6-K 1 ccupr3q16_6k.htm CCU REPORTS CONSOLIDATED THIRD QUARTER 2016 RESULTS ccupr3q16_6k.htm - Generated by SEC Publisher for SEC Filing


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 6-K

     Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934

COMPANIA CERVECERIAS UNIDAS S.A.
(Exact name of Registrant as specified in its charter)
UNITED BREWERIES COMPANY, INC.
(Translation of Registrant’s name into English)

Republic of Chile
(Jurisdiction of incorporation or organization)
Vitacura 2670, 23rd floor, Santiago, Chile
(Address of principal executive offices)
 _________________________________________

Securities registered or to be registered pursuant to section 12(b) of the Act.

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X Form 40-F ___

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ___ No X

 

 

CCU REPORTS CONSOLIDATED THIRD QUARTER 2016 RESULTS1;2;3

 

Santiago, Chile, November 8, 2016 – CCU announced today its consolidated financial results for the third quarter ended September 30, 2016:

·          Consolidated Volumes increased 2.5%. The Chile Operating segment increased 3.5%, the International Business Operating segment showed a 1.0% increase and the Wine Operating segment a decrease of 1.8% this quarter.

·          Net sales increased 1.1% as a consequence of 2.5% higher consolidated Volumes partially compensated by 1.4% lower average prices.

·          Gross profit decreased 3.7% explained by a 1.1% increase in Net Sales and a 6.2% increase in Cost of sales.

·          EBITDA declined 11.3%, due to decreases in the International Business and Wine Operating segments, partially offset by an increase in the Chile Operating segment.

·          Net income decreased 41.2% this quarter.

·          Earnings per share decreased 41.2% due to a lower Net income.

 

 

Key figures

Q3´16

Q3´15 (4)

Total
change %

(In ThHL or CLP million unless stated otherwise)

Volumes

5,469

5,334

2.5

Net sales

356,817

352,912

1.1

Gross profit

176,349

183,039

(3.7)

EBIT

30,413

37,167

(18.2)

EBITDA

51,208

57,737

(11.3)

Net income for the period

12,158

20,684

(41.2)

Earnings per share

32.9

56.0

(41.2)

 

Key figures

YTD '16

YTD '15 (4)

Total
change %

(In ThHL or CLP million unless stated otherwise)

Volumes

17,238

16,978

1.5

Net sales

1,078,915

1,046,419

3.1

Gross profit

558,900

564,791

(1.0)

EBIT

119,244

135,674

(12.1)

EBITDA

178,773

194,620

(8.1)

Net income for the period

63,025

82,521

(23.6)

Earnings per share

170.6

223.3

(23.6)

 

 

 

1 The consolidated figures of the following release are expressed in nominal Chilean Pesos and according to the rules and instructions of the Chilean Superintendence of Securities and Insurance ("SVS"), which are in accordance with IFRS.

2 For an explanation of the terms used please refer to the Glossary in Further Information and Exhibits. Figures in tables and exhibits have been rounded off and may not add up exactly to the total shown.

3 All references in this Press Release shall be deemed to refer to Q3’16 figures compared to Q3’15 figures, unless otherwise stated.

4 See Exhibit 6: Results 2015 as previously reported and current adjustments.

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 1 of 17

 

 

COMMENTS FROM THE CEO

We are pleased to see that in the third quarter of 2016 CCU´s volumes have recovered since previous quarter, with an overall volume increase of 2.5%, where the strongest driver was our Chile Operating segment. This volume growth is an important achievement in times of adverse macroeconomic conditions, especially in our two largest markets Chile and Argentina, where private consumption levels are under pressure. The volume growth in Chile, following the recent restructuring, has resulted in positive EBITDA growth of 6.4%. In the International Business Operating segment our EBITDA decreased CLP 5,496 million, due to two main effects: the devaluation of the Argentine peso, and price increases in Argentina lagging behind the high levels of inflation. Alltogether, consolidated EBITDA decreased 11.3% from CLP 57,737 million to CLP 51,208 million, and EBITDA margin contracted 201 bps from 16.4% to 14.4%.

The Chile Operating segment EBITDA increased 6.4%, as a result of a top-line growth of 10.6%, driven by volumes and higher average prices. The macroeconomic environment was characterized by a weak IMACEC5 growth of 1.4%. Nevertheless, we managed to maintain our gross margin level, which for the quarter reached 49.9%. We are beginning to capture efficiencies as a result of the recent restructuring that encompassed combining the route to market of the beer and non-alcoholic categories in the whole country. All-in, our EBITDA margin decreased 70 bps from 18.4% to 17.7%. As part of the ExCCelencia CCU program, as of this quarter the results of the transport, sales and packaging units are being reported as part of the Chile Operating segment. This change has also been reflected in the 2015 figures we present in this press release.

The International Business Operating segment, which consists of the operations in Argentina, Uruguay and Paraguay, reported an EBITDA decrease of CLP 5,496 million. Despite a 1.0% increase in volumes, our top-line decreased 13.2% in CLP terms due to the 65.2% devaluation of the Argentine peso against the CLP. In addition, the 61.7% devaluation of the Argentine peso against the USD has impacted our USD denominated costs. On top of this, inflation levels in Argentina of more than 40%6 have increased our expenses, and our price increases and efficiencies were not able to compensate this effect. As part of our ExCCelencia CCU program, in order to optimize our organizational structure in Uruguay, we have incurred restructuring costs of CLP 988 million. As a result of the beforementioned factors, EBITDA margin decreased from 8.0% to 2.9%.

