pania Cervecerias Unidas S.A.(US:CCU)2022-08-06 03:06Financial Data and Key Metrics Changes - The company reported an 18.8% increase in revenues, driven by a 22.4% rise in average prices in Chilean pesos, while volumes contracted by 2.9% [5][6] - EBITDA decreased by 47.3% to 32,470 million Chilean pesos, with EBITDA margin dropping from 13.1% to 5.8% [6][7] - The company incurred a net loss of 10,455 million Chilean pesos compared to a profit of 18,968 million Chilean pesos in the previous year [7] Business Line Data and Key Metrics Changes - In the Chile operating segment, revenues grew by 3.7% due to a 7.3% increase in average prices, while volumes declined by 3.4% [8] - The International Business Operating segment saw net sales rise by 70.9%, with volumes contracting by 1.7% [10] - The Wine Operating segment's revenues increased by 16.7%, attributed to a 17.4% growth in average prices, while volumes decreased by 0.5% [11][12] Market Data and Key Metrics Changes - In Argentina, Paraguay, and Bolivia, volumes expanded compared to pre-pandemic levels, while Uruguay remained flat and Bolivia saw a decline [10] - The company noted a 17.6% devaluation of the Chilean peso against the US dollar, impacting costs [9] Company Strategy and Development Direction - The company aims to focus on revenue management and efficiency improvements to recover profitability while maintaining business scale [5][6] - Management emphasized the importance of brand equity and marketing investments to protect market share and pricing power [35][36] Management Comments on Operating Environment and Future Outlook - The management acknowledged a challenging macroeconomic environment with high inflation and cost pressures, impacting margins [4][6] - Future expectations include stable volume growth with low single-digit increases anticipated for 2023 [25][56] Other Important Information - The company plans to continue with revenue management initiatives and cost efficiencies to recover profitability [5][6] - Management expressed confidence in achieving better profitability in 2023 despite the current challenges [39] Q&A Session Summary Question: Can you comment on the dynamics between consumption at home and away from home during the quarter? - Management noted that on-premise consumption has recovered significantly from pandemic lows, expecting further recovery [16] Question: How did the demand behave between premium and non-premium brands during the quarter? - Premium brands accounted for 43% of volumes in Q2 2022, down from higher levels in late 2021, indicating a shift in consumer preferences [18][21] Question: What is the outlook for the consumption environment in Chile? - Management expects a stable consumption environment with low growth in 2023, focusing on revenue management and efficiency [25][26] Question: What is the incremental pricing needed to offset ongoing cost inflation? - Management did not disclose specific figures but emphasized the need for further price increases to recover profitability [32] Question: How much further room is there for efficiency to protect margins? - Management indicated there are still opportunities for efficiency improvements across various operational areas [37][38] Question: How does the competitive environment look after recent price increases? - Management acknowledged potential market share loss in the short term due to price increases but remains committed to adjusting prices as necessary [42][43] Question: Will the company consider separating Argentina's performance from the international division? - Management acknowledged the unique challenges in Argentina but did not commit to separating its financial reporting [45][46] Question: Is there a possibility of exploring a hedging policy for raw materials? - Management expressed skepticism about the effectiveness of long-term hedging strategies, preferring to manage volatility directly [48][49]