Compañía Cervecerías Unidas (CCU) reported a challenging second quarter for 2024, with financial results impacted by tough demand conditions in Chile and Argentina, currency depreciation, and increased operating costs. Despite these obstacles, the company has managed to maintain its market share in both markets. CCU's Wine Operating segment showed positive signs with revenue and EBITDA growth. The company outlined measures to improve profitability, including cost control initiatives and revenue management, and expects better financial performance in the latter half of the year.
Key Takeaways
- Difficult demand conditions in Chile and Argentina, along with local currency depreciation, have negatively impacted CCU's financial results.
- CCU maintained market share in both countries despite these challenges.
- Revenue decreased by 8.6%, gross profit was down by 15.8%, and EBITDA dropped by 78.7%.
- The Wine Operating segment showed a revenue increase of 12% and EBITDA growth of 59.2%.
- Direct costs for beer and non-alcoholic beverages rose significantly from 2019 to 2024, but price increases have not fully offset cost pressures.
- CCU completed the integration of its own distribution system in Argentina, controlling 100% of its distribution and expecting to consolidate the water business by late 2024.
- The company is focused on cost control, revenue management, and digital transformation to recover profitability.
- CCU does not hedge commodities and foreign exchange and has no plans to change this policy.
- Premium segments have performed well, with volumes higher than pre-pandemic levels.
Company Outlook
- CCU anticipates continued input cost pressures for the remainder of the year.
- The company plans to manage revenue and adjust prices to address these challenges.
- Volumes in Argentina are expected to remain at 70 in Q3 and may increase to 85 in Q4, but this is uncertain.
- Prices are expected to move in line with inflation.
- No additional nonrecurring asset sales are anticipated in the second half of the year.
Bearish Highlights
- A significant decrease in volumes for the beer and water categories in Argentina.
- A 78% drop in EBITDA, mainly due to exchange rate depreciation and volume decline.
Bullish Highlights
- Successful transition to a self-managed distribution system in Argentina, with positive results.
- Improvement in the Wine Operating segment, with increased revenues and EBITDA.
- Premium segments maintaining higher volumes compared to pre-pandemic levels.
Misses
- Revenue contracted by 8.6% due to a drop in volumes.
- Gross profit and EBITDA saw steep declines of 15.8% and 78.7%, respectively.
- Net income reported as a loss of CLP15,888 million.
Q&A Highlights
- Patricio Jottar, a company executive, reaffirmed the company's policy of not hedging commodities and foreign exchange due to market unpredictability.
- Jottar expressed confidence in the multi-category beverage strategy to return to profitability.
- Premium segments have seen a slight decrease but remain strong post-pandemic, with volumes around 49-50%.
CCU's second quarter has been challenging, with various factors affecting its performance. The company remains focused on its strategies to navigate these difficulties and is optimistic about improving its financial results in the upcoming periods.
InvestingPro Insights
Compañía Cervecerías Unidas (CCU) has faced a tough economic climate, yet InvestingPro data and tips provide a nuanced view of the company's financial health and future prospects. With a market capitalization of approximately $1.99 billion, CCU's valuation reflects its standing in the competitive beverages industry. An impressive gross profit margin of 45.9% over the last twelve months as of Q1 2024 underscores the company's ability to maintain profitability even in challenging times. This is further supported by the company's solid track record of dividend payments, having rewarded shareholders for 33 consecutive years, which is a testament to its financial stability and commitment to returning value.
InvestingPro Tips for CCU highlight the company's strong free cash flow yield, suggesting that it is generating sufficient cash to support operations and reward shareholders. Moreover, the stock's low price volatility indicates that it could be a relatively stable investment, despite the broader market challenges. For investors looking for additional insights, there are 9 total InvestingPro Tips for CCU available, which could provide further guidance on the company's investment potential.
InvestingPro Data also reveals that CCU is trading near its 52-week low, with a price to book ratio of 1.3, which might attract value-oriented investors seeking discounted opportunities. Additionally, analysts predict profitability for the company this year, aligning with CCU's own expectations of improved financial performance in the latter half of the year. For those interested in exploring these metrics in more depth, they can find them detailed on InvestingPro, along with the company's fair value estimates, which currently stand at $14.63 according to InvestingPro's assessment.
In summary, while CCU confronts headwinds, the company's financial fundamentals and market position, as reflected in InvestingPro data and tips, suggest resilience and potential for recovery. Investors can tap into these insights to make informed decisions, complementing the analysis provided in the article.
Full transcript - Compania Cervecerias Unidas SA ADR (NYSE:CCU) Q2 2024:
Operator: Good afternoon, everyone, and welcome to CCU's Second Quarter 2024 Earnings Presentation Call on the 8th of August. Please note that this call is being recorded and all participant lines are in listen-only mode. After the presentation is completed, there'll be an opportunity to ask questions. So without further a due, I would now like to pass the line over to Claudio Las Heras, Head of Investor Relations at CCU. Please go ahead, sir.
