For those looking to find strong Consumer Staples stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Cervecerias Unidas (CCU) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.Cervecerias Unidas is one of 178 individual stocks in the Consumer Staples sector. Collectively, these companies sit at #13 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different sector groups. The average Zac ...

Investors interested in stocks from the Beverages - Alcohol sector have probably already heard of Cervecerias Unidas (CCU) and Boston Beer (SAM) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style ...

Group 1 - The conference call for Compañía Cervecerías Unidas S.A. (CCU) regarding Q1 2025 earnings took place on May 8, 2025, at 10:30 AM ET [1] - Key participants included CEO Patricio Jottar, CFO Felipe Dubernet, and other members of the investor relations team [2] - The purpose of the call was to review overall results and transition into a Q&A session [3] Group 2 - Forward-looking statements regarding CCU's future financial results were made, highlighting the presence of known and unknown risks and uncertainties [3] - Additional information about risks and uncertainties is available in CCU's annual report in Form 20-F filed with the U.S. Securities and Exchange Commission [4]

Revenue Breakdown - The Chile Operating segment accounted for 61.0% of total revenues in 2024, while the International Business Operating segment contributed 29.3% and the Wine Operating segment accounted for 9.7%[41]. - Approximately 72% of sales volume in 2024 corresponded to own brands, mitigating the risk of losing licensing agreements[35]. Economic Environment - The Chilean economy recorded average GDP growth of 2.0% per year from 2014 to 2024, with inflation reaching 12.8% in 2022, but falling to 3.9% and 4.5% in 2023 and 2024 respectively[42]. - The company is dependent on the political, social, and economic conditions in Chile and Argentina, which significantly impact operational results[41]. Competition and Market Risks - The company faces significant competition in the beer market from Anheuser-Busch InBev SA/NV and its subsidiaries, which could negatively impact sales and market share[26]. - The company is exposed to fluctuations in raw material costs, which could negatively impact profitability due to market volatility and geopolitical factors[36]. - Water availability and quality are critical for production, and regulatory changes or climate impacts could negatively affect sales and profitability[79]. Regulatory and Compliance Issues - The company operates under various regulatory environments, with potential changes in tax laws and advertising regulations that could negatively impact profitability[58][60]. - The Company has implemented a robust regulatory compliance system to ensure adherence to applicable regulations[63]. - The 2022 Water Code reform introduced temporary water use rights and stricter environmental assessments, impacting operational regulations[67]. Health and Safety Concerns - The company has contingency plans for health crises, but prolonged adverse public health developments could materially affect operations and financial position[40]. - A cybersecurity incident on September 25, 2024, affected the Company's IT systems related to sales and distribution, leading to recovery measures[74]. - The company has comprehensive insurance coverage for natural disasters, but coverage limits may be insufficient for extraordinary events[77]. Sustainability Initiatives - The Company built the CirCCUlar Recycling Plant to produce recycled resin, aiming for 15% recycled content in disposable plastic bottles by 2025, increasing to 70% by 2060[66]. - CCU's 2020 Environmental Vision plan achieved a 35.7% reduction in greenhouse gas emissions per liter produced, exceeding the goal of 20%[155]. - The company’s sustainability strategy includes 20 goals to be achieved by 2030 under the pillars "Our Planet" and "Our People"[171]. - The company inaugurated the first plastic bottle-to-bottle Recycling Plant in Chile, projected to recycle 870 million bottles per year[174]. Financial Profile - The company maintains a conservative financial profile with adequate liquidity indicators and favorable risk ratings, including 'AA+' from Fitch Chile and 'BBB' from Standard & Poor's[50]. - The Chilean peso has experienced significant fluctuations, depreciating 12.5% in 2024, which could adversely affect the value of the Company's ADSs[82]. - CCU issued a 10-year USD 600 million international bond with a yield to maturity of 3.365%[160]. - CCU placed a three million UF bond in the Chilean market at a rate of 2.85%[142]. Operational Developments - The company has implemented innovation strategies supported by marketing campaigns to strengthen sales and market share[28]. - In September 2023, the Company began participating in ReSimple, a collective management system for packaging recovery in Chile, in line with Law No. 20,920 on Extended Producer Responsibility[65]. - CCU began operating the first 100% electric truck in Chile, aiming for electric trucks to represent 50% of the fleet by 2030[144]. - CCU's new distribution center has a 22,500 square meter warehouse and operates with 100% electricity-powered machinery[145]. Market Share and Growth - The weighted volume market share for the Chile Operating segment was approximately 44.9% in 2024[190]. - The weighted volume market share for the International Business Operating segment was approximately 18.1%, 17.1%, and 18.7% for the years 2022, 2023, and 2024, respectively[200]. - VSPT's weighted average volume market share was 19.9%, 20.0%, and 18.4% for the years 2022, 2023, and 2024, respectively, with 35.8% of total domestic industry sales in Chile in 2024[207]. Strategic Acquisitions and Investments - The company currently owns 99.98% of Embotelladoras Chilenas Unidas S.A. (ECUSA), which produces PepsiCo brands under license[97]. - In 2024, the company prepared a 2025-2027 Strategic Plan focusing on Profitability, Growth, and Sustainability[173]. - In July 2022, the company acquired the premium beer brand Volcanes del Sur in Chile[165]. - In January 2023, the company began consolidating D&D SpA, a premium frozen cocktails company in Chile, after acquiring a controlling interest[166].

