Compania Cervecerias Unidas Q2 2026 Earnings Report

Compania Cervecerias Unidas EPS Results

• Actual EPS: -$0.12
• Consensus EPS: -$0.12
• Beat/Miss: Missed by -$0.00
• One Year Ago EPS: N/A

Compania Cervecerias Unidas Revenue Results

• Actual Revenue: $659.17 million
• Expected Revenue: $641.91 million
• Beat/Miss: Beat by +$17.27 million
• YoY Revenue Growth: N/A

Compania Cervecerias Unidas Announcement Details

• Quarter: Q2 2026
• Date: 8/4/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 12:00PM ET

Compañía Cervecerías Unidas S.A. (NYSE: CCU) is a Chile-based beverages company with operations across Latin America. The company engages in the production, marketing and distribution of beer, soft drinks, wines, mineral water and other non-alcoholic beverages. Through a combination of owned brands and licensing agreements, CCU serves both domestic and export markets with a diversified portfolio designed to meet evolving consumer tastes.

In its beer segment, CCU produces flagship brands such as Cristal, Escudo and Royal Guard, while also brewing international labels under license, including Heineken in select markets. The soft drinks division features popular local marques like Andina and Agua Mineral Cachantún, alongside energy drink offerings. CCU’s wine business is conducted through its participation in Viña San Pedro Tarapacá, which markets a range of varietals under trusted labels throughout the Americas.

The company’s footprint extends beyond Chile into Argentina, Uruguay, Paraguay and Peru, where it operates production facilities and distribution networks tailored to regional consumer preferences. CCU also exports products to markets in North America, Europe and Asia, leveraging strategic partnerships to broaden its global reach. This multi-country presence allows the company to balance seasonal and economic fluctuations across its operating territories.

With origins tracing back to the early 20th century, CCU has grown through strategic acquisitions and alliances that have reinforced its leadership in the Latin American beverage sector. The company is overseen by an experienced board of directors and a senior management team focused on innovation, sustainable practices and long-term value creation for shareholders and stakeholders alike.

Compania Cervecerias Unidas Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Consolidated EBITDA rose 59.4% year over year, supported by a 26.2% increase in Chile and a 25.8% reduction in the international segment’s EBITDA loss. Net sales grew 4.8% on 6.4% higher average prices, despite a 1.5% volume decline.
• Positive Sentiment: Chile delivered 2.5% volume growth and gained overall market share, led by mid-single-digit growth in non-alcoholic categories and double-digit expansion in flavored, low-alcohol and ready-to-drink products. CCU also acquired Nestlé Chile’s 49% stake in Aguas CCU-Nestlé, reaching full ownership of the growing water business.
• Negative Sentiment: The wine segment remained a major weakness, with volumes down 13.7% and EBITDA falling 61.9% due to global category pressure, unfavorable mix, a stronger Chilean peso and higher wine costs. CCU incurred CLP 1.633 billion in wine restructuring expenses, though management expects improved harvest conditions to reduce input costs over time.
• Neutral Sentiment: Argentina’s beer and water volumes declined at a high-single-digit rate amid weak consumption, while Bolivia was affected by social unrest and roadblocks. Management cited improving month-over-month trends since March and expects a potential recovery in Argentina during the second half, but acknowledged that macroeconomic conditions remain volatile.
• Positive Sentiment: New CEO Eduardo Ffrench-Davis introduced the four-pillar “Vamos por Más” strategy, emphasizing business focus, operational synergies, agility and digital transformation. The company is preparing a new four-year plan through 2030, while targeting efficiencies, high-margin innovation and growth in core markets such as Colombia; however, the water acquisition increased net leverage from 1.7x to 2.4x EBITDA.

Presentation

[Operator]

Good day everyone, and welcome to CCU's second quarter 2026 earnings conference call on August 5, 2026. Please note that today's call is being recorded. At this time, I would like to turn the conference call to Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.

[Claudio Las Heras, Head of Investor Relations at CCU]

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.

[Claudio Las Heras, Head of Investor Relations at CCU]

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.

[Eduardo Ffrench-Davis, CEO at CCU]

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.

[Eduardo Ffrench-Davis, CEO at CCU]

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%.

[Eduardo Ffrench-Davis, CEO at CCU]

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?

[Felipe Dubernet, CFO at CCU]

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%.