The Wine Operating segment EBITDA decreased from CLP 13,102 million to CLP 12,074 million, which is a decrease of 7.9%. Top line decreased 3.1% as a result of a 1.8% decrease in volumes, combined with a negative exchange rate effect of CLP 652 mln as the CLP appreciated 2.2% against the USD, affecting our export revenues. Volumes decreased 1.8%, as export volumes decreased, partially offset by growth in the domestic business. This quarter our cost of sales per hectoliter has increased 3.8%, due to the higher cost of wine from the 2016 harvest. All of this has lead to a decrease in gross margin from 46.4% to 43.6%. All-in, EBITDA margin contracted 116 bps, from 23.8% to 22.6%.

We are confident that we are on the right path in Chile, given the positive volumes and EBITDA trend we are observing. Regarding the International Business Operating segment, we believe we need additional revenue management efforts in Argentina to keep up with the high levels of inflation. For the coming periods, the wine business will continue to be affected by the higher cost of wine and by the decreasing exchange rate, while building our performance on the positive development of the business. In 2016, with the restructurings that we have completed as part of our ExCCelencia CCU program, we have made the necessary adjustments to move the company in the right direction, making our organization more lean and increasing our execution power for the future ahead of us.

 

 

5 IMACEC = Índice Mensual de Actividad Económica (Monthly Industrial Index on Economic Activity) is calculated by Chile´s Central Bank.

6 According to internal estimates, Last Twelve Months ended September 30, 2016

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 2 of 17

 

 

 

CONSOLIDATED INCOME STATEMENT HIGHLIGHTS (Exhibit 1 and 2)

 

NET SALES

 

Q3’16

Increased 1.1% to CLP 356,817 million as a result of 2.5% higher consolidated volumes, partially offset by 1.4% lower average prices in CLP terms. The Chile Operating segment contributed with a growth of 10.6% in Net sales as average prices increased 6.9%, and volumes increased 3.5%. The International Business Operating segment showed a 13.2% decrease in Net sales in CLP terms, due to an increase in volumes of 1.0% and a decrease in prices in CLP terms of 14.1%. The Wine Operating segment showed a Net sales decrease of 3.1% as average price and volumes decreased 1.4% and 1.8% respectively.

 

2016

Accumulated Net sales increased 3.1 % to CLP 1,078,915  million as a result of 1.5% higher consolidated volumes, and 1.6% higher average prices.

 

 

Net sales by Operating segment

 

 

Net sales (million CLP)

 

Q3´16

Mix

Q3´15 (1)

Mix

Total Change%

1. Chile Operating segment

221,379

62.0%

200,106

56.7%

10.6

2. International Business Operating segment

86,700

24.3%

99,895

28.3%

(13.2)

3. Wine Operating segment

53,329

14.9%

55,051

15.6%

(3.1)

4. Other/Eliminations

(4,590)

(1.3)%

(2,140)

-0.6%

-

TOTAL

356,817

100.0%

352,912

100.0%

1.1

 

 

Net sales (million CLP)

 

YTD '16

Mix

YTD '15 (1)

Mix

Total Change%

1. Chile Operating segment

697,997

64.7%

644,008

61.5%

8.4

2. International Business Operating segment

238,044

22.1%

265,291

25.4%

(10.3)

3. Wine Operating segment

150,997

14.0%

142,408

13.6%

6.0

4. Other/Eliminations

(8,122)

(0.8)%

(5,287)

(0.5)%

-

TOTAL

1,078,915

100.0%

1,046,419

100.0%

3.1

 

(1)    See Exhibit 6: Results 2015 as previously reported and current adjustments.

 

 

GROSS PROFIT

 

Q3’16

Decreased 3.7% to CLP 176,349 million as a result of 6.2% higher Cost of sales and 1.1% higher Net sales. Cost of sales, as a percentage of Net sales, increased from 48.1% to 50.6% as the Argentine peso devaluated 61.7% against the USD, impacting our USD denominated Cost of sales, and due to the increase in the cost of wine now that the first wines of the 2016 harvest have entered our sales. As a consequence, Gross profit as a percentage of Net sales decreased from 51.9% to 49.4%, a decrease of 244 bps.

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 3 of 17

 

 

2016

Gross profit decreased 1.0% to CLP 558,900 million and, as a percentage of Net sales, decreased from 54.0 % to 51.8 %.

 

EBIT

 

Q3’16

Decreased 18.2% to CLP 30,413 million. The EBIT margin decreased from 10.5% to 8.5% as Gross profit as a percentage of Net Sales decreased 244 bps, and MSD&A as a percentage of Net sales decreased 25 bps.

 

2016

EBIT decreased 12.1% to CLP 119,244 million and EBIT margin decreased from 13.0% to 11.1%.

 

 

EBIT and EBIT margin by Operating segment

 

 

EBIT (million CLP)

EBIT margin

 

Q3´16

Mix

Q3´15 (1)

Mix

Total Change%

Q3´16

Q3´15 (1)

Total Change(bps)

1. Chile Operating segment

23,867

78.5%

22,607

60.8%

5.6

10.8%

11.3%

(52)

2. International Business Operating segment

(592)

(1.9)%

4,084

11.0 %

(114.5)

(0.7)%

4.1 %

(477)

3. Wine Operating segment

10,269

33.8%

11,146

30.0%

(7.9)

19.3%

20.2%

(99)

4. Other/Eliminations

(3,131)

(10.3)%

(671)

(1.8)%

-

-

-

-

TOTAL

30,413

100.0%

37,167

100.0%

(18.2)

8.5%

10.5%

(201)

 

 

EBIT (million CLP)

EBIT margin

 

YTD '16

Mix

YTD '15 (1)

Mix

Total Change%

YTD '16

YTD '15 (1)

Total Change(bps)

1. Chile Operating segment

97,866

82.1%

107,085

78.9%

(8.6)

14.0%

16.6%

(261)

2. International Business Operating segment

25

0.0 %

10,607

7.8 %

(99.8)

0.0 %

4.0 %

(399)

3. Wine Operating segment

28,864

24.2%

24,323

17.9%

18.7

19.1%

17.1%

204

4. Other/Eliminations

(7,511)

(6.3)%

(6,340)

(4.7)%

-

-

-

-

TOTAL

119,244

100.0%

135,674

100.0%

(12.1)

11.1%

13.0%

(191)

(1) See Exhibit 6: Results 2015 as previously reported and current adjustments.

 

EBITDA

 

Q3’16

Decreased 11.3% to CLP 51,208 million and EBITDA margin decreased from 16.4% to 14.4%.

 

2016 

EBITDA decreased 8.1% to CLP 178,773 million and EBITDA margin decreased from 18.6% to 16.6%.

 

 

 

EBITDA and EBITDA margin by Operating segment

 

 

EBITDA (million CLP)

EBITDA margin

 

Q3´16

Mix

Q3´15 (1)

Mix

Total Change%

Q3´16

Q3´15 (1)

Total Change(bps)

1. Chile Operating segment

39,137

76.4%

36,784

63.7%

6.4

17.7%

18.4%

(70)

2. International Business Operating segment

2,534

4.9 %

8,030

13.9 %

(68.4)

2.9 %

8.0 %

(512)

3. Wine Operating segment

12,074

23.6%

13,102

22.7%

-7.9

22.6%

23.8%

(116)

4. Other/Eliminations

(2,536)

(5.0)%

(180)

(0.3)%

1311.0

-

-

-

TOTAL

51,208

100.0%

57,737

100.0%

(11.3)

14.4%

16.4%

(201)

 

 

EBITDA (million CLP)

EBITDA margin

 

YTD '16

Mix

YTD '15 (1)

Mix

Total Change%

YTD '16

YTD '15 (1)

Total Change(bps)

1. Chile Operating segment

141,435

79.1%

148,416

76.3%

(4.7)

20.3%

23.0%

(278)

2. International Business Operating segment

9,109

5.1 %

21,293

10.9 %

(57.2)

3.8 %

8.0 %

(420)

3. Wine Operating segment

34,215

19.1%

29,970

15.4%

14.2

22.7%

21.0%

161

4. Other/Eliminations

(5,987)

(3.3)%

(5,059)

(2.6)%

18.3

-

-

-

TOTAL

178,773

100.0%

194,620

100.0%

(8.1)

16.6%

18.6%

(203)

(1) See Exhibit 6: Results 2015 as previously reported and current adjustments.

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 4 of 17

 

 

NON-OPERATING RESULT

 

Q3’16

Decreased CLP 9,024 million from a loss of CLP 413 million to a loss of CLP 9,437 million mainly explained by:

·                Equity and income of JVs and associated which decreased CLP 1,144 million, from a loss of CLP 1,187 million to a loss of CLP 2,331 million, mostly due to the investments in the operations in Colombia and the closing of the Foods plant in Talca following the divestment of the food brands Natur and Calaf as announced in November 2015.

·                Other gains/(losses) which decreased CLP 9,095 million, from a gain of CLP 7,105 million to a loss of CLP 1,990 million, mostly due to negative results on our hedges related to the impact of foreign exchange rate fluctuations on taxes on our foreign currency denominated assets.

2016

Decreased CLP 23,023 million from a loss of CLP 6,433 million to a loss of CLP 29,456 million mainly explained by:

·                Equity and income of JVs and associated which decreased CLP 2,341 million, from a loss of CLP 2,999 million to a loss of CLP 5,340 million, mostly due to the investments in the operations in Colombia.

·                Foreign currency exchange differences which decreased CLP 1,640 million, from a gain of CLP 394 million to a loss of CLP 1,246 million, mostly due to the impact of the devaluation of the Argentine peso on our USD denominated assets and liabilities in Argentina.

·                Other gains/(losses) which decreased CLP 19,643 million, from a gain of CLP 9,212 million to a loss of CLP 10,431 million, mostly due to negative results on our hedges related to the impact of foreign exchange rate fluctuations on taxes on our foreign currency denominated assets.

 

INCOME TAXES

 

Q3’16

Decreased CLP 7,718 million. Higher income taxes due to the increase of the First Category Income tax rate in Chile from 22.5% to 24.0%, were offset by the lower taxable income, and by the positive effect of foreign exchange fluctuations on taxes.

 

2016

Decreased CLP 21,718 million. Higher income taxes due to the increase of the First Category Income tax rate in Chile from 22.5% to 24.0%, were offset by the lower taxable income, and by the positive effect of foreign exchange fluctuations on taxes.

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 5 of 17

 

 

NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY

 

Q3´16   

Decreased 41.2% to CLP 12,158 million, as a result of a lower net income after tax, and a higher minority interest in our water business.

 

2016     

Decreased 23.6% to CLP 63,025 million, as a result of a lower net income after tax, and a higher minority interest in our water and our wine business.

