Financial Performance - 65% and 61% of the company's net sales for 2020 and 2021, respectively, were derived from the distribution of soft drinks under The Coca-Cola Company trademarks[32]. - The company’s operations in Chile accounted for 38.0% and 44.0% of net sales in 2020 and 2021, respectively, highlighting dependence on the Chilean economy[102]. - The Argentine operations represented 18.8% and 24.2% of the company's net sales for 2020 and 2021, respectively[138]. - As of December 31, 2021, operations in Brazil represented 30.7% of the company's assets and 24.3% of net sales[121]. - Cash flows from operating activities in 2021 were Ch278,769 million in 2020[507]. - Cash flows from investing activities decreased to Ch223,879 million in 2020[509]. - Financing activities generated a negative cash flow of Ch228,360 million compared to 2020[511]. - Total liabilities as of December 31, 2021, were Ch151,511 million, or 40.1%, compared to December 2020[515]. - Non-current liabilities increased by Ch$76,678 million, or 6.2%, compared to December 2020[516]. Market and Economic Conditions - The beverage business environment is rapidly changing due to evolving consumer preferences and health concerns, which could negatively impact sales[39]. - The company faces significant risks from new labeling and warning requirements in countries like Chile and Argentina, which could adversely affect product sales and operational results[54]. - The ongoing COVID-19 pandemic has created economic uncertainty, potentially disrupting supply chains and sales channels, particularly in the restaurant and bar sectors[62][65]. - Civil unrest and political uncertainty in Chile may continue to adversely impact economic conditions and the company's operations[107]. - Economic conditions in Argentina are influenced by government policies, which have historically included high interest rates and capital controls[141]. - The Paraguayan GDP contracted by 1% in 2020 but grew by an estimated 5% in 2021, highlighting economic volatility[176]. Regulatory and Compliance Risks - The company is subject to complex regulations that may change, potentially increasing operating costs[34]. - The company is subject to personal data protection laws, and noncompliance could result in adverse publicity and financial penalties[73]. - The company is committed to compliance with anti-corruption laws, with risks of fines or penalties if violations occur[92]. - The company is subject to increasing environmental regulations, which may lead to higher operating costs and changes in consumer demand[81]. - In Chile, Law No. 21,368 mandates that disposable plastic bottles must contain at least 15% recycled plastic by 2025, increasing to 70% by 2060[82]. Currency and Inflation Risks - The company’s financial results could be negatively affected by currency devaluation in countries where it operates, as 34% of net sales were generated in Brazil in 2021[96]. - The Chilean peso depreciated by 19% in 2021 compared to the previous year's closing exchange rate against the U.S. dollar[113]. - The Argentine peso depreciated by 59%, 41%, and 22% in 2019, 2020, and 2021, respectively, against the U.S. dollar[154]. - Inflation rates in Chile were 3.0% in 2019, 3.0% in 2020, and 7.2% in 2021, with projections indicating similar levels for 2022[115]. - Inflation in Argentina was recorded at 50.9% in 2021, with the wholesale price index increasing by 51.3%[146]. Operational Challenges - The company faces risks from increased raw material costs, particularly due to U.S. dollar/local currency exchange risk and price volatility[43]. - Water scarcity and poor water quality could adversely impact production costs and capacity[46]. - The company relies on a stable supply of utilities and fuel, with fluctuations in oil prices potentially affecting operational costs[45]. - The company may experience challenges in renewing collective bargaining labor agreements, which could lead to work stoppages and impact operations[77]. - The company is investing in upgrading information technology systems to enhance data security and protect against cyber threats, which are evolving rapidly[70]. Strategic Initiatives - The company emphasizes the importance of maintaining brand image and product quality, as negative publicity could materially impact financial performance[55]. - The company is actively pursuing expansion strategies through acquisitions, but there are risks associated with identifying opportunities and achieving operational efficiencies[59]. - The company maintains insurance for various risks, but there is no assurance that coverage will be sufficient to cover potential losses[67]. - Future dividends will be determined based on earnings and financial condition, with a minimum distribution requirement of 30% of annual profits[495].
Embotelladora Andina S.A.(AKO_A) - 2021 Q4 - Annual Report