Compañía Cervecerías Unidas S.A. (NYSE:CCU) Q2 2025 Earnings Call Transcript

Compañía Cervecerías Unidas S.A. (NYSE:CCU) Q2 2025 Earnings Call Transcript August 8, 2025

Operator: Good day, everyone, and welcome to CCU’s Second Quarter 2025 Earnings Conference Call on the 7th of August 2025. Please note that today’s call is being recorded. At this time, I’d like to turn the conference call over to Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.

Claudio Las Heras: Welcome, and thank you for attending CCU’s Second Quarter 2025 Conference Call. Today with me are Mr. Felipe Dubernet, Chief Financial Officer; Mr. Joaquín Trejo, Financial Planning and Investor Relations Manager; and Ms. Carolina Burgos, Senior Investor Relations Analyst. You have received a copy of the company’s consolidated second quarter 2025 earnings release. The call will start by reviewing our overall results and then we will move on to our Q&A session. As usual, before we begin, please take note of the following statements. The statements made in this call that relate to CCU’s future financial results are forward-looking statements, which, of course, involve known and unknown risks and uncertainties that could cause actual performance or results to materially differ.

These statements should be taken in conjunction with the additional information about risks and uncertainties set forth in CCU’s annual report in Form 20-F filed with the U.S. Securities and Exchange Commission and in the annual report submitted to the CMF and available on our website. For today’s conference, as we stated in our second quarter ’25 financial report, annual variations and references regarding EBITDA and net income exclude the nonrecurring gain from the sale of a portion of land in Chile in the second quarter 2024. Also, organic variation to which we will refer next exclude the consolidation of ADO in Argentina and AV in Paraguay. For more detail to this, see Footnote 3 of our second quarter ’25 financial report. It is now my pleasure to introduce our CFO, Mr. Felipe Dubernet.

Felipe Dubernet Azocar: Thank you, Claudio, and thank you, all, for joining the call today. In the second quarter of 2025, CCU delivered high financial results and increased profitability versus last year despite the volatile and challenging business environment. Consolidated EBITDA nearly doubled versus last year, mainly driven by our main operating segments, Chile, which expanded EBITDA 59.1% and, to a lesser extent, by the 8.3% growth in the Wine Operating segment. On the other hand, we keep facing a challenging scenario in Argentina, impacting the International Business Operating segment’s results. Higher consolidated EBITDA and improved EBITDA margin were driven by volume growth, revenue management efforts and efficiency, more than offsetting cost and expense pressure from inflation.

In line with the high operation results, net income posted a lower loss versus last year. Our first half results show that we are taking the right actions to keep delivering higher operational results and profitability in the context of soft volume trends for the beverage industry in the region. For the second half, we will keep executing our 2025-2027 Strategic Plan and its three pillars: profitability, growth and sustainability, with a special focus on profitability supported by both revenue management efforts backed by strong and diversified portfolio of brands and efficiencies across all our operating segments. Regarding our main consolidated figures in the second quarter, organic net sales were up 4.8%, explained by 4.7% higher organic volumes while organic average prices were flat.

Gross profit grew 6.7% organically and gross margin expanded 73 basis points. In addition, consolidated MSD&A expenses grew 5.8%, mainly due to the consolidation of Aguas de Origen in Argentina, although as a percentage of net sales, improved 197 basis points. Without the consolidation of Aguas de Origen that we started the consolidation first of July of last year, MSD&A expenses would have increased 0.5%. In all, EBITDA expanded 97.1% and EBITDA margin expanded 150 basis points. In terms of our segments, in the Chile Operating segment, top line expanded 9.4% as a result of 6% increase in average prices and 3.2% higher volumes, where all categories posted positive growth with a better seasonally adjusted volume pace than previous quarters. Increased average prices were explained mainly by revenue management efforts, more than offsetting negative mix effects and were key to expand gross profit and gross margin by 12.5% and 115 basis points, respectively, in the context of cost pressure related to an unfavorable packaging mix and higher manufacturing costs, mainly associated with our PET recycling plant CirCCUlar.