 

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 6 of 17

 

 

 

THIRD QUARTER OPERATING SEGMENT HIGHLIGHTS (Exhibit 3)

1.    CHILE

                 

Net sales increased 10.6% to CLP 221,379 million as a result of 3.5% higher volumes, combined with 6.9% higher average prices.

EBIT increased 5.6% to CLP 23,867 million mainly explained by a 9.3% higher gross profit and 11.6% higher MSD&A expenses. Gross profit increased 9.3% as a result of 10.6% Net Sales growth, partially offset by 12.0% higher Cost of sales. All-in we maintained a relatively stable EBIT margin decreasing 52 bps from 11.3% to 10.8%.

EBITDA increased 6.4% to CLP 39,137 million and the EBITDA margin decreased from 18.4% to 17.7%.

Comments: The Chile Operating segment experienced a volume growth of 3.5% driven by both our beer and non-alcoholic category. Despite the slow macroeconomic environment we managed to maintain our gross margin level, which for the quarter reached 49.9%. We are beginning to capture efficiencies as a result of the recent restructuring that encompassed combining the route to market of the beer and non-alcoholic categories in the whole country. All-in, our EBITDA margin decreased 70 bps from 18.4% to 17.7%.

 

We continued with our long term brand building strategy across all our categories, investing in our brands throughout the whole country. In the beer category we launched our new packaging for Sol, the 269cc sleek can, Chile being the first market to launch this innovation.

 

In the non-alcoholic category we launched Pepsi Zero, in order to strengthen the Pepsi brand in Chile, by increasing our presence in the sugarfree category, which is growing its preference amongst Chilean consumers. It is supported by the marketing campaign “Change Your Routine”. Lipton Ice Tea has launched its new flavor Peach, based on black tea with peach flavor and zero percent sugar.

 

In spirits we launched Campanario Sparkling Sour, the first sparkling pisco sour, which represents a revolution in the Chilean cocktail industry, and we launched a limited edition of Mistral Ice Dry Black. We also published the book “Horcón Quemado Legend, heritage and alchemy: a trip to the origin” describing the history of the brand that goes back to the year 1909.

 

We were ranked by the “Reputation Institute” among the top 10 companies in terms of consumer perception regarding more than 100 companies across 15 different sectors. We have won the “Impulsa Female Talent” prize for our exceptional management of gender matters, and the percentage of women in the organization and management positions. In recognition of our excellent relationship with our labor unions we have been awarded the “Clotario Blest 2016” prize.

 

We continue our exceptional partnership with the Chilean police force “Carabineros de Chile” to promote responsible consumption related to the Chilean national holiday of September 18, by means of a Safety campaign “Toma Conciencia”, directed at pedestrians, cyclists and car drivers.

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 7 of 17

 

 

2.    INTERNATIONAL BUSINESS

 

Net sales measured in Chilean pesos, decreased 13.2% as a result of 14.1% lower average prices in CLP terms and 1.0% higher sales Volumes.

 

EBIT measured in Chilean pesos, decreased to negative CLP 592 million as a result of 13.2% lower Net sales combined with 5.5% lower Cost of sales, partially offset by 12.8% lower MSD&A expenses in Chilean pesos. Cost of sales as a percentage of Net sales increased to 45.6% from 41.9%, mostly due to the 61.7% devaluation of the Argentine peso, 3.4% of the Uruguayan peso, and 4.6% devaluation of the Paraguayan guaraní, affecting the USD denominated cost of sales. MSD&A as a percentage of Net sales increased from 53.9% to 54.2%. The EBIT margin decreased from 4.1% to negative 0.7%.

 

EBITDA measured in Chilean pesos, decreased CLP 5,496 million to CLP 2,534 million and the EBITDA margin decreased from 8.0% to 2.9%.

Comments: The 1.0% volume increase in the International Business Operating segment was mostly driven by Argentina, where we have managed to increase our market share, thereby outperforming the industry. The 61.7% devaluation has strongly affected our USD denominated costs, and inflation levels of more than 40% have absorbed a large proportion of our price increase in Argentina. As part of the restructuring plan, in Uruguay we have changed to an indirect distribution system, being effective as of September, incurring restructuring costs of CLP 988 million.

In Argentina, we are active with our marketing campaign for our brand Schneider with the launch of three new commercials of “Lanzadores de Schneider” and we have sponsored the “Bue” music festival in Buenos Aires with our brand Heineken. For our cider brand Real, we have launched berries flavor. We participated in the Day of Responsible Consumption, where our employees visited several cities in the country to improve awareness regarding responsible consumption and sales of alcoholic beverages.

In Paraguay we have launched “Heineken Draft”, a new product proposal that allows to enjoy the freshness and quality of the beer, and we have also launched a draft beer for the craft brand Sajonia.

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 8 of 17

 

 

 

3.    WINE

 

Net sales decreased 3.1% to CLP 53,329 million due to 1.8% lower sales Volumes7 coupled with 1.4% lower average prices.

 

EBIT decreased 7.9% to CLP 10,269 million mainly explained by 3.1% lower Net sales, and a 1.9% Cost of sales increase, partially offset by 7.3% lower MSD&A expenses. Cost of sales as a percentage of Net sales increased from 53.6% to 56.4%, due to the higher cost of wine related to the 2016 harvest. MSD&A as a percentage of Net sales decreased from 26.1% to 25.0% as a result of efficiencies obtained. The EBIT margin decreased from 20.2 % to 19.3 %.

