pania Cervecerias Unidas S.A.(CCU) - 2024 Q4 - Annual Report

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].