Group 1 - The core viewpoint of the article highlights the challenges in interpreting CCU's Q4 results due to the impact of Argentina's inflationary accounting, which has led to a reported revenue increase of over 60% despite flat organic sales volumes [1] - The analysis emphasizes a focus on operational aspects and long-term earnings power rather than market-driven dynamics, suggesting a preference for companies that can be held regardless of future price movements [1] - The article indicates that most recommendations will be holds, reflecting a cautious approach in a bullish market, with only a small fraction of companies deemed suitable for a buy at any given time [1] Group 2 - The article does not provide any specific financial metrics or detailed analysis of CCU's competitive dynamics or industry participation [1]

Financial Data and Key Metrics Changes - In 2024, consolidated EBITDA reached CLP 387,267 million, increasing by 2.1% year-over-year, and by 9.6% when including a non-recurring gain from land sale [9] - Consolidated net income expanded by 32.5% excluding non-recurring gains, and by 52.3% including them [9] - In Q4 2024, consolidated EBITDA surged to CLP 182,621 million, a 65.2% increase, driven by all operating segments [14] - Consolidated net income for Q4 2024 reached CLP 74,153 million, up by 77.7% [16] Business Line Data and Key Metrics Changes - In the Chile operating segment, top line expanded by 9.9%, driven by a 4.9% increase in average prices and a 4.7% increase in volumes [16] - The International Business segment saw organic net sales increase sharply, despite an 11.5% contraction in organic volumes [17] - The Wine segment posted a top line expansion of 21.4%, driven by a 21.7% rise in average prices, with flat volumes [18] Market Data and Key Metrics Changes - The beer and water industries in Argentina faced a contraction in the low 20s percentage, while Chile experienced modest economic growth leading to flat volumes [8] - In Argentina, volumes decreased significantly in the first half of 2024 but showed gradual improvement in Q4 [37][39] Company Strategy and Development Direction - The company continues to strengthen its regional footprint, consolidating its water business with Danone in Argentina and increasing scale in Paraguay through a partnership with BRC Group [11][12] - The HerCCUles plan, which focused on recovering financial results, concluded in 2024, and the company is now developing a new strategic plan for 2025-2027 focusing on profitability, growth, and sustainability [96][100] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding 2025 due to a volatile and uncertain business scenario, emphasizing the need for revenue management and operational efficiencies [100] - The economic growth in Chile is expected to be around 2% in the long term, with low single-digit growth anticipated for the industry [28] Other Important Information - The company inaugurated a modern PET recycling plant in Chile, named CirCCUlar, as part of its sustainability efforts [13] - The company reported a loss of CLP 1,095 million in Q4 2023 due to hyperinflationary accounting in Argentina [14] Q&A Session Summary Question: Performance in Chile between premium and mainstream beer - The mix between premium and mainstream beer remained stable, with a soft industry outlook expected for the year [25][26] Question: Price elasticity in Chile - Price increases of 4.9% were implemented, with management indicating that they aim to recover margins post-pandemic [30][31] Question: Argentina's performance and expectations - Argentina saw a significant decrease in volumes in earlier quarters, but Q4 showed gradual improvements [37][39] Question: Margin recovery outlook for 2025 and 2026 - Management indicated that margin recovery would depend on external factors, particularly exchange rates, and emphasized revenue management efforts [48][50] Question: Wine division performance and outlook - The wine division is recovering, particularly in exports, but remains below pre-pandemic levels [55][56] Question: Impact of recent blackout in Chile - The blackout did not significantly affect operations, with only one shift of production lost [66] Question: CapEx expectations - CapEx is expected to be slightly above inflation and depreciation, with a focus on efficiencies rather than capacity expansion [71][72] Question: Financial debt over EBITDA evaluation - The company is comfortable with its current levels of net financial debt over EBITDA, which improved to 1.8 times [81] Question: Cost inflation outlook in Chile - Cost inflation is volatile, and the ability to increase prices will depend on competition and brand strength [88][89] Question: Competition regarding price increases in the beer market - The industry has generally followed price increases, with a focus on rationalizing promotions [92][93] Question: Future efficiency plans post-HerCCUles - The company will continue to focus on profitability and efficiency in its new strategic plan, building on the successes of HerCCUles [96][98]