 

EBITDA decreased 7.9% to CLP 12,074 million and the EBITDA margin decreased 116 bps to 22.6%.

 

Comments: In our Chilean Domestic market Net sales increased 4.3% to CLP 19,399 million as a result of 2.2% higher volumes and 2.1% higher prices in all the categories. The 2.2% volume increase is mainly explained by a growing industry and a good execution at the points of sales.

 

In the Export business Net sales decreased 7.0% to CLP 32,983 million as a result of 5.3% lower sales volume and 1.8% lower prices in CLP terms, mainly caused by the appreciation of the Chilean peso against the US dollar. The decrease in volumes was partially caused by the high basis of comparison in the United States. Regardless of this effect we see healthy volumes in the Export business.

 

In addition to the recently inaugurated biogas plant of the vineyard San Pedro in Molina, we have initiated the operation of a hydroelectrical central placed at our vineyard Tarapacá, that will generate 250 kW of electric power to supply the warehouse operation of the vineyard, demonstrating our commitment to sustainability of our operations.

Celebrating Chile´s national holiday of September 18, we have launched a limited edition of our Gato Cabernet Sauvignon in 1.5 liter format, showing the colors of the Chilean flag.

For the second consecutive year, our wine “1865” of our vineyard San Pedro was identified as top 7 best known wine brands in China, recognizing its sales in the country, continuous leadership and growth over the last few years.

 

7 Excludes bulk wine.

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 9 of 17

 

 

 

FURTHER INFORMATION AND EXHIBITS

 

ABOUT CCU

 

CCU is a diversified beverage company operating principally in Chile, Argentina, Bolivia, Colombia, Paraguay and Uruguay. CCU is the largest Chilean brewer, the second-largest Chilean soft drinks producer and the largest Chilean water and nectar producer, the second-largest Argentine brewer, the second-largest Chilean wine producer and the largest pisco distributor. It also participates in the HOD, functional drinks and rum industries in Chile, in the beer, water and soft drinks industries in Uruguay, and in the soft drinks, water and nectar industries and beer distribution in Paraguay and Bolivia. The Company has licensing and / or distribution agreements with Heineken Brouwerijen B.V., Anheuser-Busch Incorporated, PepsiCo Inc., Schweppes Holdings Limited, Guinness Brewing Worldwide Limited, Société des Produits Nestlé S.A., Pernod Ricard and Coors Brewing Company.

 

CAUTIONARY STATEMENT

 

Statements made in this press release that relate to CCU’s future performance or financial results are forward-looking statements, which involve known and unknown risks and uncertainties that could cause actual performance or results to materially differ. We undertake no obligation to update any of these statements. Persons reading this press release are cautioned not to place undue reliance on these forward-looking statements. These statements should be taken in conjunction with the additional information about risk and uncertainties set forth in CCU’s annual report on Form 20-F filed with the US Securities and Exchange Commission and in the annual report submitted to the SVS and available in our web page.

 

GLOSSARY

 

Operating segments

The Operating segments are defined with respect to its revenues in the geographic areas of commercial activity:

 

·         Chile: This segment commercializes Beer, Non Alcoholic Beverages and Spirits in the Chilean market, and also includes the results of Transportes CCU Limitada, Comercial CCU S.A., CRECCU S.A. and Fábrica de Envases Plásticos S.A.

·         International Business: This segment commercializes Beer, Cider, Non Alcoholic Beverages and Spirits in the Argentinean, Uruguayan and Paraguayan market.

·         Wine: This segment commercializes Wine, mainly in the export market reaching over 80 countries.

·         Other/Eliminations: It considers the non-allocated corporate overhead expenses and eliminations of transactions between segments.

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 10 of 17

 

 

Cost of sales

Formerly referred to as Cost of Goods Sold (COGS), Cost of sales includes direct costs and manufacturing expenses.

 

Earnings Per Share (EPS)

Net profit divided by the weighted average number of shares during the year.

 

EBIT

Stands for Earnings Before Interest and Taxes, and for management purposes it is defined, as earnings before other gains (losses), net financial expenses, equity and income of joint ventures, foreign currency exchange differences, results as per adjustment units and income taxes. EBIT is equivalent to Operating Result used in the 20-F Form.

 

EBITDA

EBITDA represents EBIT plus depreciation and amortization. EBITDA is not an accounting measure under IFRS. When analyzing the operating performance, investors should use EBITDA in addition to, not as an alternative for Net income, as this item is defined by IFRS. Investors should also note that CCU’s presentation of EBITDA may not be comparable to similarly titled indicators used by other companies. EBITDA is equivalent to ORBDA (Operating Result Before Depreciation and Amortization), used in the 20-F Form.

 

Exceptional Items (EI)

Formerly referred to as Non recurring items (NRI), Exceptional items are either income or expenses which do not occur regularly as part of the normal activities of the Company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature.

 

Gross Profit

Gross profit represents the difference between Net sales and Cost of sales

 

Marketing, Selling, Distribution and Administrative expenses (MSD&A)

MSD&A include marketing, selling, distribution and administrative expenses.

 

Net Debt

Total financial debt minus cash & cash equivalents.

 

Net Debt / EBITDA

The ratio is based on a twelve month rolling calculation for EBITDA.

 

Net income

Net profit attributable to parent company shareholder as per IFRS.

 

UF

The UF is a monetary unit indexed to the CPI variation in Chile.

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 11 of 17

 

 

Exhibit 1: Income Statement (Third Quarter 2016)

Third Quarter

2016

2015

Total

 

(CLP million)

Change %

Net sales

356,817

352,912

1.1

Cost of sales

(180,469)

(169,873)

6.2

% of net sales

50.6

48.1

 

Gross profit

176,349

183,039

(3.7)

MSD&A

(146,297)

(145,575)

0.5

% of net sales

41.0

41.2

 

Other operating income/(expenses)

361

(296)

(222.2)

Exceptional items

 

 

 

EBIT

30,413

37,167

(18.2)

EBIT margin

8.5

10.5

 

Net financial expenses

(4,066)

(4,191)

(3.0)

Equity and income of JVs and associated

(2,331)

(1,187)

96.4

Foreign currency exchange differences

(550)

(1,032)

(46.7)

Results as per adjustment units

(499)

(1,108)

(55.0)

Other gains/(losses)

(1,990)

7,105

(128.0)

Total Non-operating result

(9,437)

(413)

2,183.7

Income/(loss) before taxes

20,976

36,754

(42.9)

Income taxes

(3,729)

(11,447)

(67.4)

Net income for the period

17,248

25,307

(31.8)

 

 

 

 

Net income attributable to:

 

 

 

The equity holders of the parent

12,158

20,684

(41.2)

Non-controlling interest

5,089

4,623

10.1

 

 

 

 

EBITDA

51,208

57,737

(11.3)

EBITDA margin

14.4

16.4

-

 

 

 

 

OTHER INFORMATION

 

 

 

Number of shares

369,502,872

369,502,872

 

Shares per ADR

2

2

 

 

 

 

 

Earnings per share

32.9

56.0

(41.2)

Earnings per ADR

65.8

112.0

(41.2)

 

 

 

 

Depreciation

20,795

20,569

1.1

Capital Expenditures

42,099

35,869

17.4

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 12 of 17

 

 

Exhibit 2: Income Statement (Nine months ended on September 30, 2016)

YTD AS OF SEPTEMBER

2016

2015

Total

 

(CLP million)

Change %

Net sales

1,078,915

1,046,419

3.1

Cost of sales

(520,015)

(481,629)

8.0

% of net sales

48.2

46.0

 

Gross profit

558,900

564,791

(1.0)

MSD&A

(442,251)

(430,710)

2.7

% of net sales

41.0

41.2

 

Other operating income/(expenses)

2,595

1,594

62.8

EBIT

119,244

135,674

(12.1)

EBIT margin

11.1

13.0

 

Net financial expenses

(10,463)

(10,625)

(1.5)

Equity and income of JVs and associated

(5,340)

(2,999)

78.0

Foreign currency exchange differences

(1,246)

394

(416.2)

Results as per adjustment units

(1,976)

(2,415)

(18.2)

Other gains/(losses)

(10,431)

9,212

(213.2)

Total Non-operating result

(29,456)

(6,433)

357.9

Income/(loss) before taxes

89,788

129,242

(30.5)

Income taxes

(11,586)

(33,304)

(65.2)

Net income for the year

78,203

95,938

(18.5)

 

 

 

 

Net income attributable to:

 

 

 

The equity holders of the parent

63,025

82,521

(23.6)

Non-controlling interest

15,177

13,417

13.1

 

 

 

 

EBITDA

178,773

194,620

(8.1)

EBITDA margin

16.6

18.6

-

 

 

 

 

OTHER INFORMATION

 

 

 

Number of shares

369,502,872

369,502,872

 

Shares per ADR

2

2

 

 

 

 

 

Earnings per share

170.6

223.3

(23.6)

Earnings per ADR

341.1

446.7

(23.6)

 

 

 

 

Depreciation

59,528

58,946

1.0

Capital Expenditures

98,248

99,818

(1.6)

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 13 of 17

 

 

 

Exhibit 3: Segment Information (Third Quarter 2016)

 

1. Chile Operating segment (1)

 

2. International Business Operating segment

 

3. Wine Operating segment

Third Quarter

 

 

(In ThHL or CLP million unless stated otherwise)

2016

2015

Total %

 

2016

2015

Total %

 

2016

2015

Total %

Volumes

3,802

3,673

3.5

 

1,286

1,273

1.0

 

382

389

(1.8)

Net sales

221,379

200,106

10.6

 

86,700

99,895

(13.2)

 

53,329

55,051

(3.1)

Net sales (CLP/HL)

58,234

54,480

6.9

 

67,431

78,502

(14.1)

 

139,640

141,586

(1.4)

Cost of sales

(111,008)

(99,112)

12.0

 

(39,527)

(41,840)

(5.5)

 

(30,056)

(29,493)

1.9

% of net sales

50.1

49.5

 

 

45.6

41.9

 

 

56.4

53.6

 

Gross profit

110,371

100,994

9.3

 

47,173

58,055

(18.7)

 

23,273

25,558

(8.9)

% of net sales

49.9

50.5

 

 

54.4

58.1

 

 

43.6

46.4

 

MSD&A

(87,302)

(78,225)

11.6

 

(46,977)

(53,856)

(12.8)

 

(13,306)

(14,347)

(7.3)

% of net sales

39.4

39.1

 

 

54.2

53.9

 

 

25.0

26.1

 

Other operating income/(expenses)

798

(162)

(591.4)

 

(788)

(115)

587.8

 

303

(65)

(565.6)

EBIT

23,867

22,607

5.6

 

