pania Cervecerias Unidas S.A.(CCU) - 2021 Q4 - Annual Report

Financial Performance - Adjusted Operating Result for 2021 was CLP 320,881 million, a significant increase from CLP 186,591 million in 2020, reflecting a growth of 71.9%[137] - The company reported a net income of CLP 219,051 million for the year ended December 31, 2021, compared to CLP 108,195 million in 2020, marking an increase of 102.0%[137] - Net income attributable to equity holders of the parent company grew by 107.1%[139] - Adjusted Operating Result expanded by 72.0%, with a 49.7% increase in the Chile Operating segment and a significant recovery in the International Business Operating segment[139] - Adjusted Operating Result increased by 72.0% from CLP 186,591 million in 2020 to CLP 320,881 million in 2021, with the margin rising from 10.0% to 12.9%[143] Sales and Revenue - Net sales increased by 33.8% from CLP 1,857,594 million in 2020 to CLP 2,484,712 million in 2021, driven by a 13.0% increase in sales volume and an 18.3% rise in average prices[139] - The Chile Operating segment generated net sales of CLP 1,578,152 million in 2021, accounting for 63.5% of total net sales, compared to CLP 1,242,763 million (66.9%) in 2020[136] - The International Business Operating segment's net sales increased to CLP 677,945 million (27.3%) in 2021 from CLP 402,829 million (21.7%) in 2020, marking a growth of 68.2%[136] - The Wine Operating segment reported net sales of CLP 261,620 million (10.5%) in 2021, up from CLP 235,210 million (12.7%) in 2020, indicating a growth of 11.5%[136] - The Chile Operating segment's net sales increased by 27.0% from CLP 1,242,763 million in 2020 to CLP 1,578,152 million in 2021[139] - The International Business segment's net sales surged by 68.3% from CLP 402,829 million in 2020 to CLP 677,945 million in 2021[139] Operational Efficiency - The ORBDA for 2021 was CLP 444,998 million, up from CLP 296,405 million in 2020, reflecting a growth of 50.1%[137] - The Chile Operating segment's ORBDA margin was 81.5% in 2021, down from 93.6% in 2020, indicating a decrease in operational efficiency[136] - The International Business Operating segment achieved an ORBDA of CLP 56,564 million (17.6%) in 2021, a recovery from a loss of CLP 1,351 million in 2020[136] Costs and Expenses - Cost of sales rose by 31.3% from CLP 984,036 million in 2020 to CLP 1,291,560 million in 2021, primarily due to a 13.0% increase in sales volume and a 16.1% rise in cost of sales per hectoliter[140] - Gross profit increased by 36.6% from CLP 873,558 million in 2020 to CLP 1,193,152 million in 2021[140] - MSD&A expenses increased by 25.2% from CLP 704,790 million in 2020 to CLP 882,177 million in 2021, but as a percentage of net sales, they decreased from 37.9% to 35.5%[140] - Other income by function decreased by 38.8% from CLP 19,296 million in 2020 to CLP 11,808 million in 2021[142] - Other expenses increased by 29.2% from CLP 1,473 million in 2020 to CLP 1,903 million in 2021, mainly due to asset write-offs[142] Cash Flow and Investments - Cash generated from operating activities amounted to CLP 293,356 million in 2021, up from CLP 280,670 million in 2020[146] - Cash flows from financing activities showed outflows of CLP 233,644 million in 2021, compared to inflows of CLP 64,750 million in 2020[148] - Cash used in investment activities totaled CLP 178,993 million in 2021, an increase from CLP 140,545 million in 2020[148] - The company plans to invest CLP 270,315 million in capital expenditures for 2022, with CLP 205,210 million allocated in Chile, focusing on production assets, distribution assets, returnable packaging, and marketing assets[152] Economic Context - The Chilean economy experienced a GDP growth of 11.7% in 2021, with inflation at 7.2% and an unemployment rate of 8.9%, indicating a recovery from the previous year's contraction[154] - The Argentine economy grew by 10.3% in 2021, but faced a depreciation of the Argentine peso by 34.8% on average, which may negatively impact the company's financial results due to raw material costs being indexed to the USD[156] Strategic Initiatives - The company has been investing in new technologies and digital transformation, including the launch of the B2B platform "Mi Carro" in Chile and the regional expansion of the B2C platform "La Barra"[153] - The company is analyzing potential acquisitions in the beverage sector in Chile and other South American countries as part of its growth strategy[152] - The company has implemented a regional plan to ensure operational continuity and financial health during the COVID-19 pandemic, maintaining normal operations despite ongoing challenges[158] - The company’s capital investment program is subject to revision based on market conditions, economic factors, and potential regulatory changes affecting operations[152] Market Challenges - The prices of key raw materials, such as malt, sugar, and aluminum, have been rising, leading to cost pressures, with significant fluctuations influenced by global supply and demand[155]