Industry Overview - The Zacks Beverages – Alcohol industry is facing rising costs due to inflationary pressures on labor, transportation, and raw materials, which are straining margins and profitability [1][7][8] - Newly imposed tariffs by President Donald Trump are expected to disrupt the U.S. beverage alcohol market, increasing prices for imported brands and potentially reducing consumer demand [2][10][11] Market Trends - Despite challenges, the alcohol industry is experiencing strong growth driven by premiumization, with consumers seeking distinctive, high-quality beverages [3][12] - Trending segments include ready-to-drink (RTD) spirits, canned wine and cocktails, hard seltzers, cider, and flavored malt beverages, reshaping the market [3][13] Company Strategies - Key players like Molson Coors, The Boston Beer Company Inc., and Compañía Cervecerías Unidas are prioritizing innovation and product development to align with shifting consumer preferences [4][12] - Companies are making strategic investments in premiumization, technology, and product innovation to position themselves for sustained growth [4] Company Performance - Molson Coors has seen a 13% decline in stock over the past year but is focused on a revitalization plan aimed at sustainable growth through innovation and premiumization [20][21] - The Boston Beer Company has experienced a 35.9% decline in stock over the past year, with a focus on revitalizing its brands and expanding its Beyond Beer segment [22][23] - Compañía Cervecerías Unidas has risen 9.4% in the past year, with a strong portfolio and a consensus estimate suggesting growth of 6.4% in sales and 12.3% in earnings for 2025 [24][25] Industry Performance Metrics - The Zacks Beverages – Alcohol industry has underperformed the broader sector and the S&P 500, with a collective decline of 26.8% over the past year compared to a 22.3% increase in the S&P 500 [17] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 13.89X, significantly lower than the S&P 500's 22.52X [18]