MSD&A expenses grew below inflation, expanding 2.1% and as a percentage of net sales improved 265 basis points due to efficiencies. Altogether, EBITDA increased 59.1% and EBITDA margin expanded 339 basis points. In International Business Operating segment, organic volume posted a 9.8% expansion, although net sales recorded an 11.4% contraction driven by 19.3% lower organic average prices in Chilean pesos. The decline in organic average prices was mainly due to the devaluation of the Argentine peso against the U.S. dollar and also due to a challenging pricing scenario in Argentina. The volume expansion was mainly explained by a low comparison base in the second quarter 2024 in Argentina, while volumes seasonally just continue in a recovery trend for the fourth consecutive quarter.

Organic gross profit increased 11.6% and organic gross margin was flat. MSD&A expenses were up 10.5% mainly due to the consolidation of ADO and higher marketing expenses. As a percentage of net sales, MSD&A expenses decreased 301 basis points. Without the consolidation of ADO, MSD&A expenses would have increased 5.9%. In all, in spite of volume growth, given the effects mentioned above, EBITDA loss was similar to last year. The Wine Operating segment posted a top line expansion of 6%, mainly driven by 4.2% rise in volumes and 1.7% higher average prices. Larger volumes were led by a 17.4% growth in exports, partially offset by 4.1% decrease in the Chilean domestic market while the industry posted a larger decline. The higher average prices were mostly explained by a weaker CLP and its favorable impact on export revenues and revenue management initiatives in domestic markets, compensated by negative mix effects in the portfolio.

Gross profit was flat and gross margin deteriorated by 222 basis points due to cost pressures from a higher cost of wine due to a lower harvest and higher USD-linked packaging costs. MSD&A expenses dropped 3.7% with efficiencies and as a percentage of net sales improved to 174 basis points. Altogether, EBITDA increased 8.3% and EBITDA margin was up 32 basis points. Regarding our main JV and associated business, in Colombia, we delivered low single-digit volume growth in soft industry context. We continue working in strengthening our brand portfolio, our execution to deliver sustainable growth in volume and results in Colombia. Now I will be glad to answer any questions you may have.

Operator: [Operator Instructions] Our first question is from Felipe Ucros from Scotiabank.

Q&A Session

Felipe Ucros Nunez: A couple on my end. So the first one is on the pricing in Argentina. Can you delve a little deeper into your pricing comments? You talk about a difficulty in pricing. So just wondering if you can talk about whether this comes from the competitive environment, with lack of discipline or perhaps it’s just the state of the consumer that’s keeping you from increasing prices faster and on pace with inflation. And then the second one is on SG&A in Argentina. Operating leverage seemed to drop pretty strongly this quarter, particularly when you compare it to the last three quarters since you acquired Aguas de Origen. So third quarter of last year, which was, seasonally speaking, kind of similar also winter, your SG&A was close to 50% of sales. But this quarter, it was closer to 66%. So pretty stark difference from one year to another. Perhaps the pricing issue has to do with it but just wondering what the drivers are on that de- leveraging pace.

Felipe Dubernet Azocar: Hello, Felipe. So the first thing is that was key to pricing because at the end of the day, pricing has been very difficult in Argentina, especially in the last, I would say, six months. To give you a reference, last year, beer price in Argentina was compared to inflation in 2024, above inflation by 4.4%. However, this year, year-to-date, is below inflation by 10.5%. So if we take into account where the new government took office in Argentina, let’s say the period of 18 months since 1st January 2024, our prices in Argentina are 6% below inflation. As you know also, wages are — real wages in Argentina are lagging below inflation. This is expected because at the end, the main target of the government is to reduce inflation.

So consumer has less Argentinian pesos in his wallet. Argentina is expensive right now. Obviously, this change that, at the end of the day, for the future is for good to reduce inflation in Argentina. Also the good news in Argentina after the announcement of the government mid-April is that we have a new exchange rate policy, let’s say. So this is what is affecting overall the industry. Also competition is aggressive because when volumes are difficult to recover. So maybe the good size is that for the fourth consecutive quarter, seasonally adjusted our volumes have grown. However, also, we have had mix effects as we — as the mix participation of value brands are higher than before. And this has also to do with this deflationary pressure, I would say, in Argentina.

