Compañía Cervecerías Unidas S.A. Q2 FY2025 earnings call

• CCU delivered high financial results in Q2 2025 despite a volatile and challenging business environment, with consolidated EBITDA nearly doubling. • The Chile segment was a key driver, with EBITDA expanding 59.1%, driven by volume growth, revenue management, and efficiencies. • The Wine segment saw an 8.3% EBITDA increase, supported by volume growth in exports and average price hikes, though impacted by cost pressures. • The International segment faced challenges in Argentina, with net sales contracting due to devaluation and tough pricing. • CCU is executing its 2025-2027 Strategic Plan focusing on profitability, growth, and sustainability, with a special emphasis on profitability via revenue management and efficiencies across segments. • Work continues in Colombia to strengthen brand portfolios and drive sustainable volume and result growth.

In the second quarter of 2025, CCU achieved strong financial results. Consolidated EBITDA nearly doubled compared to the previous year. The Chile Operating segment saw EBITDA expand by 59.1%. The Wine Operating segment experienced an 8.3% growth in EBITDA. Organic net sales increased by 4.8%, driven by a 4.7% rise in organic volumes with flat organic average prices. Gross profit grew organically by 6.7% and gross margin expanded by 73 basis points. For the Chile segment, top-line sales expanded by 9.4% due to a 6% increase in average prices and a 3.2% rise in volumes. The Wine segment had a top-line expansion of 6% from a 4.2% growth in volumes and a 1.7% increase in average prices. The International Business Operating segment had organic volume up by 9.8% but net sales contracted by 11.4% due to lower average prices in Chilean pesos.

• Management does not provide specific forward-looking estimates due to market volatility. Factors like volatile exchange rates and uncertain competition make precise guidance difficult. • No precise guidance on profitability, revenue, or free cash flow can be given as the business environment is highly uncertain.

• Volatile and challenging business environment impacting overall performance. • Argentina's challenging economic scenario affecting the International segment's results. • Fluctuating exchange rates, particularly the U.S. dollar, posing risks to financials. • Cost pressures from inflation and raw material price fluctuations (e.g., aluminum, PET). • Intense competition affecting pricing and market share in various regions.

Q: Please delve deeper into the pricing comments in Argentina.

A: Pricing in Argentina has been difficult, with beer prices below inflation for 18 months. Wages are lagging inflation, there's a competitive environment, and mix effects with more value brand participation contribute to the deflationary pressure.

Q: Talk about the SG&A in Argentina and the de-leveraging pace.

A: MSD&A expenses in Argentina include marketing expenses from the consolidation of ADO. However, pro forma excluding ADO, MSD&A expenses organically decreased by 600-300 basis points.

Q: Expectations on COGS for the rest of the year?

A: Aluminum prices have increased, but other raw materials like sugar and barley have seen price drops. Uncertainty remains due to U.S. dollar volatility.

Q: Situation in Argentina and green shoots?

A: Argentina faces a difficult pricing scenario with deflation. Long-term green shoots exist if the macroeconomic plan works, but currently, it's suffering from salaries lagging inflation and aggressive competition.

Q: Export volumes in wine and future expectations?

A: Export volumes in wine were up 17.4% in Q2, and mid-single-digit growth is expected for the year as recovery continues.

Q: Impact of r-PET law and related costs?

A: The r-PET law has led to costs around MXN 7 billion year-to-date, and it's difficult to pass these additional costs to consumers as nonalcoholic prices grew in line with inflation.

Q: Chile billing performance vs initial expectations and beer market share?

A: Chile's volume performance is flat year-to-date, beer volumes are stable, and nonalcoholic has a positive trend. Market share in beer is stable due to brand equity.

Q: Momentum in Chile beer and drivers?

A: The momentum in Chile beer is driven by solid brand equity, enabling revenue management and price increases while maintaining market share.

Q: International segment EBITDA margin shift?

A: Devaluation of the currency, slower volume recovery pace, mix deterioration, and impact of hyperinflation accounting contributed to the EBITDA margin shift in the International segment.

Q: Consumer health in Chile and pricing outlook?

A: Beer volumes in Chile were stable in July 2025, and nonalcoholic maintained a seasonally adjusted trend. Pricing is competitive, and further price increases can't be committed to but focus on revenue management.