Compañía Cervecerías Unidas (CCL) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 results were significantly weaker year-over-year, mainly due to sharp volume declines and currency depreciation in Chile and Argentina.

• Consolidated net sales for 2Q24 decreased by 8.6% year-over-year to CLP 524,641 million, with volumes down 12.7%.

• EBITDA for 2Q24 was CLP 38,722 million including a non-recurring land sale; adjusted EBITDA was CLP 10,053 million, down 78.7% year-over-year.

• Net income for 2Q24 was CLP 5,040 million (including non-recurring gain); excluding this, net income was a loss of CLP 15,888 million.

• Market share was maintained in Chile and Argentina despite volume declines.

Financial highlights

• Revenues contracted 8.6% year-over-year, driven by a 12.7% drop in volumes, partially offset by a 4.6% increase in average prices in Chilean pesos.

• Gross profit declined 15.8% to CLP 210,113 million, with gross margin down 338 bps to 40.0%.

• EBITDA margin was 7.4% (reported), 1.9% (adjusted), down 629 bps year-over-year.

• Total expenses as a percentage of net sales increased to 62.1% in 2Q24 from 55.1% in 2Q23.

• Net financial debt/EBITDA increased to 2.24 as of June 30, 2024, from 2.01 at year-end 2023.

Outlook and guidance

• Profitability recovery is the top short-term priority, with expectations for improved financial results in the second half of 2024.

• Management expects profitability to recover as cost and revenue management actions take effect and volume trends normalize.

• Price increases are planned to keep pace with inflation, and further revenue management actions are underway.

• July showed improved volume performance in Chile, signaling potential recovery.

• In Argentina, volumes are expected to remain at current low levels in Q3 and potentially recover in Q4, though visibility remains limited.