Industry Overview - The Zacks Beverages – Alcohol industry includes producers, importers, exporters, marketers, and sellers of various alcoholic beverages such as beer, wine, spirits, and non-alcoholic drinks [3] - The industry is currently facing significant cost pressures due to inflation affecting labor, transportation, and raw materials, which have strained margins and profitability [4][5] Cost Pressures - Rising ingredient costs, particularly for grains and fruits, along with increased shipping and packaging expenses, have driven up production costs [4] - Higher advertising, promotional, and SG&A expenses are adding to financial strain, with many industry players expecting these pressures to persist [5] Tariff Impacts - Newly imposed tariffs by President Donald Trump, including a 25% tariff on imports from Canada and Mexico and a 10% tariff on goods from China, are expected to increase prices for imported alcoholic beverages, potentially reducing consumer demand [6] - The tariffs may disrupt supply chains, leading to product shortages and increased operational expenses [6] Market Trends - Despite challenges, the alcohol industry is experiencing growth driven by premiumization, with consumers seeking high-quality and distinctive beverages [2] - Trending segments include ready-to-drink (RTD) spirits, canned wine, hard seltzers, and flavored malt beverages, prompting brands to prioritize innovation and product development [7] Industry Performance - The Zacks Beverages – Alcohol industry has underperformed the broader sector and the S&P 500, with a collective decline of 26.8% over the past year [11] - The industry currently holds a Zacks Industry Rank of 233, placing it in the bottom 6% of over 250 Zacks industries, indicating dull near-term prospects [8][9] Valuation Metrics - The industry is trading at a forward 12-month price-to-earnings (P/E) ratio of 13.89X, significantly lower than the S&P 500's 22.52X and the sector's 16.84X [13] Company Highlights - **Molson Coors (TAP)**: The company has seen a 13% decline in stock price over the past year but is focused on revitalization and premiumization strategies [15][16] - **Boston Beer (SAM)**: The largest premium craft brewer in the U.S. has experienced a 35.9% decline in stock price, with a focus on brand revitalization and cost-saving measures [18][19] - **Compania Cervecerias Unidas (CCU)**: This leading multi-category beverage company has seen a 9.4% increase in stock price over the past year, with growth projections of 6.4% in sales and 12.3% in earnings for 2025 [21][22]

Financial Data and Key Metrics Changes - In Q2 2024, the company's revenues contracted by 8.6%, primarily due to a 12.7% drop in volumes, partially offset by a 4.6% increase in average prices in Chilean pesos [6][7] - Gross profit decreased by 15.8%, and the gross margin as a percentage of net sales deteriorated by 338 basis points due to higher cost pressures from currency depreciation [7] - EBITDA reached CLP10,053 million, representing a 78.7% decrease, with an EBITDA margin contraction of 629 basis points [7][8] - Net income reported a loss of CLP15,888 million, excluding a non-recurring gain from land sale, which would have resulted in a gain of CLP5,040 million if included [7][8] Business Line Data and Key Metrics Changes - In the Chile Operating segment, net sales contracted by 5.5%, driven by an 8.4% volume drop, partially offset by a 3.1% growth in average prices [8] - The International Business Operating segment saw a 22.1% drop in net sales, with a 27.2% reduction in volumes, partially offset by a 7% rise in average prices [9] - The Wine Operating segment experienced a revenue increase of 12%, driven by an 11.9% rise in average prices, with export volumes expanding by 9.1% [10] Market Data and Key Metrics Changes - The Chilean peso and Argentine peso depreciated by 16.8% and 255.1% against the U.S. dollar, respectively, increasing U.S. dollar-denominated costs [6] - Despite the challenging economic environment, the company maintained overall market share in both Chile and Argentina [6] Company Strategy and Development Direction - The company is focusing on revenue management and cost control measures under the HerCCUles plan to return to profitability [6][7] - Management emphasized the importance of a multi-category beverage strategy to leverage synergies and improve financial performance [48] Management Comments on Operating Environment and Future Outlook - Management noted that the second quarter was heavily impacted by adverse weather conditions and a challenging economic context in Chile and Argentina [5][6] - Looking ahead, management expressed cautious optimism for volume recovery in July and anticipated a gradual improvement in the second half of 2024 [14][38] Other Important Information - The company does not expect to have any non-recurring asset sales similar to the land sale in the second half of the year [40] - Management confirmed that they do not hedge raw materials due to the unpredictability of commodity prices [42] Q&A Session Summary Question: Impact of weather on volume performance - Management acknowledged that weather significantly affected beer volumes, with extreme conditions in May and June leading to a notable decline [12][14] Question: Competitors' pricing actions - Management indicated that competitors are facing similar cost pressures and are likely to follow price increases to recover margins [16][18] Question: Transition from Coke distribution in Argentina - Management reported a smooth transition to their own distribution system, which has resulted in positive financial outcomes [20][21] Question: Volume and pricing expectations in Argentina - Management expressed uncertainty about volume recovery but anticipated a gradual improvement towards the end of 2024 [38] Question: Cost outlook for the remainder of the year - Management noted that while some raw material costs have softened, the overall outlook remains volatile due to currency fluctuations [34][35] Question: Measures to recover margins - Management highlighted cost control, revenue management initiatives, and efficiency improvements as key strategies to enhance profitability [36][37]