So it’s very clear that our prices in this period are below inflation. As far as the economy recovery in Argentina and in the future, mainly also a further reduction on inflation, our prices would be in a more healthy perspective, let’s say. Regarding the synergies of the water business, no, the synergies are there because at the end, of course, at total expenses level, of course, we have in our P&L the expenses of ADO. There are marketing expenses because these are completely allocated to the category. There is more distribution costs, of course, but also we have, let’s say, we are only owners of the 51% of the company, so we have a benefit there because we charge double, [indiscernible] the interest that you need to look. But at the end, you have more marketing expenses because at same quarter last year, we didn’t have these.

But the good indicator, and this is why we did the pro forma is that if you exclude ADO the consolidation over our MSD&A expenses have decreased 5.9%. And a percentage of net sales, and this is what is very important because in a scenario where you have high inflation and difficulties to prices, our MSD&A expenses organically decreased 600 and 300 basis points. This is the key indicator. So of course, the volumes were disappointing in terms of what we expected as recovery, but what was more difficult was the pricing scenario, Felipe.

Felipe Ucros Nunez: No, understood. That’s very clear. And if I can do a follow-up, on the other side on Chile, you have very good results on gross margins. Wondering if you can discuss what was the key driver here on the expansion of gross margins in Chile.

Felipe Dubernet Azocar: Of course. I think — Okay, Felipe, yes, Chile. Thank you for — that you notice that Chile, we have got good results. In fact, I think — we think we have had good results in Chile not only overall but in all categories, let’s say, beer, nonalcoholic and also spirits. This is — first of all, this is, as always, we did a commentary on that. Our brand equity is very strong in Chile. So our pricing power — so because increasing in this context, the prices, 6%, this is real average prices. It’s not effect, it’s real average prices. This is much above inflation. And at the same time, we have maintained overall market share and recovering market share, especially in iconic products against previous quarter.

So this sounds a good equation, I would say, increasing prices, recovering market share in alcoholic products. We posted in overall alcoholic products low single-digit growth where competition has had negative growth so in a very difficult industry. As I mentioned, last quarter in alcohol beverages. And this is based on sound brand equity. So I, along with this good equation top line, I would like to say also a good effort in efficiencies, especially in logistics. So overall, it’s a good quarter in our core operating segment, which is Chile.

Operator: Our next question is from Vidhi Vira from Goldman Sachs. Can you give guidance for the second half of 2025 profitability and revenue expectations? Can you share color on the free cash flow you expect to generate this year after interest, tax, net working capital, CapEx, et cetera?

Felipe Dubernet Azocar: Okay. Thank you Vidhi, for your question. First of all, we don’t do forward-looking estimates so I cannot answer this question. On top of that, it’s very volatile. U.S. dollar is volatile exchange rate so we have had, at the beginning of a months ago, U.S. dollar was at [ 940 ] We experienced 5% devaluation so it’s very volatile. Consumption, as I mentioned in my previous answer especially for Chile, seems to be low single digits, but we need to wait. Pricing scenario has been favorable so far, but we don’t know — of course, we don’t know how competition would seem to be. So I can’t give you a guidance on a more precise standard. Regarding free cash flow, yes, we have really a good question on operating cash flow not only because we increase our EBITDA but also in working capital, thanks to inventory reduction, thanks to initiatives.

Because efficiencies, you can look at efficiencies, on the one hand, in expenses, in cost, but also in working capital. So we are implementing a new planning platform. We do have a new logistic and planning process so that is delivering its fruits. So as a consequence, we experienced inventory — base inventory reduction. Also good work on accounts receivables, on receivables by the team. Also, in this particular quarter, we changed our operating model with Red Bull, which allow us to free up extra cash flow. In terms of CapEx, we are a little bit behind the phasing of the estimate in public in the 20-F that we would find in the 20-F, but that was more than compensated by these excellent working capital results.

Operator: Our next question is from Kevin Cheng from Western Asset Management. Okay. Looks like Kevin dropped. We’ll move on to the next question. Our next question is from Lucas Ferreira from JPMorgan.

Lucas Ferreira: My first question is on your expectations on COGS for the rest of the year. There was an important drop in aluminum prices, right, in the beginning of the second quarter. Wondering if some of these already was reflected in this quarter’s results, or if you expect that drop to be something in favor of the company in the third quarter. And then if you can comment a little bit, especially in Chile, how you see the — your expectations. You had an important improvement in margins year-over-year in 2Q. If that’s still the case for the second half, second half of last year. Especially in the fourth quarter, right, company had a good improvement in profitability, if you think this is offering tough comps for you? Are you comfortable to once again, especially in the fourth quarter, reach the near 20% margin in Chile?