[Felipe Dubernet, CFO at CCU]

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.

[Felipe Dubernet, CFO at CCU]

Flavored, low-alcohol, ready-to-drink products led by brands such as Stones in beer, Mistral Ice, and Kantal 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 U.S. dollar, impacting favorably our U.S. 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.

[Felipe Dubernet, CFO at CCU]

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. 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.

[Felipe Dubernet, CFO at CCU]

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.

[Felipe Dubernet, CFO at CCU]

The decline in average prices were lower due to a negative mix effect in the portfolio and a stronger Chilean peso against the U.S. 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.

[Felipe Dubernet, CFO at CCU]

In this regard, as of June 2026, flavored low alcohol ready-to-drink products based on wine almost doubled versus last year, mostly driven by the launch of the single-serve can version of our brand Gato Selección Dulce, among other brands, backed by our multi-category production capabilities. Regarding our major invention and associated business in Colombia, we posted mid-teens volume growth during the quarter. We are focused on that country on building brand equity and scale to intense profitable growth in the future. Now, we will be glad to answer any question you may have.

[Operator]

Thank you. We'll now move to the question and answer section. If you'd like to ask a question, please press star two on your phone and wait to be prompted. If you are dialing by the web, you can type your question in the box provided or request to ask a voice question. Our first question comes from Alejandro Fuchs from Itaú BBA. Your line is open. Please go ahead.

[Alejandro Fuchs, Analyst at Itaú BBA]

Thank you, Operator. [Non-English content], Eduardo, Felipe, and team. Thank you for the space for questions. I have two very quick ones, if I may. The first one, I wanted to see if maybe you could elaborate a little bit on how you see the competitive environment in Chile, especially on the soft drink market, anything that has changed in the last couple of months, and maybe how do you see the rest of the year? The second one, in terms of alcoholic, especially beer in Argentina, we saw volumes continue to be pressured despite the sporting events this quarter. I wanted to see if you could break down for us what do you expect for the rest of the year and if there was a positive impact or not, given the sporting event in the country. Thank you.

[Eduardo Ffrench-Davis, CEO at CCU]

Thank you, Alejandro. I will take the first question from Chile. Thank you for both questions. In terms of competitive environment in Chile, especially in the soft drinks, always this is a very mature category compound by different segments. Actually, we operate nine segments within that macro category, and it has always been very competitive. We believe that the trends will continue. All the better-for-you products, all the healthy products such as waters, flavored waters, juices, functional products are growing, and we will see that they are continue growing.

[Eduardo Ffrench-Davis, CEO at CCU]

We have a strong position in terms of market shares in those categories, and we will invest in those categories in order to get more innovations and to push the mix on those categories. Within the CSD categories, we are doing a great job with Pepsi within the cola segment, and with strong brands in the flavor subsegment as well. We believe that the soft drinks will continue growing mainly through better-for-you products, which we believe that we have a very strong position. The second question, the beer in Argentina, I will pass that question to Felipe now.

[Felipe Dubernet, CFO at CCU]

Hello, Alejandro. The second quarter, as you noticed, the beer industry compression was high single-digit. However, we are comparing a particularly, let's say, high comparison base in the second quarter of last year. Maybe you know in quarter three, volume collapsed, this is in line with a significant rise on interest rate in Argentina, unemployment due to all the macroeconomic adjustment that were done in Argentina last year. We should look or see a recovery in volumes in second half of 2026.

[Felipe Dubernet, CFO at CCU]

One, because of the comparison base on quarter three on the one hand, also what we are seeing now is a continuous improvement in volume trends in Argentina since March. If we seasonally adjust the volumes in Argentina, we are seeing a recovery month-on-month since March. A more stable macroeconomic scenario in terms of inflation and devaluation in Argentina yet has not translated to a more dynamic consumption environment. You know everything is volatile, and this is a forward-looking that I cannot ensure to you, we should see a more robust consumption environment towards the end of the year, we have seen, let's say, some good signs since March in terms of improvement of volumes. Thank you, Alejandro.

[Alejandro Fuchs, Analyst at Itaú BBA]

That was super clear. Thank you, Eduardo and Felipe.

[Operator]

Thank you very much. Our next question comes from Fernando Olvera from Bank of America. Your line is open. Please go ahead.

