Chile: CCU reports consolidated first quarter 2005 results: beer volumes in Chile increased by 12%

Compañía Cervecerías Unidas S.A. (CCU) announced on April 27 its consolidated financial results, stated in Chilean GAAP for the first quarter 2005. All US$ figures are based on the exchange rate effective March 31, 2005 (US$1.00 = Ch$585.93).

According to CCU’s CEO, the results for the first quarter were positive, especially consolidated revenues that grew by 10.6%. Operating income and net income increased 4.1% and 14.2%, respectively. Costs and expenses were affected, in part, by external factors. On one hand, higher distribution expenses and PET costs due to higher oil prices; on the other hand, the Argentinean gas crisis that has obliged us to use diesel oil instead of natural gas, both in Chile and Argentina since March.

During the quarter, the performance of beer in Argentina and wine segments stood out. The operating results of beer Argentina improved 63.0%, mainly explained by 7.7% higher volumes and 6.9% higher prices, measured in Chilean pesos.

The Chilean beer business increased its revenues by 9.5%, mainly due to a 12.0% increase in sale volumes. Nevertheless, operating results grew 3.0% as a consequence of increased promotional activities associated with Cristal canned beer in supermarkets and higher marketing expenses, in addition to the higher distribution and energy costs previously mentioned.

CCU’s total revenues increased 10.6% to Ch$124,632 million (US$212.7 million), as a result of 9.4% higher revenues from core products and 38.7% higher revenues of other products. Core products growth is a result of 9.8% higher consolidated volumes, partially offset by 0.4% lower average prices. Consolidated volumes growth is explained by an increase of 12.0% in beer Chile, 7.7% in beer Argentina, 10.2% in the soft drink segment, 3.6% and 72.8% in the Chilean domestic and Argentinean wine businesses, respectively. The decrease in average prices is explained by 2.4% lower prices in beer Chile and 1.8% lower prices in the soft drink segment, partially offset by higher prices in beer Argentina and the wine segments.

CCU’s operating profit amounted to Ch$24,697 million (US$42.2 million), 4.1% higher than Q1’04, due to higher gross profit, partially offset by higher selling, general & administrative (SG&A) expenses. SG&A expenses reached Ch$43,609 million (US$74.4 million) in Q1’05, 9.3% higher than in Q1’04, due to higher SG&A expenses in all business segments. SG&A expenses as a percentage of sales decreased from 35.4% in Q1’04 to 35.0% in Q1’05. The consolidated operating margin for the period decreased from 21.0% to 19.8%.

Beer in Chile: Beer sale volumes in Chile had a very positive performance, with a 12% increase to 1,267,623 hl, most notably the premium segment that grew 27% and Escudo that increased its volumes by 26%. Promotional activities related with Cristal canned beer in supermarkets, in addition to the absence of price increases to recover inflation, led to lower margins. Regarding beer segment in Chile, CCU’s revenues increased 9.5% to Ch$53,392 million (US$91.1 million), as a result of 12.0% higher sale volumes, partially offset by 2.4% lower real average prices. Operating income for beer in Chile increased 3.0% to Ch$18,121 million (US$30.9 million), mainly as a result of higher revenues, partially offset by higher cost of goods sold and SG&A expenses.

Beer in Argentina: Beer sale volumes in Argentina had a positive performance as well, with a 7.7% increase to 665,868 hl The profitability of beer segment in Argentina continues improving, with higher volumes and better prices. In dollar terms, prices increased from US$32 per HL in Q1’04 to US$37 per HL in Q1’05. Sale volumes increased mainly in the nationwide brands: Schneider, Heineken and Budweiser. Revenues increased 15.0% to Ch$14,735 million (US$25.1 million), due to 7.7% higher sale volumes and 6.9% higher sale prices, measured in Chilean pesos. In US dollar terms, prices increased 15.0%. Operating Income increased 63.0% from Ch$1,107 million (US$1.9 million) in Q1’04 to Ch$1,805 million (US$3.1 million) in Q1’05, as a result of higher revenues, partially offset by higher cost of goods sold and SG&A expenses.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .