Good day, everyone and welcome to the CCU's First Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Claudio Las Heras, Head of Investor Relations. Please go ahead.

Welcome, everyone, and thank you for attending CCU's first quarter 2021 conference call. Today with me are Patricio Jottar, Chief Executive Officer; Felipe Dubernet, Chief Financial Officer; and Nicolás Novoa, Financial Planning and Investor Relations Manager. You have received a copy of the company's consolidated first quarter 2021 results. Patricio will now review our overall performance and we will then move on to a Q&A session. Before we begin, please take note of our cautionary statement. The statements made in this call 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. These statements should be taken in conjunction with the additional information about risks and uncertainties set forth in CCU's annual report in Form 20-F filed with the US Security and Exchange Commission and in the annual report submitted to the CMF and available on our website. It is my pleasure to introduce Patricio Jottar.

Thank you, Claudio, and thank you all for joining us today. During the first quarter 2021, we continued implementing a regional plan with three priorities during the COVID-19 pandemic. The safety of our people and the community we interact with, operation continuity and financial shares. This plan allowed us to operate and supply our products to our clients and consumers in a still very challenging scenario, where restrictions continue to be implemented across the region to control new outbreaks of the virus. Within this context, as we have been mentioning since the beginning of the pandemic and stating in every quarter, we have put a special focus to maintain or to grow business scale with the purpose of gradually recovered profitability over time, by implementing revenue management initiatives and efficiency. This strategy started to yield results in the fourth quarter of 2020 and showed a better result in this quarter, where in addition to continue growing our business scale in all our operating segments, we delivered an improvement in our profitability. In terms of our performance, in the first quarter of 2021, CCU's consolidated volumes grew 4.8% with an expansion in all our operating segments. This positive volume growth was mainly explained by a solid commercial execution and the strength of our portfolio of brands. Regarding financial results, EBITDA was up 39.5% and EBITDA margin improved by 147 basis points from 17.7% to 22.2%. The better financial results was mainly driven by four elements: first, the expansion in consolidated volumes as mentioned above; second, the implementation of revenue management initiatives and positive mix effects; third, efficiency gains from the ExCCelencia CCU program with MSD&A expenses as a percentage of net sales, decreasing from 38.2% to 34.1%; and four, finance – positive external effects from the 9.8% appreciation of the Chilean…

[Operator Instructions] We'll go first to Fernando Olvera from Bank of America. Your line is open.

Hi. Good morning, everyone. And thanks for taking my questions. I have two, if I may. The first one is related to pricing. I mean, given the increase in commodity prices, how are you thinking about your pricing strategy going forward? How can this change your view about favoring volume growth? And when do you expect to face higher costs? And the second question is about expenses. It was really outstanding the efficiencies that you achieved across the operations. Can you comment from where did you obtain most of such efficiencies? And how should we think about expense evolution when mobility restrictions decline? Thank you.

Thank you, Fernando for your questions. You are right. I mean regarding prices we have a good revenue management execution mainly by reducing discounts, reducing promotions and particularly by improving the mix of our premium segments. But you're right, the cost of raw material is higher today. It's true that the exchange rate is lower, so one element compensates the other and we need to cope with this in the future. But again, short-term, reducing discounts, reducing promotions and improving premium has shown a good answer to that. As you know, revenue management is a permanent focus of our ExCCelencia CCU program and we are very focused again on this. What is going to happen with volumes in the future? Difficult to say as you know. Because of the pandemic most of the governments are expanding fiscally a lot and people are receiving money in their pockets on one hand. And on the other hand, they're reducing the expenses in other categories. So our categories have been favored by this effect. It's difficult to predict what is going to happen in the future. But as always our strategy is going to be the same as we have had for many years. Number one to grow scale, our business is about scale, it's about volumes. You could as you know during 2020, we put a lot of effort in order to improve our scale and we finish the year increasing our consolidated volume by 2.2% and we'll continue doing this. And at the same time, improving margins and at the same time, keeping our expenses under control. Having said that, I move to the second question. Look it's true. I mean, our expenses are under control and we are doing a big effort in order to do this. We have an…

Great. Thank you so much.

Thank you, Fernando.

[Operator Instructions] Next we'll go to Henrique Brustolin from BTG. Your line is open.

Hello. Good morning, everybody. Two questions on my side. The first one in terms of…

Yes. Hello If you -- excuse me, Henrique please. Go ahead.

Okay. I'm sorry. The first one is in terms of pricing in Chile that we saw a very strong growth and you mentioned the positive mix impact. So I just wanted to hear if there were also any price increases in the quarter? And how was the relative performance between the alcoholic and non-alcoholic segment? And we think the alcoholic segment, premium performed very well, but how that compared to the mainstream portfolio. So I think it would be very helpful. And the second question is in terms of competition, right? So this is the first quarter that ended and coke bottlers fully operated under the new distribution agreement. And then, they just reported 20% plus volume growth in Chile. But I'm unsure about the comparison basis, but just wanted to hear from you guys, if you see any changes in the competitive environment in Chile in different channels, since the distribution agreement started? And also if you could give some color on market share performance, I think, it would be very helpful. Thanks.

Yes. Thank you, Henrique, for your question. Exactly, you are right, they reported 20% or more growth in volumes in two years, because I mean the first Q of 2020 was a very strange quarter. So the real comparison is first quarter 2021 compared with first quarter 2019. And they announced that they grew by 20% and in the same basis we grew in our beer portfolio and more than 20%. In fact it has 24% --

25.

25% comparing again Q1 2021 with Q1 2019. And if you take a longer period of time, let's say, four, five years our market shares, with ups and downs, have been rather stable in there, as we have been gaining market share in non-alcoholic. Look, regarding competition, indeed to have the Coca-Cola system distributing the beers of our competitors is something important. I mean Coca-Cola is a fantastic operator and they have a fantastic distribution network. But let me say that, to become a real multi-category operator is much more than put new products on Europe and U.S. historical distribution. This is the beginning or this is the first step of a multi-category process, but this is not a real multi-category strategy. A real multi-category strategy needs a philosophy, a culture, needs processes, KPIs and a lot of tools in order to put the same focus in a 2 million or 3 million hectoliter brand than you have in 1,000 hectoliter brand. This is a real philosophy behind multi-category. We have been running a multi-category operation for 20 years. At the end of the day -- now, our competitor Coca-Cola is going to learn how to do this. But believe me, this is not a short-term journey. It's a long-term journey. Having said that, we respect them a lot. Regarding alcoholic products, it's true. We have been improving the percentage of premium in our portfolio a lot. In the first quarter of 2021, premium products in the beer -- in our beer portfolio represented more than 40% of our volumes. Two years ago that was 25% to 30%. We have been increasing -- we have been increasing this, which is good, because it improves our profitability. But at the same time, it's a challenge, because there is much more competition in this segment, it's much more difficult to defend -- to grow market share in premium, rather than in mainstream. But this is our job. This is our everyday job.

That’s very helpful. Thanks very much.

Thank you, Henrique.

[Operator Instructions] And we have no further questions in the queue. So I'll turn it back to Patricio Jottar for closing remarks.

Perfect. Thank you very much. Summarizing, during this first quarter 2021, in a still challenging scenario, due to the pandemic, CCU continued developing a regional plan with three priorities, as I mentioned before. Number one, the safety of the people; number two, the operation continuity; and number three, the financial health. At the same time, the strategy implemented in this context gave positive results during the quarter, where we delivered volume growth in all the operating segments and a recovery in our financial results. The latter, with an improvement in our profitability. In 2021, we'll continue to face a challenging and uncertain scenario, due to new outbreaks of COVID-19 in the region. In this context, we'll keep executing with a lot of discipline. The strategy that we have been carrying out in order to continue delivering profitable and sustainable growth. Thank you very much all of you for attending this call.

And that does conclude our call for today. Thank you for your participation. You may now disconnect.