Chile: 2Q 2006 total revenues increased 7.6% for Compañía Cervecerías Unidas S.A.
Compañía Cervecerías Unidas S.A. (CCU) announced August 02 its consolidated financial results, stated in Chilean GAAP for the second quarter and six months ended June 30, 2006. All US$ figures are based on the exchange rate effective June 30, 2006 (US$1.00 = Ch$539.44).
Second quarter (Q2'06) total revenues increased 7.6% to Ch$110,013 million (US$203.9 million), as a result of higher consolidated volumes and higher average prices. Consolidated volumes growth is explained by an increase of 20.9% in beer Chile, 8.6% in beer Argentina, 9.8% in the soft drink segment, 4.6% and 12.5% in the Chilean export wine and Argentine wine businesses, respectively, partially offset by lower sales volumes of domestic wine and pisco. The increase in average prices is explained by higher prices in the pisco, Argentine wine and beer Argentina segments, partially offset by lower prices in the beer Chile, domestic and export wine segments, as well as the soft drink segment.
The year-to-date (YTD) accumulated revenues increased 7.5%, amounting to Ch$251,384 million (US$466.0 million). Q2'06 gross profit increased 6.8% to Ch$50,527 million (US$93.7 million) as a result of 7.6% higher revenues, partially offset by an 8.3% higher cost of goods sold, which amounted to Ch$59,486 million (US$110.3 million). The increase in cost of goods sold is explained by the beer businesses in Chile and Argentina, and the soft drink business. In Q2'06, the gross profit margin, as a percentage of sales, decreased from 46.3% to 45.9%. YTD gross profit increased 8.5%, amounting to Ch$129,677 million (US$240.4 million). The consolidated gross margin decreased 0.5 percentage points to 51.6%.
Q2'06 operating result amounted to Ch$5,581 million (US$10.3 million), 11.7% higher than Q2'05, mainly due to a 6.8% higher gross profit, partially offset by 6.2% higher selling, general and administrative (SG&A) expenses. SG&A expenses reached Ch$44,946 million (US$83.3 million) in Q2'06, mainly due to higher SG&A expenses in the beer Chile, soft drink, beer Argentina and pisco businesses. SG&A expenses as a percentage of sales decreased from 41.4% in Q2'05 to 40.9% in Q2'06. The consolidated operating margin for the period increased from 4.9% to 5.1% in Q2'06. YTD operating result increased 5.5%, amounting to Ch$32,792 million (US$60.8 million). The consolidated operating margin decreased 0.3 percentage points to 13.0%.
Q2'06 EBITDA increased 4.3% to Ch$16,136 million (US$29.9 million) compared to Q2'05, while the consolidated EBITDA margin (EBITDA as a percentage of sales) was 0.4 percentage points lower than in Q2'05, reaching 14.7%. YTD EBITDA increased 3.3%, to Ch$53,779 million (US$99.7 million). The EBITDA margin decreased 0.9 percentage points to 21.4%.
Q2'06 non-operating results improved by Ch$1,192 million (US$2.2 million) compared to the same quarter last year, from a loss of Ch$3,058 million (US$5.7 million) to a loss of Ch$1,866 million (US$3.5 million). The improvement in non-operating results is mainly explained by:
1. Other non-operating income/expenses, which improved from a loss of Ch$383 million (US$0.7 million) in Q2'05 to a gain of Ch$1,873 million (US$3.5 million) this quarter, mainly due to a non-recurring gain on the sale of a disposable property site and some other assets.
2. Net interest expenses, which improved from a loss of Ch$2,214 million (US$4.1 million) in Q2'05 to a loss of Ch$1,563 million (US$2.9 million) in Q2'06, due to higher interest rates earned over time deposits and to the restructuring of VSP's debt.
These positive effects were partially offset by:
1. Price level restatement, which decreased from a gain of Ch$330 million (US$0.6 million) to a loss of Ch$584 million (US$1.1 million) in Q2'06, mainly due to the effect of a lower inflation rate over a lower net nonmonetary asset position during Q2'06.
2. Amortization of goodwill, which increased Ch$622 million (US$1.1 million) in Q2'06 due to a one-time adjustment of goodwill.