[Fernando Olvera, Analyst at Bank of America]

Hi, good morning. Thanks for taking my questions, and congratulations, Eduardo, for the appointment. My first question is related to the strategic plan that you mentioned in your initial remarks. Maybe if you can give some color of what are some of the targets that you are planning to achieve with this new strategic plan in the medium term, that would be great. My second question is related to Chile. How do you expect consumption to behave in the remaining of the year? Maybe if you could share some initial thoughts about 2027, considering the mega reform approved by the government. Thank you.

[Eduardo Ffrench-Davis, CEO at CCU]

Hi, Fernando. Thank you for your message and, of course, for your questions. I am very optimistic for the future. I will answer both questions. The first one, around the new strategy. For sure, this new strategy will be part of our new strategic plan. We are going to create a new strategic plan based on two main things. The first one, it's going to be a four-year plan looking forward to 2030 and setting some KPIs for that year. The second thing is we are going to interrupt the current strategic plan to create a new one. This new strategic plan is based on the [Non-English content] Vamos por Más that I talked on the beginning of this presentation. This [Non-English content] is based basically in four main pillars. I will explain a little bit more further on these pillars.

[Eduardo Ffrench-Davis, CEO at CCU]

The first one is to focus on businesses, which is not mean that we haven't had focus on business, but we will strengthen our focus in our businesses, separating or differentiating our core businesses with our high-potential businesses. We are going to go deep in our multi-category strategy, which focus on each single category, leading distinct consumption occasions and growing volume and margin across all our operations. We are going to be very focused on consumer occasions and to go deeper in those occasions and satisfy consumers in different places, times, with our multi-category portfolio, which is something that we really believe that is very strong. The second one is operational synergies. We will reach greater productivity and efficiencies, leveraging our multi-category strengths and the reduction of redundancies. We are looking for the whole company.

[Eduardo Ffrench-Davis, CEO at CCU]

We have done a first single act like synerging wines and light liquors, especially in the domestic Chilean market. We have several more things to come in order to get more synergies, leveraging our multi-category spirits and vocation. The third one is agility. We will implement a greater autonomy to respond to the market. We are living in a very volatile market with accelerated changes, and we want to be more agile in order to respond those changes. Less operational friction, we have called [Non-English content] or tollbooths, and a real-time control in our operations with leaner and more connected structures. The fourth one is transformation. We are doing some transformation, especially with digital tools in sales, for example, with Kuspi in our logistics and planning, integrating new tools, structures, and processes, and in industrial in our facilities as well.

[Eduardo Ffrench-Davis, CEO at CCU]

We will go deep on that with an architecture based on new processes and technologies, putting the digital transformation as the number one enabler of synergies and mainly growth. That is answering your first question, Fernando. Obviously, more is coming on our strategic plan, and for sure, I cannot say it anymore. This is the main mindset that we are creating in order to have a new strategic plan focused on profitable growth based on our main capabilities. The second question is about the per capita consumption or volumes trends in Chile. We received the IMACEC yesterday, actually, and was a good thing, we cannot say that as a country, we are ready to grow as we have done in the past. We still believe that our categories are facing a new trend.

[Eduardo Ffrench-Davis, CEO at CCU]

For sure, we cannot avoid the downtrend rate that we are facing with alcohol, but we believe that our categories, with innovation and with certain things, we can turn around that situation. The wine situation is basically a global one, but we have seen some early stages of early green grass with, for example, Bliss, it's a ready-to-drink product. We launched our new wines ready-to-drink product, I don't know, one month ago, and it has been very successful. We believe that we can turn around this alcohol downtrend in the domestic market. On the non-alcoholic business, as I mentioned before, we see that our portfolio, better-for-you portfolio, based on waters, flavored waters, juices and nectars, and functional, we are number one in all of those categories.

[Eduardo Ffrench-Davis, CEO at CCU]

We believe that will continue growing, integrating new consumer occasions, and satisfying consumer needs that are eager for more alternatives, and not only based on CSDs. We believe that, in terms of per capita consumption, will be a second semester in order to see how the economy is turning around, in a positive way. We believe our portfolio is prepared to turn around the situations that we faced on the first semester.

[Felipe Dubernet, CFO at CCU]

Let's talk about tax reform.

[Eduardo Ffrench-Davis, CEO at CCU]

Yeah.