Claudio Las Heras: Welcome everyone, and thank you for attending CCU's second quarter 2024 conference call. Today with me are Mr. Patricio Jottar, Chief Executive Officer; Mr. Felipe Dubernet, Chief Financial Officer; Mr. Joaquín Trejo, Financial Planning and Investor Relation Manager; and Carolina Burgos, Senior Investor Relation Analyst. You have received a copy of the company's consolidated second quarter 2024 results. At usual, Patricio will now review our overall performance and we'll then move into 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 U.S. Securities and Exchange Commission and in the annual report submitted to the CMF and available on our website. It is now my pleasure to introduce Mr. Patricio Jottar.
Patricio Jottar: Thank you, Claudio, and thank you all for joining us today. In the second quarter of 2024 CCU's financial results were much weaker than last year, as they were heavily impacted by two effects, a particularly difficult context for demand in Chile and Argentina, and the depreciation of our main local currencies. In Chile, the industries of our core categories particularly there, decreased largely explained by adverse weather conditions with unusual low temperatures and record rainfall during the quarter, particularly in May and June. In Argentina, we faced a sharp contraction in economy and in the beer industry associated with a challenging context for consumption. It's important to mention that we maintained overall market share in both countries. In terms of our main local currencies, the Chilean peso, an Argentine peso depreciated 16.8% and 255.1% against the U.S. dollar respectively, increasing our U.S. dollar denominated costs impacting our operating results. In this scenario. Under original plan HerCCUles, further actions in terms of revenue management and costs and expenses control are currently in place. These actions in a more normalized context of volumes growth should help us to return to the profitability path. During the second quarter of 2024, our revenues contracted 8.6%, fully explained by 12.7% volumes dropped partially compensated by 4.6% higher average prices in Chilean pesos. Lower volumes were largely cost by a weaker demand in Chile and Argentina as I explained before. Average prices were higher due to revenue margin initiatives in all operating segments. Gross profit was down 15.8% and as a percentage of net safe deteriorated by 338 basis points due to higher cost pressures mainly coming from depreciation of the Chilean peso and the Argentine peso mentioned above. MSD&A expenses expanded 1.7% and as a percentage for net sales deteriorated 464 basis points mainly of a consequence of lower volumes and its negative impact in fixed expensive dilution. In all EBITDA reached CLP10,053 million of 78.7% decrease and EBITDA margin contracted 629 basis points. Net income reached a loss of CLP15,888 million. These figures do not consider the non-recurring gain from the sale of a portion of land in Chile without favorable effect before taxes of CLP28,669 million and after tax at CLP20,928 million, including this non-recurring effect EBITDA totalized CLP38,722 million and net income reach a gain of CLP5,040 million. The following analysis also does not consider this non-recurring event. In the Chile Operating segment, top line contracted 5.5% driven by 8.4% volume drop partially offset by 3.1% growth in average prices. Volume contraction was caused by weaker demand due to unfavorable weather conditions in the quarter particularly in the beer business. Nonetheless, we saw a much better performance in July being a good sign for volumes looking ahead. Average prices were higher driven by revenue management efforts in all our categories, partially offset by negative mixed effects in the portfolio. In this regard, in July, we implemented additional price actions, gross margin decreased of the result of high cost pressure, larger coming from our U.S. dollar denominated costs. MSD&A expenses were flood due to efficiencies that helps to compensate higher U.S. dollar denominated expenses. Consequently, EBITDA totalized CLP26,587 million contracting 39.7%. In International Business Operating segment, which includes Argentina, Bolivia, Paraguay and Uruguay, net sales recorded 22.1% drops as a result of 27.2% reduction in volumes partially offset by 7% rise in average prices in Chilean pesos. Weaker volumes were mostly concentrated in Argentina. On the other hand, Paraguay and Bolivia expanded volumes, while Uruguay dropped due to a high comparison base explained by an uncommon draft in 2023, which boosted package water consumption in that year. The better average price in Chilean pesos were driven by revenue management efforts in all the countries. Partly offsetting strong cost pressures mostly coming from the sharp depreciation of the Argentine peso against the U.S. dollar, and its impacting U.S. dollar denominated cost. Consequently, gross margin deteriorated from 46% to 37.5%, and SG&A expenses increased 3.3% and as a percentage, net sales deteriorated mainly due to the lower business scale in Argentina. Altogether, we reached a loss of CLP 24,372 million. The Wine Operating segment continued in a recovery tent with revenues expanding 12% driven by 11.9% high average prices. Volume showed a strong recovery in export from Chile, which expanded 9.1% while the Chile domestic market was down 5.4%. The better average prices were boosted by the weaker Chilean peso and favorable impact on export revenues and revenue management initiatives in our domestic markets. Gross profit rose 28.5% and gross margin improved 511 basis points. MSD&A expenses increased 12.4%, mainly due to higher marketing expenses related to exports, which are denominated in U.S. dollars and as a percentage for net sales remained flat. In all EBITDA increase 59.2%. Regarding our main joint ventures and associated business in Colombia. Volumes increased mid-teens guiding better financial results. In Argentina, our water business with a non-recorded the contraction in volumes due to the challenging scenario for consumption. Nonetheless, financial results improves versus last year due to efficiencies from a successful go to market and back office integration with CCU Argentina. Now, I will be glad to answer any questions you may have.