(592)

4,084

(114.5)

 

10,269

11,146

(7.9)

EBIT Margin

10.8

11.3

 

 

(0.7)

4.1

 

 

19.3

20.2

 

EBITDA

39,137

36,784

6.4

 

2,534

8,030

(68.4)

 

12,074

13,102

(7.9)

EBITDA Margin

17.7

18.4

 

 

2.9

8.0

 

 

22.6

23.8

 

       

 

      

 

      

 

4. Other/eliminations (1)

 

Total

 

      

Third Quarter

 

 

      

(In ThHL or CLP million unless stated otherwise)

2016

2015

Total %

 

2016

2015

Total %

 

      

Volumes

 

 

 

 

5,469

5,334

2.5

 

      

Net sales

(4,590)

(2,140)

114.5

 

356,817

352,912

1.1

 

      

Net sales (CLP/HL)

 

 

 

 

65,241

66,158

(1.4)

 

      

Cost of sales

122

572

(78.7)

 

(180,469)

(169,873)

6.2

 

      

% of net sales

 

  

 

 

50.6

48.1

 

 

      

Gross profit

(4,469)

(1,569)

184.9

 

176,349

183,039

(3.7)

 

      

% of net sales

 

 

 

 

49.4

51.9

 

 

      

MSD&A

1,289

852

51.3

 

(146,297)

(145,575)

0.5

 

      

% of net sales

 

  

 

 

41.0

41.2

 

 

      

Other operating income/(expenses)

49

46

6.0

 

361

(296)

(222.2)

 

      

EBIT

(3,131)

(671)

366.9

 

30,413

37,167

(18.2)

 

      

EBIT Margin

-

-

 

 

8.5

10.5

 

 

      

EBITDA

(2,536)

(180)

1,311.0

 

51,208

57,737

(11.3)

 

      

EBITDA Margin

-

-

 

 

14.4

16.4

 

 

      

 

(1)     See Exhibit 6: Results 2015 as previously reported and current adjustments.

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 14 of 17

 

 

Exhibit 4: Segment Information (Nine months ended on September 30, 2016)

 

1. Chile Operating segment (1)

 

2. International Business Operating segment

 

3. Wine Operating segment

YTD AS OF SEPTEMBER

 

 

(In ThHL or CLP million unless stated otherwise)

2016

2015

Total %

 

2016

2015

Total %

 

2016

2015

Total %

Volumes

12,331

12,037

2.4

 

3,850

3,908

(1.5)

 

1,058

1,034

2.3

Net sales

697,997

644,008

8.4

 

238,044

265,291

(10.3)

 

150,997

142,408

6.0

Net sales (CLP/HL)

56,606

53,504

5.8

 

61,833

67,892

(8.9)

 

142,741

137,673

3.7

Cost of sales

(329,953)

(291,837)

13.1

 

(104,410)

(107,656)

(3.0)

 

(84,141)

(78,601)

7.0

% of net sales

47.3

45.3

 

 

43.9

40.6

 

 

55.7

55.2

 

Gross profit

368,044

352,171

4.5

 

133,634

157,635

(15.2)

 

66,856

63,807

4.8

% of net sales

52.7

54.7

 

 

56.1

59.4

 

 

44.3

44.8

 

MSD&A

(271,959)

(245,358)

10.8

 

(132,890)

(148,119)

(10.3)

 

(38,566)

(39,578)

(2.6)

% of net sales

39.0

38.1

 

 

55.8

55.8

 

 

25.5

27.8

 

Other operating income/(expenses)

1,781

272

555.3

 

(719)

1,091

(165.9)

 

574

94

512.2

EBIT

97,866

107,085

(8.6)

 

25

10,607

(99.8)

 

28,864

24,323

18.7

EBIT margin

14.0

16.6

 

 

0.0

4.0

 

 

19.1

17.1

 

EBITDA

141,435

148,416

(4.7)

 

9,109

21,293

(57.2)

 

34,215

29,970

14.2

EBITDA margin

20.3

23.0

 

 

3.8

8.0

 

 

22.7

21.0

 

       

 

      

 

      

 

4. Other/eliminations (1)

 

Total

 

      

YTD AS OF SEPTEMBER

 

 

      

(In ThHL or CLP million unless stated otherwise)

2016

2015

Total %

 

2016

2015

Total %

 

      

Volumes

 

 

 

 

17,238

16,978

1.5

 

      

Net sales

(8,122)

(5,287)

53.6

 

1,078,915

1,046,419

3.1

 

      

Net sales (CLP/HL)

 

 

 

 

62,588

61,632

1.6

 

      

Cost of sales

(1,512)

(3,535)

(57.2)

 

(520,015)

(481,629)

8.0

 

      

% of net sales

 

  

 

 

48.2

46.0

 

 

      

Gross profit

(9,634)

(8,822)

9.2

 

558,900

564,791

(1.0)

 

      

% of net sales

 

 

 

 

51.8

54.0

 

 

      

MSD&A

1,164

2,344

(50.3)

 

(442,251)

(430,710)

2.7

 

      

% of net sales

 

  

 

 

41.0

41.2

 

 

      

Other operating income/(expenses)

959

138

596.4

 

2,595

1,594

62.8

 

      

EBIT

(7,511)

(6,340)

18.5

 

119,244

135,674

(12.1)

 

      

EBIT margin

-

-

 

 

11.1

13.0

 

 

      

EBITDA

(5,987)

(5,059)

18.3

 

178,773

194,620

(8.1)

 

      

EBITDA margin

-

-

 

 

16.6

18.6

 

 

      

 

(1)     See Exhibit 6: Results 2015 as previously reported and current adjustments.