[Felipe Dubernet, CFO at CCU]

Let me complement what Eduardo has said regarding tax reform. I think it's a good news for the country, the approval of the new tax reform, reducing corporate taxes in Chile. When will this come to more consumption is something that we cannot predict. However, in the long term, it's a good news for the country to boost investment in the country, to boost employment. Of course, this could boost the consumption for our products. As you know, there are many variables or many other inputs that are key for the level of consumption. Okay, Fernando. Thank you.

[Fernando Olvera, Analyst at Bank of America]

Okay. Thank you both for the answer.

[Operator]

Thank you so much. Our next question comes from Felipe Ucros from Scotiabank. Your line is open. Please go ahead.

[Felipe Ucros, Analyst at Scotiabank]

Thanks, Operator, and good afternoon, Eduardo, Felipe, and team. Thanks for the space. Eduardo, congrats on the new role. Great to meet you. Perhaps a few follow-ups on the new strategy and the upcoming midterm plan that you're still working on. I realize that you're still working on the plan, so it's probably a little too early to have definitive answers on this, but perhaps you can give us some initial thoughts on three things that I'm curious about. The first one is hedging. CCU has stood out within the publicly traded industry as one of the only companies that doesn't hedge. Right? There's some chatter in the market that this generates different pricing needs than your competitors. So just wondering if, within your strategy, there are any changes that you plan to make around this or perhaps bring to the board for potential changes.

[Felipe Ucros, Analyst at Scotiabank]

The second side is wine. Obviously, it seems like you're already doing some restructuring there and you're innovating quite a bit, but wondering if there's a bigger transformation around the approach and the strategy that you guys have had towards the wine segment. Perhaps whether you'll try to accelerate privatization or any other things that you plan to change there. The last one is for Colombia, where you guys have had a decent performance this quarter. Just wondering if there are any changes that you plan on that side of the business. Thank you.

[Eduardo Ffrench-Davis, CEO at CCU]

Hi, Felipe. Thank you for your question. Three main questions. I will pass the first one to Felipe Dubernet, and the second one and third one, I'm going to respond directly.

[Felipe Dubernet, CFO at CCU]

Hello, Felipe. How are you? Our policy regarding hedging of commodities for exchange rate remain unchanged. This is a policy that is reviewed every year by the board of CCU, but as of today, remain unchanged. Eduardo will answer you the question regarding the two important businesses of wine and Colombia.

[Eduardo Ffrench-Davis, CEO at CCU]

Yeah. Regarding wine, for sure, we are facing an important trend globally. We are an important player in Chile for sure, but at the same time, we're an important player outside, in the export. We are doing, I think, two main things. The third one is not only integrating liquors, which we have an important ammunition or power in Chile with the wines in order to get synergies, but also we are doing this in order to fulfill consumer needs that we believe that are coming together. Today, the consumer is not only choosing product by product, it's choosing based on consumer occasions. We believe that together in Chile, with a portfolio combining wines and spirits, we can satisfy better to our consumer and for sure increase volumes due that strategy in terms of global export, we are focusing our main capabilities on VSPT, on exports.

[Eduardo Ffrench-Davis, CEO at CCU]

Increase our footprint outside, getting more markets within the company, and basically strengthen our position in terms of production, getting synergies and efficiencies from there. We believe that wine, we are adjusting some places, some pieces. For sure, we are facing a very important global trend, but we believe that we can start turning around that situation with this strategy. For sure, we have to see how it evolves, but we are taking decisions around that business now. In Colombia, we still believe that we have a very important, or plenty of space to grow over there. Colombia is an interesting country. It is facing a change in its government now. For sure, we are living a very good momentum in Colombia. We are double-digit growth with beer and Malta over there.

[Eduardo Ffrench-Davis, CEO at CCU]

We have plenty of innovation and a new strategy setting up to Colombia in order to get more of this country. Colombia, for us, in this strategy, Vamos por Más, is a core country for us. We are there to grow, and we are there to win some battles. We are going to strengthen our position in Colombia, and we believe that we can create momentum, continue the momentum that we are facing on that last two.

[Felipe Ucros, Analyst at Scotiabank]

Great for that color. Maybe if I can do one follow-up on the cost of wine. Less strategic, but you did mention that the cost of wine had increased, and I thought that stood out in stark contrast to what Concha y Toro reported, where they are having much lower cost of wine and a very strong harvest. Just wondering why you think there is a difference. Perhaps it has to do with the regions, different climate in different regions, maybe with the suppliers of grapes that you guys use. Just wondering if you can comment a little about that differential. Thank you.