3. Foreign currency exchange result, which decreased from a loss of Ch$94 million (US$0.2 million) to a loss of Ch$285 million (US$0.5 million), due to the depreciation of the exchange rate during the quarter over a net liability position in foreign currency.
YTD non-operating results improved from a loss of Ch$4,454 million (US$8.3 million) to a loss of Ch$3,190 million (US$5.9 million), mainly due to the non-recurring gain on the sale of a property site.
Q2'06 net income increased 223.6% from Ch$1,006 million (US$1.9 million) to Ch$3,257 million (US$6.0 million), mainly due to improved operating and non-operating results and positive minority interest, partially offset by higher income taxes. Higher income taxes were mainly due to better results and differed income taxes. Positive minority interest is mainly explained by losses in VSP and CCU Argentina. YTD net income increased 13.6% from Ch$21,109 million (US$39.1 million) to Ch$23,977 million (US$44.4 million), mainly due to improved operating and non operating results as well as positive minority interest, partially offset by higher income taxes.
Beer Chile
Revenues increased 19.5% to Ch$39,129 million (US$72.5 million), as a result of 0.9% higher ales volumes and 1.2% lower real average prices due to higher discounts.
Operating Income increased 32.3% to Ch$6,122 million (US$11.3 million), mainly as a result of the higher revenue level, the effect of which was partially offset by higher SG&A expenses and higher cost of goods sold.
Cost of goods sold increased 25.1% to Ch$16,868 million (US$31.3 million), mainly due to higher direct costs as a consequence of a greater mix of one-way products, and higher energy costs. As a percentage of sales, cost of goods sold increased from 41.2% in Q2'05 to 43.1% in Q2'06.
SG&A expenses increased 10.2% to Ch$16,139 million (US$29.9 million) mainly due to higher distribution and marketing expenses, reaching 41.2% of sales, 3.5 percentage points lower than in Q2'05. The operating margin increased from 14.1% in Q2'05 to 15.6% in Q2'06.
EBITDA increased 15.9% to Ch$10,716 million (US$19.9 million), while the EBITDA margin was 27.4% of sales, 0.8 percentage points lower than in Q2'05.
Sales volumes had a very positive performance, with a 20.9% increase, most notably in Cristal, Escudo, Heineken, Budweiser and Kunstmann brands. During April, Cristal launched a brand extension, Cristal Red Ale, a beer with a toasted aroma and reddish color. This new product has had a positive response from consumers.
Beer Argentina
Revenues increased 16.6% to Ch$9,753 million (US$18.1 million), due to 9.2% higher prices measured in Chilean pesos and 8.6% higher sales volumes.
Operating Income improved by Ch$261 million (US$0.5 million) from a loss of Ch$1,528 million (US$2.8 million) in Q2'05 to a loss of Ch$1,267 million (US$2.3 million) in Q2'06, as a result of higher revenues, partially offset by higher cost of goods sold and SG&A expenses.
Cost of goods sold increased 11.3%, reaching Ch$5,605 million (US$10.4 million) this quarter. As a percentage of sales, cost of goods sold decreased from 60.2% in Q2'05 to 57.5% in Q2'06, mainly due to the dilution of fixed costs.
SG&A expenses increased 11.5% from Ch$4,856 million (US$9.0 million) in Q2'05 to Ch$5,415 million (US$10.0 million) in Q2'06. As a percentage of sales, SG&A expenses decreased from 58.1% to 55.5% mainly due to the dilution of fixed expenses.
EBITDA improved Ch$316 million (US$0.6 million) from a loss of Ch$98 million (US$0.2 million) in Q2'05 to a gain of Ch$217 million (US$0.4 million) this quarter, while the EBITDA margin reached 2.2% in Q2'06, compared with a negative 1.2% in Q2'05, as a consequence of higher volumes and prices.
The profitability of this segment continues improving due to higher volumes and better prices. Prices increased from US$38 per HL in Q2’05 to US$43 per HL in Q2’06. Sales volumes increased mainly in the nationwide brands Budweiser, Heineken and Schneider.
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