, partially offset by a 7.4% contraction in volumes. Higher average prices in Chilean pesos was due to revenue management initiatives, mainly with price actions in Argentina in line with inflation.

Volumes in these segments were below last year, mainly explained by Argentina due to a high single-digit contraction in beer and water industries and a difficult business scenario in Bolivia, marked by social unrest and road blocks that disrupted our operations. Gross profit increased 20.8%. MSD&A expenses grew 7.6%, as a percentage of net sales decreased 460 basis points. EBITDA resulted in a 25.8% lower loss versus second quarter 2025. During the quarter, we incurred in restructuring expenses in Argentina by CLP 1,408 million. The wine operating segment posted a top-line drop of 14.1%, mostly driven by the 13.7% decrease in volumes as average prices contracted 0.5%. Lower volumes were driven by industry contraction in export and domestic market in Chile.

The decline in average prices were lower due to a negative mix effect in the portfolio and a stronger Chilean peso against the US dollar, which impacted negatively export revenues. These effects were partially offset by revenue management initiatives. Gross profit fell 26.9%, mostly due to cost pressures from a higher cost of wine, partially offset by efficiencies in manufacturing. MSD&A expenses dropped 3.7%, mostly due to the lower business scale. Altogether, EBITDA decreased 61.9%. During the quarter, we incurred restructuring expenses amounting CLP 1,633 million. To navigate the difficult scenario in the wine business, we will continue pursuing efficiencies and keep developing a strategy of accelerating high-margin innovation.