[Eduardo Ffrench-Davis, CEO at CCU]

Yes, I pass this question. Thank you, Felipe, for the follow-up question. I pass this to Felipe Dubernet.

[Felipe Dubernet, CFO at CCU]

Okay. Yes, Felipe, regarding the wine cost. As you know, this year we are facing a particularly unfavorable input cost in terms of wine cost in our P&L, as the whole industry. As you mentioned, a competitor also, we have had a positive wine harvest this year. That will reduce, going forward, our cost of wine, as we reduce, of course, inventory levels that are depending on how we evolve in the volumes. We see in the business that is suffering a lot, not only in consumption, but also in the input cost side, in the exchange rate side for our export business, this year a lot. At least we are seeing some green grass in the horizon now with the input cost of wine going forward. As I said, will depend on how we deplete our inventories going forward.

[Felipe Ucros, Analyst at Scotiabank]

Very clear. Thanks for that color.

[Operator]

Thank you very much. Our next question comes from Thiago Bortoluci from Goldman Sachs. Your line is open. Please go ahead.

[Thiago Bortoluci, Analyst at Goldman Sachs]

Thank you very much, Operator. Good afternoon, everyone. [Non-English content], Eduardo, Felipe, Claudio. Eduardo, first of all, congrats on the new role. Wishing you the best of luck, and wishing to continue the conversation with you. Thank you for the opportunity to ask questions. I think my very only one question is for you, Eduardo. Once you take the CEO role and evaluate the situation in Chile more broadly, how satisfied would you say you are with the price points and price sensitivities, price relativities in each of the categories in Chile?

[Thiago Bortoluci, Analyst at Goldman Sachs]

Do you think there is any particular segment that needs a more focused, targeted shift or a strategic pivot in the next six months? Related to this, how should inflation and oil prices particularly impact your pricing decisions, particularly for the second half of the year? I know you have already implemented a price adjustment. How much of your underlying cost inflation is covered with this? Thank you very much.

[Eduardo Ffrench-Davis, CEO at CCU]

Hi, Thiago. Thank you for your message and for your questions. Well, as you see in the presentation, we have a very strong results in Chile. Chile, mainly through the different categories, from the two categories, keeping our momentum in market share with the beer category and improving our prices, and the excellent development of non-alcoholic business, improving our market shares and improving our prices, we are facing a very good position regarding the second semester. In that terms, obviously, there are always opportunities in terms of pricing. Consumers are less willing now to take list prices, increase on list prices, as several company have done in the past. New technologies and new studies we have to put in place. In our new strategy, revenue growth management has an important role in our strategy.

[Eduardo Ffrench-Davis, CEO at CCU]

Obviously, revenue growth management is a huge area that we can go deep dive, but there are several initiatives, like for example, a good example, the TPO initiatives, trade promotion optimization within the modern trade, and use of algorithms. We have a proprietary algorithms called SALES, which is helping us, our revenue growth management in traditional trade, that can help us to drive price without hitting the consumers and hitting all the places and SKUs at the same time. Technology, processes, and intelligence based on algorithms will help us to improve our mix, not only driven by prices, but also driven by channel and format, or pack types mixture. I am confident that we have done a very good job on prices within the first semester. We will continue with new tools, doing a greater job on the second one.

[Thiago Bortoluci, Analyst at Goldman Sachs]

This is helpful. Thank you very much.

[Operator]

Thank you very much. Our next question comes from Alvaro Garcia from BTG Pactual. Your line is open. Please go ahead. Mr. Alvaro, your line is open. Please go ahead.

[Alvaro Garcia, Analyst at BTG Pactual]

Can you hear me?

[Operator]

Yes, we can.

[Alvaro Garcia, Analyst at BTG Pactual]

Okay. Sorry about that. Hi, Eduardo, Felipe. Eduardo, congrats on the new role. I have a question on the Nestlé transaction, the water transaction in Chile. One, it's a pretty hefty transaction from a financial standpoint. I'm wondering how you're thinking about leverage heading into 2027, how you're thinking about the dividends into 2027. That's one aspect of the question, but the other is whether it changes the operating model for that business specifically. I'm guessing the answer is no, but maybe on brands, maybe there's like 100% ownership. Does that give you more flexibility on brand strategy in water specifically? If you could speak to any specific changes on the back of that transaction. Thank you.