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 15 of 17

 

 

Exhibit 5: Balance Sheet

    

 

  

 

September 30

December 31

 

Total Change%

 

2016

2015

 

 

(CLP million)

 

ASSETS

 

 

 

 

Cash and cash equivalents

105,645

192,554

 

(45.1)

Other current assets

497,732

491,758

 

1.2

Total current assets

603,377

684,312

 

(11.8)

 

 

 

 

 

PP&E (net)

890,541

872,667

 

2.0

Other non current assets

299,273

266,377

 

12.3

Total non current assets

1,189,814

1,139,045

 

4.5

Total assets

1,793,191

1,823,357

 

(1.7)

 

 

 

 

 

LIABILITIES

 

 

 

 

Short term financial debt

77,288

43,974

 

75.8

Other liabilities

300,804

344,717

 

(12.7)

Total current liabilities

378,091

388,691

 

(2.7)

 

 

 

 

 

Long term financial debt

120,119

136,927

 

(12.3)

Other liabilities

113,430

110,217

 

2.9

Total non current liabilities

233,549

247,144

 

(5.5)

Total Liabilities

611,641

635,834

 

(3.8)

 

 

 

 

 

EQUITY

 

 

 

 

Paid-in capital

562,693

562,693

 

-

Other reserves

(132,738)

(103,226)

 

(28.6)

Retained earnings

629,862

598,349

 

5.3

Net equity attributable to parent company shareholders

1,059,818

1,057,816

 

0.2

Non - controlling interest

121,733

129,706

 

(6.1)

Total equity

1,181,550

1,187,522

 

(0.5)

Total equity and liabilities

1,793,191

1,823,357

 

(1.7)

     

 

  

OTHER FINANCIAL INFORMATION

 

 

 

 

 

    

 

 

Total financial debt

197,407

180,901

 

9.1

 

 

  

 

 

Net Financial debt

91,762

(11,654)

 

(887.4)

 

 

  

 

 

Liquidity ratio

1.60

1.76

 

 

Financial Debt / Capitalization

0.14

0.13

 

 

Net Financial debt / EBITDA

0.32

(0.04)

 

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 16 of 17

 

 

Exhibit 6: Results 2015 as previously reported and current adjustments

From the third quarter of 2016 onwards, the Chile Operating segment incorporated in their management the business activities performed by the Strategic Service Units (SSU), which include Transportes CCU Limitada, Comercial CCU S.A., CRECCU S.A., and Fábrica de Envases Plásticos S.A.. As of  September 2015 the revenue and expenses of the Strategic Service Units were disclosed under Others, however for comparability these revenues and expenses have been adjusted to the previously reported figures in the following tables.

 

 

1. Chile Operating segment

4. Other/eliminations

Third Quarter

(In CLP million unless stated otherwise)

As previously reported

Adjustments

Adjusted

As previously reported

Adjustments

Adjusted

Net sales

197,883

2,223

200,106

82

(2,223)

(2,140)

Cost of sales

(99,320)

208

(99,112)

780

(208)

572

% of net sales

50.2

 

49.5

 

 

 

Gross profit

98,564

2,431

100,994

862

(2,431)

(1,569)

% of net sales

49.8

 

50.5

 

 

 

MSD&A

(72,972)

(5,252)

(78,225)

(4,400)

5,252

852

% of net sales

36.9

 

39.1

 

 

 

Other operating income/(expenses)

(30)

(132)

(162)

(86)

132

46

EBIT

25,561

(2,954)

22,607

(3,625)

2,954

(671)

EBIT Margin

12.9

 

11.3

 

 

 

EBITDA

37,317

(533)

36,784

(713)

533

(180)

EBITDA Margin

18.9

 

18.4

 

 

 

       

 

 

 

 

 

 

 

 

 

 

       

 

    

 

1. Chile Operating segment

4. Other/eliminations

YTD AS OF SEPTEMBER

(In CLP million unless stated otherwise)

As previously reported

Adjustments

Adjusted

As previously reported

Adjustments

Adjusted

Net sales

638,710

5,297

644,008

11

(5,297)

(5,287)

Cost of sales

(297,982)

6,146

(291,837)

2,611

(6,146)

(3,535)

% of net sales

46.7

 

45.3

 

 

 

Gross profit

340,728

11,443

352,171

2,621

(11,443)

(8,822)

% of net sales

53.3

 

54.7

 

 

 

MSD&A

(234,303)

(11,054)

(245,358)

(8,711)

11,054

2,344

% of net sales

36.7

 

38.1

 

 

 

Other operating income/(expenses)

420

(148)

272

(10)

148

138

EBIT

106,844

241

107,085

(6,099)

(241)

(6,340)

EBIT Margin

16.7

 

16.6

 

 

 

EBITDA

140,117

8,299

148,416

3,239

(8,299)

(5,059)

EBITDA Margin

21.9

 

23.0

 

 

 

 

 

 

Office Address: Vitacura 2670, 23rd Floor, Santiago, Chile
Bolsa de Comercio de Santiago: CCU
NYSE: CCU

Page 17 of 17

 

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Compañía Cervecerías Unidas S.A.
(United Breweries Company, Inc.)

  /s/ Felipe Dubernet      
  Chief Financial Officer 
 

 

Date: November 8, 2016