Financial Performance - The company's cost of sales decreased by 9.0% from CLP 1,514,925 million in 2022 to CLP 1,378,612 million in 2023, primarily due to a 5.7% decrease in cost of sales per hectoliter and a 3.4% decrease in sales volumes [102]. - Adjusted Operating Result increased by 9.4% from CLP 231,431 million in 2022 to CLP 253,283 million in 2023, with the margin rising from 8.5% to 9.9% [106]. - The Adjusted Operating Result for the Chile segment increased by 30.5% from CLP 156,753 million in 2022 to CLP 204,586 million in 2023, with the margin increasing from 9.4% to 11.6% [109]. - The International Business segment's Adjusted Operating Result decreased by 8.5% from CLP 62,913 million in 2022 to CLP 57,553 million in 2023, although the margin improved from 8.0% to 9.8% [110]. - The Wine segment's Adjusted Operating Result decreased by 48.7% from CLP 39,046 million in 2022 to CLP 20,019 million in 2023, with the margin declining from 13.2% to 7.9% [110]. - Net sales decreased by 5.4% from CLP 2,711,435 million in 2022 to CLP 2,565,556 million in 2023, attributed to a 3.4% decline in volumes and a 2.0% decrease in average prices [124]. - Net income for 2023 was CLP 118,425 million, down 10.6% from CLP 135,484 million in 2022 [120]. - Net income attributable to non-controlling interests dropped 26.2% from CLP 17,316 million in 2022 to CLP 12,773 million in 2023 [116]. Expenses and Financial Metrics - Marketing, Selling, Distribution and Administrative (MSD&A) expenses decreased by 3.3% from CLP 967,924 million in 2022 to CLP 936,272 million in 2023 [105]. - Net Financial Expenses declined by 29.1% from a loss of CLP 53,060 million in 2022 to a loss of CLP 37,621 million in 2023, attributed to higher interest income [111]. - Other Income by Function decreased by 16.4% from CLP 5,285 million in 2022 to CLP 4,420 million in 2023, primarily due to a decrease in income from leases [106]. - Other Expenses decreased by 25.9% from CLP 2,440 million in 2022 to CLP 1,809 million in 2023, mainly due to lower asset write-offs [106]. - Cash flows from operating activities in 2023 were CLP 1,059,814 million, an increase of 25.8% from CLP 843,182 million in 2022 [113]. - Cash used in investment activities totaled CLP 137,232 million in 2023, a decrease from CLP 236,457 million in 2022 [113]. - Long-term indebtedness as of December 31, 2023, amounted to CLP 1,329,262 million, with a consolidated interest coverage ratio of 4.93 [130]. - The company maintained a consolidated financial leverage ratio of 0.50 as of December 31, 2023 [130]. Economic and Market Conditions - In 2023, the Chilean economy experienced a GDP growth of 0.2% and an inflation rate of 3.9%, compared to a GDP growth of 2.1% and inflation of 12.8% in 2022 [137]. - The average unemployment rate in Chile was 8.7% in 2023, reflecting a deterioration compared to 7.9% in 2022 [137]. - The company anticipates GDP growth in Chile to improve in 2024, with forecasts between 2.0% and 3.0% [137]. - Price volatility of primary raw materials such as aluminum, malt, sugar, and PET may impact the company's operations [137]. - The Chilean peso experienced a depreciation of 2.5% in 2023, following a trend of fluctuations in exchange rates [137]. Strategic Initiatives - The execution of the regional plan "HerCCUles" contributed to improved operating results, focusing on revenue management and efficiency gains [122]. - The company is investing in new technologies and digital transformation, including the development of machine-learning algorithms for customer analysis and logistics optimization [136]. - The company launched a proprietary B2B platform "Mi Carro" in Chile and expanded its B2C platform "La Barra" to enhance consumer experience [134]. - The company has established technical agreements with Heineken for production assistance, enhancing operational capabilities [134]. - The company has made significant advancements in e-commerce platforms to improve sales and distribution processes [134].