[Eduardo Ffrench-Davis, CEO at CCU]

Hi, Alvaro. Thank you for your message. Regarding that question, let me answer it with the strategy. As you know, the water business is growing a lot. Within the water business, we have different kind of products. We have mineral waters, which satisfy certain part of the consumers, purified waters, which compete directly with tap water, actually, and flavored waters. Our strategy remains the same, with this acquisition, we are going to strengthen certain part of that strategy. We will continue creating momentum with Cachantún as a number one mineral water within the country. As you may notice, we have launched several innovations with Cachantún Strong Gas, Cachantún, the black one. It has been very successful, not only competing against water business, but also getting momentum and getting consumer occasions from CSDs, which is something that is very interesting in terms of the water penetration.

[Eduardo Ffrench-Davis, CEO at CCU]

We will continue with that. Regarding the flavored water, you have seen that flavors are growing, different SKU are growing, different pack types or PPA strategies are getting momentum as well. We have launched several innovations, especially with gas, and they are creating, again, an important growth coming from different categories and not only coming from the water categories. Finally, purified water, we switch our strategy from Nestlé Puravida, Nestlé Pure Life, which was a license fee coming from Nestlé, to our Manantial brand, and Manantial has done a very great job.

[Eduardo Ffrench-Davis, CEO at CCU]

Now we are incrementing our market share in a sustainable manner and with strong numbers against our competitors, and at the same time, taking volumes from tap water, which is, in Chile at least, is a huge undercover market. We believe that with this acquisition, we will make more agile our decisions around the water business, and we will on growth.

[Felipe Dubernet, CFO at CCU]

Leverage questions.

[Eduardo Ffrench-Davis, CEO at CCU]

Regarding leverage questions, I will pass the question to Felipe Dubernet.

[Felipe Dubernet, CFO at CCU]

Hello. How are you, Alvaro? The leverage, as you know, this increased from 1.7 last quarter to 2.4 this quarter. This is due because we used the cash we had on hand, that it came from the issuance of the 1.4 international bond within 2022. It was very good proceed of the money in this acquisition, because it's accredited on the one hand, it would further enhance our net income going forward, as we'll have 100% net income from this business. Going forward at the end, if we could see a recovery going forward in Argentina, that has a terrible second half on last year, and the growth on strong results we are delivering in Chile, we should converge towards the middle of the range that we have defined between 1.5-2.5 net financial debt EBITDA going forward.

[Felipe Dubernet, CFO at CCU]

Certainly in quarter four, or not certainly, but we look with good perspective on reducing the leverage. Regarding dividend policy, as maybe you know, and it's in the financial statement, the policy in CCU is to distribute at least 50% of net income, and this is maintained in this coming exercise, or coming in this year. For 2027, we need to wait until the shareholder meeting, which is typically in April, if these policies change or not. The policy remains the same, to distribute 50% of the net income, at least.

[Alvaro Garcia, Analyst at BTG Pactual]

Great. Wonderful. Thank you very much.

[Operator]

Thank you very much. Our next question comes from Rodrigo Alcantara from UBS. Your line is open. Please go ahead.

[Rodrigo Alcantara, Analyst at UBS]

Good afternoon. Guys, thanks for taking my question. Just want to touch base again on Argentina. I guess the answer was very clear from a macro perspective, and totally get it. It's hard for us to predict what to expect in the second half. Still was not clear for me, the share performance. When you look at your number and other brewers. Just wonder if you can help me understand what you attribute this share performance we observe during the quarter, specifically in beer. If you can give us granularity on the portfolio, the brands, Heineken portfolio and your own brands.

[Rodrigo Alcantara, Analyst at UBS]

What are you planning to do in order to revert that share-wise again into the second half? Very quickly would be on to when and what to expect the launch of Heineken Ultimate, if any, following the launch in Brazil. If it would be far too soon, anytime soon, could be in Argentina as well. Those would be my questions. Thank you.

[Eduardo Ffrench-Davis, CEO at CCU]

Hi, Rodrigo. This is Eduardo. Thank you for your both questions. The first one regarding the market share in Argentina. Well, our numbers, we have our Nielsen numbers, and we see our market share in Argentina year to date growing a little bit, but flat in that terms. For sure, we are eager for more as we are certainly saying. We believe that our new strategy that we are trying to put in place in Argentina for the next year, we'll get a little bit more market share. We have a very strong national brands, but also we have a very interesting local brands in Argentina that they are doing, or could be do a greater job region by region.

