Compania Cervecerias Unidas Q1 Earnings Call Highlights

Key Points

• Chile drove first-quarter growth for CCU, with sales up 3.9% and EBITDA rising 13.7% as volumes increased and non-alcoholic categories such as water and functional beverages performed well. Gross margin also expanded sharply thanks to lower costs and efficiency gains.
• Argentina and the wine segment weakened results, with the international business seeing lower sales and EBITDA amid currency pressure and softer beer volumes, while wine sales fell 7.2% and EBITDA plunged 50.1% on weak export and domestic demand.
• Management warned cost volatility remains a key risk, especially from oil, aluminum and packaging inputs, and said future margin performance will depend on balancing price increases, volumes and consumer affordability. The company is continuing its 2025-2027 focus on profitability, growth and sustainability.

Compania Cervecerias Unidas NYSE: CCU began 2026 with strong results in its Chile business, but softness in Argentina and a sharp downturn in wine weighed on consolidated performance, Chief Financial Officer Felipe Dubernet said on the company’s first-quarter earnings call.

Dubernet said consolidated EBITDA was essentially flat, rising 0.1% from the prior year. The result reflected a 13.7% increase in EBITDA in Chile, which was offset by declines of 18.6% in the international business segment and 50.1% in the wine segment.

Consolidated net sales rose 0.2%, as a 1.8% increase in volumes was nearly offset by a 1.5% decrease in average prices in Chilean pesos. Dubernet said the lower average prices were mainly due to a negative currency translation effect in Argentina following a 28.7% depreciation of the Argentine peso against the U.S. dollar, partially offset by revenue management initiatives.

Gross profit increased 1.4%, while gross margin improved 55 basis points, driven by lower direct costs and efficiencies. MSD&A expenses were nearly flat in Chilean pesos, though they rose 23 basis points as a percentage of net sales. EBITDA margin remained stable at 16.1%. Net income fell 6.8% from the prior year.

Chile Drives First-Quarter Growth

CCU’s Chile segment, its largest operating business, posted 3.9% top-line growth, driven by a 3.9% increase in volumes. Average prices were flat, which Dubernet attributed to portfolio mix, particularly growth in non-alcoholic products such as water.

Non-alcoholic categories grew at a high-single-digit rate, while alcoholic products, which include beer and spirits in the Chile segment, declined by low single digits. Dubernet said flavored low-alcohol ready-to-drink products grew at a low-double-digit rate.

In response to a question from Bank of America analyst Fernando Olvera, Dubernet said soft drinks were flat to up very low single digits, while other non-alcoholic categories performed better. Water, including enhanced and flavored water with natural juices such as the Mas brand, grew at a double-digit rate. Juices grew mid-single digits, while functional beverages, including energy drinks and sports drinks, also contributed to growth.

“This is more related to consumer trends,” Dubernet said, pointing to innovation and continued growth in enhanced water.

Chile’s gross profit rose 10.2%, and gross margin expanded 278 basis points. Dubernet cited the 8.1% appreciation of the Chilean peso against the U.S. dollar, which lowered U.S. dollar-denominated costs, along with procurement and manufacturing efficiencies. Those benefits were partially offset by higher aluminum prices. EBITDA in Chile increased 13.7%, and the EBITDA margin expanded 173 basis points to 20.0%.

Cost Volatility Remains a Key Risk

Dubernet said the company is operating in a volatile cost environment, particularly because of oil, aluminum and packaging-related costs. He noted that oil prices affect distribution costs and materials such as PET, polyethylene and polypropylene.

Asked whether Chile’s first-quarter EBITDA margin was sustainable, Dubernet said the company had benefited from better prices and lower unit costs but cautioned that the outlook depends on input costs and consumer behavior.

CCU raised prices across its Chile portfolio at the end of March and beginning of April, Dubernet said. The company is also pursuing additional efficiencies, but he emphasized the need to balance price and volume, particularly as consumers face higher costs such as gasoline.

Dubernet said each $30 per barrel increase in oil prices would represent about a $30 million direct impact from oil-linked costs. He added that appreciation of the Chilean peso could help offset some cost pressure.

Argentina Remains Soft, But Comparisons Improve

The international business segment recorded a 6.7% decline in net sales, reflecting a 5.1% decrease in average prices in Chilean pesos and a 1.7% contraction in volumes. Dubernet said Argentina’s negative currency translation effect and mix weighed on prices, partially offset by price increases in line with year-to-date inflation.

In Argentina, beer volumes declined by mid-single digits in a stable market share environment, while the non-alcoholic category grew low single digits. Gross profit in the international segment fell 10.7%, and gross margin declined 218 basis points because of cost pressures. EBITDA declined 18.6%, or 10.4% excluding restructuring costs in Argentina.

In response to Quest Capital analyst Constanza González Muñoz, Dubernet said the first quarter remained soft in Argentina, but comparisons should become more favorable in the remaining quarters because the final nine months of the prior year were particularly weak.

“We don’t see an extraordinarily good recovery,” Dubernet said. “However, it’s more stable so far.”

Wine Business Faces Weak Market Conditions

The wine operating segment reported a 7.2% decline in net sales, driven by a 5.9% drop in volumes and a 1.4% decline in average prices. Dubernet said weaker volumes reflected contractions in both export and domestic markets, in line with industry trends. Average prices were hurt by the stronger Chilean peso against the U.S. dollar and mix effects, partially offset by domestic revenue management initiatives.

Gross profit in wine fell 21.8%, while gross margin declined 589 basis points, primarily because of higher wine costs. EBITDA dropped 50.1%, and EBITDA margin fell 508 basis points.

Asked about the outlook for the wine business, Dubernet said global wine consumption is declining, including in Chile. He said the company sees continued pressure in the domestic market as consumers shift toward beer and other alcoholic beverages, including low-alcohol ready-to-drink products.

“The outlook is not positive in our view,” Dubernet said, while adding that export markets may offer opportunities as the industry consolidates. He said CCU aims to focus on key markets, brands, innovation and a more profitable portfolio.

Olvera also asked whether CCU had considered selling the wine business. Dubernet said no, citing synergies, particularly in the domestic route to market, and potential for improved profitability and market share in exports.

Management Focuses on Profitability, Growth and Sustainability

Dubernet said CCU’s joint venture and associated business in Colombia posted mid-teens volume growth during the quarter and continued to build scale. The company is focused on building brand equity in Colombia to support future profitable growth, he said.

In closing remarks, Dubernet said CCU will continue executing its 2025-2027 strategic plan, built around profitability, growth and sustainability. He said geopolitical conflicts have increased global costs and inflationary pressure, requiring the company to act cautiously.

CCU has already taken revenue management actions, and Dubernet said the company will continue reinforcing efficiency efforts and managing capital expenditure priorities to help offset the impact of the current environment.

About Compania Cervecerias Unidas NYSE: CCU

Compañía Cervecerías Unidas SA 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.

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