Felipe Dubernet Azocar: So we are seeing more commodity. Yes, we are seeing a little bit higher aluminum prices, as we mentioned, 5% more than last year so at $2,500 per ton. So we are not seeing — so — and as we don’t hedge, we prefer to be a bit cautious on that, especially given the trade discussions that the U.S. government is having with China, Brazil and other countries. There are other raw materials that are in a better shape, let’s say, sugar, reducing 14% compared to last year so far, and somewhat also barley reducing 60% compared to last year. So we are seeing more rather stable aluminum price going forward. On the other hand, we are a little bit worried about, as I mentioned in my previous answer, to the U.S. dollar because around [ 970 ] last — so it’s — and for the quarter was [ 933 ] for the entire quarter 2.

So now we are facing U.S. dollar pressure. Of course, towards the end of this year, margin will depend on a lot on how we sustain our prices. And I would say that finance are positive because second quarter was very, very encouraging. We are in our best ever run equity levels in all categories with our service. So consumers are preferring despite prices, our products. So at the end of the day, this is a sound foundation of the business. So what will happen, as I mentioned in my previous answer, I will not give you a forward-looking view. But if we sustain this level of prices, we have, of course, some pressures on — given the recent — this weak devaluation of the Chilean pesos, but the volumes that we maintain, what I — the commentary I made this quarter, I think we are growing low single-digit volumes.

So we could have a good second half.

Operator: Our next question is from Orazio Elera from MBI Inversiones. How do you see the situation in Argentina? Is there any green shoots in terms of profitability?

Felipe Dubernet Azocar: Orazio, I think — I know I prefer to have interaction, but it seems that I have answered the question. So we are facing a difficult pricing scenario. Argentina is in a deflation mode. If we continue this trend, I think, is something that Argentina has had to do, let’s say, with these inflation levels because I don’t know, two, three years ago, we have hyperinflation, we increased prices, volume didn’t suffer, but we couldn’t get dividend from this operation. And now we are in a moment of change. So the green spot, as I think you asked your question, if this new macroeconomic program achieved to a good end would be good in the long term for our business. We have a solid foundation in Argentina in terms of brand preference, completely aligned with our market share position.

We have a good operation that is making efficiencies. We incorporate a new more scale, adding the water — the retail water business. So for the long term, I saw if the macroeconomic plan in Argentina works, and the country has more investment, I’m seeing a better future. Now we are in the middle of the transition from a hyperinflation economy to a deflation. And of course, our P&L is suffering because it’s difficult with the consumer where the salaries are lagging inflation to further increase prices. Also competition is aggressive. But as I said, the things that are under our control is the brand equity and the good work we are doing there.

Operator: Our next question is from Ewald Stark from BICE Inversiones.

Ewald Stark Bittencourt: I saw that in exportation volumes in [indiscernible] Increased by 14% year-over-year. So I was wondering what do you expect going forward? Do you still expect volumes to increase by double digits given that you are taking an active approach in opening distribution channels?

Felipe Dubernet Azocar: So yes, on why our main priority in the export business was to recover scale. Remember, we have a terrible 2023 with the global destocking of inventory. And this is, I would say, it’s a very encouraging quarter where our volumes grew by 17.4% with very good performance in Japan, Brazil and South America, while the U.S. market continued to be very complicated. Going forward, we expect, let’s say, for the overall year, to continue the recovery we did in 2024 and let’s say, something like mid-single-digit growth in our exports. But the second quarter was very good, also above our expectations somewhat. So as I mentioned, in other business was below our expectation, the volume in Argentina. But on the other hand, export of wine was above our expectation.

This is the multi-category. As I said, there are some business that we do good performance, some quarters, some business we do. This is why CCU is a leading multi-category company in order to have a good diversification.

Operator: Our next question is from Álvaro García from BTG. Can you comment on the dynamics of beer versus soft drinks in Chile?