[Eduardo Ffrench-Davis, CEO at CCU]

At least our numbers say that we are stable in terms of market share in Argentina, and actually gaining a little bit on value market share comparing the volume market share, because as Felipe mentioned in the presentation, we have done several price increase during the last quarter. Regarding the Heineken Ultimate, for sure we have a very strong pipeline in terms of innovation. Heineken Ultimate is trying to reach consumer occasions that are not satisfied by the typical normal beer products that are in the market. In Brazil, is doing a great job, and we are seeing to integrate that innovation in several operations within our businesses in CCU, not only in Argentina, but in other places as well. News are coming soon.

[Rodrigo Alcantara, Analyst at UBS]

Excellent. Thank you. Thank you, guys.

[Operator]

Thank you very much. Our next question comes from [Maria Paula Arua] from Nestlé. Your line is open. Please go ahead. Maria, your line is open.

[Analyst at Nestlé]

Hello? Hello?

[Operator]

Hi, I can hear you.

[Analyst at Nestlé]

I've got two questions about the Colombian market. The first one is: Is the current expectation for Colombia to continue delivering mid-teens growth, or are there any anticipated changes to the growth trajectory moving forward? The second one is, as part of the Vamos por Más strategy, that is Colombia, one of the core countries, and this strategy aims to deliver higher quality and more profitable growth. Should we expect Colombia to continue relying primarily on the value segment as the growth driver, or will there be a stronger strategy focused on premium brands moving forward?

[Eduardo Ffrench-Davis, CEO at CCU]

Hi, Maria. Thank you for the two questions. Regarding the first one, for sure it's difficult now to predict. It has always been difficult to predict the future, but now in Colombia, it's more difficult because governments are changing. We will see how this new government set up in Colombia. Regarding that, Colombia is definitely a place that we believe that we have plenty space for growth. We truly believe in that market. We have been there. Obviously, we have a furious competition over there, but we believe that we have built strong brands and certain parts of Colombia, we are doing really well, for example, in Cartagena. We believe in Colombia. We don't know if the market, the industry, will grow at the same pace that we have done in this last quarter, but we believe in to increase our competitive position over there.

[Eduardo Ffrench-Davis, CEO at CCU]

In terms of our portfolio, Colombia is a very mainstream portfolio compared other regions, other countries within Latin America, and it's dominated by our competitor over there. We believe that the way that we can improve our profitability over there is to compete asymmetric with a different portfolio. We will increase our portfolio in terms of different brands, sell in different places, and trying to reach profitability with that strategy on the future.

[Operator]

Thank you so much. Our next question comes from Kevin Zavala from UBS. Your line is open. Please go ahead.

[Kevin Zavala, Analyst at UBS]

Hello, Eduardo, Felipe, Claudio, thanks for the space. Just wanted to question regarding distribution expenses, this quarter remained a source of pressure despite some efficient initiatives already underway. If you could explain which components are driving the increase, such as fuel, labor, fleet utilization, et cetera. In relation with that, which business process are the first targets for your digital investment? I would like to hear from you, where do you expect the most tangible benefits, whether either sales effectiveness, demand forecasting, procurement, manufacturing, logistics from this investment in digital. Thank you.

[Felipe Dubernet, CFO at CCU]

Okay. Hello, Kevin. We have some problem with the system here, but we solved it. I'm Felipe. I will take your first question. We have some noise problems, but I think you were wondering about how oil and distribution expenses are impacting our P&L. I will take this part of the question. The second part, regarding the future, Eduardo will take it.

[Felipe Dubernet, CFO at CCU]

As you notice, we build a KPI that is total expenses. It does include production cost, distribution cost, or MSD&A as a whole. Despite the higher distribution cost, because of oil pressures we had, we have been able to reduce our overall expenses, our net sale, by 56 basis points as in a consolidated basis, which is very good, and keep our expenses below Chilean inflation, 3.8%. Chilean inflation in the period is 4.2%. In my view, this is good, because at the same time, we were investing more, especially in Chile, behind our brands that is building the future.

