pania Cervecerias Unidas S.A.(CCU) - 2023 Q4 - Annual Report

Financial Performance - The company's cost of sales decreased by 9.0% from CLP 1,514,925 million in 2022 to CLP 1,378,612 million in 2023, primarily due to a 5.7% decrease in cost of sales per hectoliter and a 3.4% decrease in sales volumes [102]. - Adjusted Operating Result increased by 9.4% from CLP 231,431 million in 2022 to CLP 253,283 million in 2023, with the margin rising from 8.5% to 9.9% [106]. - The Adjusted Operating Result for the Chile segment increased by 30.5% from CLP 156,753 million in 2022 to CLP 204,586 million in 2023, with the margin increasing from 9.4% to 11.6% [109]. - The International Business segment's Adjusted Operating Result decreased by 8.5% from CLP 62,913 million in 2022 to CLP 57,553 million in 2023, although the margin improved from 8.0% to 9.8% [110]. - The Wine segment's Adjusted Operating Result decreased by 48.7% from CLP 39,046 million in 2022 to CLP 20,019 million in 2023, with the margin declining from 13.2% to 7.9% [110]. - Net sales decreased by 5.4% from CLP 2,711,435 million in 2022 to CLP 2,565,556 million in 2023, attributed to a 3.4% decline in volumes and a 2.0% decrease in average prices [124]. - Net income for 2023 was CLP 118,425 million, down 10.6% from CLP 135,484 million in 2022 [120]. - Net income attributable to non-controlling interests dropped 26.2% from CLP 17,316 million in 2022 to CLP 12,773 million in 2023 [116]. Expenses and Financial Metrics - Marketing, Selling, Distribution and Administrative (MSD&A) expenses decreased by 3.3% from CLP 967,924 million in 2022 to CLP 936,272 million in 2023 [105]. - Net Financial Expenses declined by 29.1% from a loss of CLP 53,060 million in 2022 to a loss of CLP 37,621 million in 2023, attributed to higher interest income [111]. - Other Income by Function decreased by 16.4% from CLP 5,285 million in 2022 to CLP 4,420 million in 2023, primarily due to a decrease in income from leases [106]. - Other Expenses decreased by 25.9% from CLP 2,440 million in 2022 to CLP 1,809 million in 2023, mainly due to lower asset write-offs [106]. - Cash flows from operating activities in 2023 were CLP 1,059,814 million, an increase of 25.8% from CLP 843,182 million in 2022 [113]. - Cash used in investment activities totaled CLP 137,232 million in 2023, a decrease from CLP 236,457 million in 2022 [113]. - Long-term indebtedness as of December 31, 2023, amounted to CLP 1,329,262 million, with a consolidated interest coverage ratio of 4.93 [130]. - The company maintained a consolidated financial leverage ratio of 0.50 as of December 31, 2023 [130]. Economic and Market Conditions - In 2023, the Chilean economy experienced a GDP growth of 0.2% and an inflation rate of 3.9%, compared to a GDP growth of 2.1% and inflation of 12.8% in 2022 [137]. - The average unemployment rate in Chile was 8.7% in 2023, reflecting a deterioration compared to 7.9% in 2022 [137]. - The company anticipates GDP growth in Chile to improve in 2024, with forecasts between 2.0% and 3.0% [137]. - Price volatility of primary raw materials such as aluminum, malt, sugar, and PET may impact the company's operations [137]. - The Chilean peso experienced a depreciation of 2.5% in 2023, following a trend of fluctuations in exchange rates [137]. Strategic Initiatives - The execution of the regional plan "HerCCUles" contributed to improved operating results, focusing on revenue management and efficiency gains [122]. - The company is investing in new technologies and digital transformation, including the development of machine-learning algorithms for customer analysis and logistics optimization [136]. - The company launched a proprietary B2B platform "Mi Carro" in Chile and expanded its B2C platform "La Barra" to enhance consumer experience [134]. - The company has established technical agreements with Heineken for production assistance, enhancing operational capabilities [134]. - The company has made significant advancements in e-commerce platforms to improve sales and distribution processes [134].