Felipe Dubernet Azocar: No. Both categories have practically the same growth, low single-digit growth, I would say, beer and nonalcoholic. In the case of spirits, we have a very solid growth because we are the market leaders in the new trendy categories such as ready-to-drink with our neutralised brand. We are a sound leader there. So both were in line in terms of low single-digit growth. In the case of beer also outpacing our market share in quarter 2 of what we had in quarter 1. So with a good market share recovery in beer across all the brands. So that was good. In the case of nonalcoholic we grew low single digit. despite an unfavorable mix for us as Colas continue to take more of the whole nonalcoholic beverage or within soft drinks, Colas where we are not the market leaders are taking more portion of the mix.

But this has been a trend since the pandemic. However, we — our Pepsi brand continue to gain brand equity, which is important to compete against the market leader in costs. But despite all of this, we experienced this low single-digit growth in a very competitive, by the way, scenario in nonalcoholic, also in beer. But in nonalcoholic that usually that sometimes is more rational, has been very competitive in the last quarters.

Operator: Our next question is from Constanza Gonzales from Quest Capital.

Constanza Muñoz: Thank you for taking my questions. I have two . The first one is in relation with Argentina. You said before that you cannot give us a guidance for the year, but could you give us more details about the pass-through to prices of inflation in the month of July? And also just for clarify, in the short term, the priority of the company is to keep the market share in Argentina instead of increased profitability?

Felipe Dubernet Azocar: Yes, I mentioned to you that the gap in the last 18 months of beer prices in Argentina compared to inflation in the previous question also, that I answered, was 6% low. We expect towards the end of the year to reduce this gap. It was difficult in the 18 months to be in December this year in line with inflation, especially looking at the salaries evolution in Argentina without losing volume and scale. Argentina for us is a mature business. We don’t want to gain share through aggressive promotions. So we — as I mentioned in the previous question, I think we have our fair share compared to our brand equity, let’s say. So answering you, if we maintain our brand equity, we will maintain our share. I think what else — I think this was your — the answer to you.

So that’s it. On the other hand, the water business presented better. I didn’t mention, but in the accumulated 18 months, water is just 3% below inflation. This is why soft drinks and nonalcoholic beverage are suffering less in the P&L compared to alcoholic beverages because also alcoholic beverage in the past has had more exposure to devaluation of the currency. Also, remember another thing that we have had a big chunk in terms of devaluation in April. So if everything continue in the current impact, let’s say, that the government announced, that this is already predicted, let’s say. And we expect that inflation levels continue to lower in Argentina. This is the plan of the government. And for the long term, as I said, this is good. Argentina is a special country.

Argentina is coming — is getting out. It’s not cheap. Argentina is getting out from a hyperinflationary economy to a normal standard economy. And this is the price we are somewhat paying as the consumers in order to have a better future.

Operator: Our next question is from [ Martin Caldente ] from BTG. He has few questions. I wanted to ask how the implementation of the r- PET law has impacted your operations so far and how you’re preparing for the upcoming more demanding targets? What kind of operational and financial implications have you seen? And to what extent have you passed these additional costs through to consumer prices? And secondly, how are you currently seeing the outlook of key raw materials such as sugar, fruit pulp, PET, aluminum and other relevant inputs across your main categories?

Felipe Dubernet Azocar: Okay, thank you. Again, we have [Technical Difficulty] using the platform. But here we go, I think the second part of the question, I already answered. Where we saw better prices in sugar. We pulled, especially sugar. PET is, I would say, is stable, [indiscernible] PET. The PET we import from China. Aluminum, I said, we are seeing a 25% price stable, let’s say. So — but as I mentioned, input costs are subject to the U.S. dollar. And this is not a good week for us regarding the U.S. dollar going forward. The first part of the question regarding “CirCCUlar and the r-PET Law regarding packaging recycling or PET recycling or PET bottle recycling, I will hand over this question to Joaquín Trejo to give you some color on that.

Joaquín Trejo Darraidou: Thank you, Felipe, and thanks, Martin, for your question. Yes, the impact of the r-PET law can be seen in the cost and expenses associated with our PET recycling plant CirCCUlar. To give you more color on that, in the second quarter, the impact is approximately MXN 3 billion. This is mainly due to two factors: one, the manufacturing expenses; and second, the additional cost of the recycle we’ve seen over the building we see. And on a year-to-date basis, it’s about MXN 7 billion more or less. And obviously, this is significant impact considering our total sale because we are talking about more or less 7% of the EBITDA of the Chile operating segment in the quarter. So yes, definitely. And regarding prices, we think it’s difficult to pass this on to consumers.