[Felipe Dubernet, CFO at CCU]

At the end, having this external pressure of oil in distribution costs on the one side, but on the other side, higher level of inflation, but on the other side, being able to invest more for the future for our brands, I think is the perfect equation for a company like us, and this was particularly good this quarter. If you look and we are implementing efficient initiative in all key aspect of the business with good result, mostly in logistics. That, in his previous role, was led by Eduardo, as he was the head of the non-alcoholic business and the logistics in Chile.

[Felipe Dubernet, CFO at CCU]

Also, I forgot to mention that we have restructuring costs into business that are suffering, such as Argentina and the wine business. If we exclude those effects, our total expenses on a consolidated basis will be around 3% growth. This is much less than inflation. Of course, I will pass to Eduardo, looking at the future, we need to improve our margins, that's sure, especially going towards our pre-pandemic margins that we had. This needs more efforts in terms of synergies and efficiencies. Eduardo will make a commentary on that.

[Eduardo Ffrench-Davis, CEO at CCU]

Thank you, Felipe. Yes, Kevin. Of course, within the new study that we have presented, the Vamos por Más transformation is a key pillar, not only for getting efficiencies and improve our EBITDA margin, but also to be a fuel for or enabler for growth, which is something that is for top-line growth, which is something that this kind of business needs in order to be better, stronger, and with higher margin as well. The digital transformation, as Felipe has mentioned, has been very successful, not only with low-hanging fruits initiatives, but also some stage one initiatives. We have done it silos by silos now. The future, and the new structures that we are setting up, is going to integrate all the transformation activities because if I am making a transformation in logistics in order to improve our logistics system, it's not 100% connected with sales transformation.

[Eduardo Ffrench-Davis, CEO at CCU]

Sometimes there are inefficiencies between them. The new structure and the new strategy, Vamos por Más, is going to integrate the end-to-end value chain and set an appropriate structure in order to get that transformation an end-to-end system, and also integrate IT and AI capabilities within that structure at the same time. We are going to be more agile and penetrate silos and be end to end in order to get that transformation. Of course, there are plenty of examples for that, but real-time control. Now, for example, control towers in logistics, planning, commercial, industrial, are, for example, a key system that we are going to put in place in order to get real-time synergies.

[Eduardo Ffrench-Davis, CEO at CCU]

When you are managing, for example, an efficiency on a line, but you are looking back that numbers with one month, you cannot make the necessary adjustment to get the efficiencies on real time. It is just an example. Obviously, more things to come, but transformation, sorry, on the future is a key point of our strategy.

[Kevin Zavala, Analyst at UBS]

Thank you.

[Operator]

Thank you so much. I am not seeing any more questions, perhaps I can hand it back to the CCU team for the closing remarks.

[Eduardo Ffrench-Davis, CEO at CCU]

Thank you. Thank you all. Thank you, [inaudible]. Thank you all the people who has listened this Q&A session and listened the presentation. Thank you for the people who has done the question itself. I am very optimistic and I am very eager for more. In this new role in CCU, I have been here 20, 21 years. I born in this company, but I am looking, with several challenges and optimism, the future. Finally, we have to navigate these current challenges and volatile businesses complex and keep protecting CCU's future. We will act with more agility and more focus while delivering synergies and efficiencies across all our operating segments.

[Eduardo Ffrench-Davis, CEO at CCU]

Together with a strengthening of our portfolio to adapt to new consumer trends by growing in high-margin innovation category is key for our plan. Working with collaboration, we will be prepared with the strength for our 2027 and 2030 strategy plan with more focus, more synergies, more agility, and more transformation. [Non-English content] Thank you very much for your attendance, and see you in the next chapter.

[Operator]

This concludes the call for today. We are now closing all the lines. Thank you, and have a nice day.

Participants

Analysts

• Claudio Las Heras, Head of Investor Relations at CCU
• Eduardo Ffrench-Davis, CEO at CCU
• Felipe Dubernet, CFO at CCU
• Alejandro Fuchs, Analyst at Itaú BBA
• Fernando Olvera, Analyst at Bank of America
• Felipe Ucros, Analyst at Scotiabank
• Thiago Bortoluci, Analyst at Goldman Sachs
• Alvaro Garcia, Analyst at BTG Pactual
• Rodrigo Alcantara, Analyst at UBS
• Analyst at Nestlé
• Kevin Zavala, Analyst at UBS