The following is a summary of the Compañía Cervecerías Unidas S.A. (CCU) Q2 2024 Earnings Call Transcript:

Financial Performance:

• CCU reported a significant decline in its financial performance in Q2 2024 with revenues contracting by 8.6% and volumes by 12.7%.

• Gross profit decreased by 15.8%, and EBITDA margin deteriorated by 629 basis points.

• Net income resulted in a loss of CLP15,888 million, heavily influenced by adverse market conditions and currency depreciations. A non-recurring gain from land sale helped to offset some losses.

• Notable currency depreciations included the Chilean peso and Argentine peso, diminishing by 16.8% and 255.1% against the U.S. dollar respectively, thereby escalating U.S. dollar-denominated costs.

Business Progress:

• Under the 'HerCCUles' plan, CCU implemented further actions in revenue management and cost control aiming to mitigate the impact from decreased volumes and return to profitability.

• CCU aims to escalate efforts on revenue management, leveraging digital transformation programs and tight control on fixed expenses to enhance profitability.

Opportunities:

• Despite the decline in volumes, CCU managed to maintain market shares in both Chile and Argentina, which indicates the potential to regain momentum in more favorable market conditions.

• The company's diverse portfolio, including segments like wine which saw an 11.9% increase in average prices and a growth in exports, represents an avenue for leveraging international market dynamics to improve performance.

Risks:

• CCU faces significant challenges due to a sharp economic contraction in Argentina and weaker demand in both Chile and Argentina influenced by unfavorable weather conditions.

• Currency fluctuations notably impact costs, as significant portions of expenses are denominated in U.S. dollars, creating financial pressures amid local currency depreciations.

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