In fact, the prices of the nonalcoholic categories in the second quarter grew in line with inflation. So I would say that passing on the cost to prices is difficult to do so as long as consumers actually don’t or do value that. So I would say that, yes, it’s a challenge because prices in nonalcoholic categories in Chile grew in line with inflation in the second quarter, not above or well above inflation.

Operator: Our next question is from Fernando Olvera from Bank of America.

Fernando Olvera Espinosa de los Monteros: The two are related to Chile. Regarding the billing performance that we have seen year-to-date, I was just wondering how does this compare versus your initial expectation at the beginning of the year. And my second question also related to Chile is, based on the strong pricing that we have seen, how your market share has performed on beer so far this year.

Felipe Dubernet Azocar: Fernando, nice to hear your view. So regarding Chile volume performance, as I said, we grew low single digit. And year-to-date, I would say we are flat in terms of volumes. Also because the comparison of the first quarter of last year was a little bit high also the second quarter. But we have capped but with a good seasonally adjusted trend, I would say, only stable because it’s stabilized, in the case of beer. So in the last, I would say in the last three quarters, let’s say, seasonally adjusted industry volumes in Argentina were stable. So of course, we have less volume or per capita consumption compared to 2021. Remember you about the pension fund withdrawal and the consumption part in Chile, let’s say.

But — so we are seeing a stabilization of the beer volumes. Nonalcoholic, on the other hand, we are seeing a positive trend, seasonally adjusted with a very good — because seasonally, so the quarter was much better than same quarter last year, even seasonally adjusted. And we continue, seasonally adjusted, to see better volumes in the last, let’s say, four quarters, okay, in nonalcoholic. So in conclusion, I think it’s possible to have a low single-digit growth in beer towards the year. And in the case of nonalcoholic between, let’s say, low single digit and mid-single digits, a little bit higher. But this is in the overall equation. On the other hand, we are doing very well in spirits, especially because of the ready-to-drink products. I don’t know if I answered your question.

Fernando Olvera Espinosa de los Monteros: Yes, that’s great. And Felipe, and regarding the market share now on beer?

Felipe Dubernet Azocar: No, I already mentioned in the previous question about the share. Overall, it’s stable compared to last year, I would say, stable, which is very encouraging is that it’s not stable because it’s growing, is our brand equity in the year. This is why the pricing power we have.

Operator: Our next question is from Thiago Bortoluci from Goldman Sachs.

Thiago A. Bortoluci: I have two, but let me start with Chile, right? When I put together, Felipe, a few of the things that you said, you said stable market share in the year. You said consolidated prices moving above inflation with nonalcoholic growing at inflation, right, which implies you are growing materially above inflation on the year, right? What is driving this momentum for beer, in your view? Like you are growing real prices still keeping market share. Is this about to do with competition moderating? Is this to do with channel mix? What is your assessment on this? I’ll pause here and then I have another one in international.

Felipe Dubernet Azocar: So as you know, the beer business all over the world have suffered from very high inflation in the last year. The driver is our priority in recovering profitability in our businesses. And the category that suffered the month after the pandemic because of raw materials, because of exchange rate, is beer, particularly beer. And the driver is that we have a solid brand equity so it’s internal driver at the end in order to increase prices. So we need to recover the profitability we had before the pandemic and that’s clear. So we continue our revenue management efforts, working on our mixes. So the good news is that the mix has not deteriorated in beer in the last two years. Despite having a more soft industry, mixes remain the same.

And of course, we have a higher market share in mainstream, lower market share in premium, but in spite of this, our market share is almost stable. Of course, in the first quarter, we lost a little bit market share, but we recovered then in quarter 2 while increasing prices. So that’s good news, I would say. Did I answer your question?

Thiago A. Bortoluci: Clearly. And then if I may, a follow-up in International. We all understand quite well what’s happening in Argentina, right? We know the activity momentum, inflation and all the volatility there. But none of this is new to the story, right? Everything was already in place in the beginning of the year with one exemption that is clearly the FX, right, that moved a lot. Now this is more of a conceptual question, right, rather than getting the number. What changed from the first quarter to the second quarter for us to see a shifting to double — well, mid-teens EBITDA margin in the first quarter to negative 20s EBITDA margin in the second quarter? And again, I know I understand the FX part of this equation. But apart of this, how should we think about the underlying momentum, right, particularly when I compare your performance on a quarter-over-quarter basis?

Felipe Dubernet Azocar: Our pricing when you compare with inflation deteriorated in the second quarter, along with devaluation of the currency. Let me first start with the devaluation because this is something in the second quarter you need to take into account. And we disclosed this in our press release, if you saw, there is a table, which is the exhibit 7, which is the impact of the hyperinflation accounting. And this impacted us a lot, impacted us around $3 million at the EBITDA level, the impact of the IAS 29, which is the update in the quarter of the first quarter. So the first quarter result is adjusted into the second quarter result. Sorry to mention this, sometimes it’s complex to you to take into account that because this hyperinflation accounting is a unique country coming up.

So this has an impact also in our results. But anyway, despite the accounting matters, let’s say, which deteriorated, I think the pace of the recovery slowed down, although we have a recovery, but it slowed down. The recovery in quarter 1 was much higher when you compare seasonally adjusted with quarter 4, but it seems the consumer has less purchasing power, let’s say, — salaries are below inflation. So it is difficult this thing. Also the mix deteriorated in Argentina. That is part of the equation. So we saw — and this trend has happened between quarter 2 and quarter 1, to be honest. So a lower pace of volume recovery the gap of pricing compared to inflation wide OpEx, aggressive competition also. But we have to continue to work on efficiencies, on expense control.

We think in the coming months, maybe with this good trend in terms of inflation in Argentina along the consumer recover is purchasing power, there would be a more favorable scenario in order to start to close this gap in terms of pricing against inflation.

Operator: [Operator Instructions] We have a follow-up question from Vidhi Vira from Goldman Sachs. Can you share color on the health of the consumer in Chile? How are you seeing volumes and pricing evolve in July 2025? Are you in a position to increase prices in the second half of 2025 to maintain and improve profitability?

Felipe Dubernet Azocar: Yes. I think the sense of the consumer of Chile, as I mentioned, alcoholic beverage, especially beer, stabilized. So it’s too early to call how would be the volume. Our business is very — is a very seasonal business, okay? So it’s difficult to anticipate quarter 4, which is very important. The comps in July because of price increases of last year, but seasonally adjusted volumes of July were better than quarter 2. This is the only thing I can mention, that’s right. Seasonally adjusted beer volumes were better than quarter 2. In nonalcoholic, also it maintain seasonally adjusted — the July seasonally adjusted was in line in quarter 2. So we continue to see, let’s say, this low middle-digit zone in nonalcoholic, okay?

Regarding pricing scenario, Chile is a very competitive market. I cannot forecast that. Always if there are opportunities for management, believe me, we will take them. We’ll take them along, see other KPIs, but as market share, our brand equity, it’s not just to say, okay, price, how is volume July 2025 were stable. We haven’t seen something changing on sustaining our prices already achieved. So a good thing would be, let’s say, to further enhance our revenue management. But I cannot commit on that because it would be — it’s a very competitive market.

Operator: Thank you. It looks like we have no further questions. I’ll now hand it back to the CCU team for the closing remarks.

Felipe Dubernet Azocar: Hello Everyone, to attend this conference call. In summary, in quarter 2 2025, we almost doubled consolidated EBITDA for a robust expansion in our core operating segment, which is Chile, and a high single-digit EBITDA expansion in the Wine Operating segment. As I mentioned, we still face a very challenging scenario in Argentina. But for the future, we think it is for good, as I said. Revenue management and efficiencies were key to achieve this quarter 2. Moreover, we were able to deliver volume growth in all operating segments and core categories in a context of soft industries. To conclude, and I would like to mention that at the end of this call, this is a very symbolic year for CCU as we are celebrating 175 years of history.

We will continue implementing in this year our 2025-2027 strategic plan, supported in our multi-category strategy and our vast business experience to ensure sustainable and profitable growth for our company. I wish you a wonderful afternoon. Thank you, all of you.

Operator: That concludes the call for today. Thank you, and have a nice day.