Operator: [Operator Instructions] First question comes from Mr. Felipe Ucros from Scotiabank (TSX:BNS).
Felipe Ucros: Good morning Patricio, and thanks to this case. A few questions on my side. Maybe start with the first one on weather. You discussed in your release and your remarks that weather had a little bit to do with the poor volume performance in beer and non-alcoholic beverages. But in my mind, when it's cold and the consumer drinks less beer and non-alcoholic maybe the consumer drinks more red wine. But the results locally show that in wine Chile was also negative. So just wondering if you could comment on how those weather effects move the portfolio and whether we should consider that there's more pressure from generalized consumption rather than weather, or if you think weather was a bigger effect here? And then I'll do a follow up.
Patricio Jottar: Look, if we double click the volumes in the domestic industry -- this, we find differences among the different categories. In fact, while we are keeping market sharing general in terms in the different categories. So the figures of CCU represents figures of the industry. In the case of beer, -- so the whole Chilean segment decreased by 8.4% is volumes, as I mentioned before. But there are difference in the case of beer, the decrease was in the mid-teens, while in the case of non-alcoholic, the decrease was middle or mid-single-digit. So something like 5% in the case of non-alcoholic, something like 14% in the case of --. So as you could see, very strong difference in both cases, we are keeping marketers. You are right, when the weather is not good wine and spirits benefit from this. In fact, the volumes of spirit decreased by something like 5% and the volumes of wine domestic market, I mentioned it in my introduction, something like 5% also. May and June were extremely, extremely bad in terms of temperature and in terms of rain. In fact, the temperatures on the second quarter, particularly May and June, were the worst in the last 20 years and growing by far the worst in the last 20 years. Making a strong effect particle in beer, which is very sensible on temperature, on weather, and creating or producing an effect also in the other categories, but not as much as in the case of beer. Looking forward, we don't know what is going to happen with weather, but of course we assume that weather is going to be normal, not hot, not cold. July was a very normal month in terms of temperature and in terms of rain average on the last 20 years and volumes assume some growth, not too much, a single-digit, 2% something this 2% to 3%, which is normal in an economy which is not performing well as the economy of Chile. So we feel comfortable regarding the future, regarding volumes. And again, we think that May and June particularly in Q2 2024, were extremely, extremely extreme because of the conditions I just mentioned.
Felipe Ucros: Thanks for the clarity on that. And my second question is on competition. Last quarter, I asked about the rationality in the market, and asked if your competitors were moving prices with inflation, and it seemed that they were not moving at the speed, or at least not the same magnitude as a CCU. You announced in your release that you increased prices in July. Have you seen your competition follow you this time around?
Patricio Jottar: Look, Felipe, I think that there is a lot of rationality in our markets and it happens that the pressure on direct costs have been tremendous. I mean, if you take a longer period of time, let's say 2019, 2024, our direct costs have increased in beer, non-alcoholic by 66%, 68%, and we have been able to increase price in line of inflation a little bit less in the case of beer, a little bit more in the case of non-alcoholic. But we have not been able to catch up with the enormous pressure on a direct cost. We need to continue making efforts on to improve prices, to recuperate margins. And we are moving in that direction, and the industry as a whole is moving in this direction.
Felipe Ucros: That's clear. Any indication that your competitors have followed after your increase in July?
Patricio Jottar: Say the, I mean, I prefer not to double click on the extremely short term, but I would like to say that the industry as a whole is facing the same pressures on direct costs and is moving in the direction of recuperating margin. In fact, it's not just until it's all over the world. But they prefer not to discuss on what is happening today in the market, but they remain positive on our ability to recuperate margins let me say this.
Felipe Ucros: Yes. It’s a very short term to kind of gauge that. Last question on Argentina and shifting to other topics. It's been a few quarters since you left the Coke distribution system in Argentina and you started using your own. Just wondering if you can give us an idea of how smooth the transition has been and whether you're happy where you are on that distribution today.
Patricio Jottar: Look, we are extremely happy. We made all the integration of the distributions in August, September, October, 2023. It was very important for us, because as you probably know 22% of our beer volumes in Argentina were distributed by the Coca-Cola (NYSE:KO) system and we wanted to have control of our 100% of our distribution. Buying incorporating the non-water products in our distribution, we created enough critical mass to have our own distribution system in all the territory. And today, we do not depend on the distribution of Coca-Cola in the South and in some parts of the North of Argentina. It was very smooth. We reduced a lot of full-time employees. We reduced a lot of distributors. This is a 100% paid in our P&L of 2023, and the results are extremely good and satisfactory. We're very happy on our ability to run a joint distribution, putting together today beer, wine, cider, and water. And we're extremely happy on this. Particularly in the case of water, we are running at a positive EBITDA and positive net profit in the year the water business. We're not consolidating this. We expect to consolidate beginning August or September, 2024. I mean, in this month or next month. We're not consolidating this, but while we consolidate, we expect to have possibility EBITDA and positive net profits, mainly because we transform all the fixed costs of the water operation into viable costs by incorporating it in our platform. How is the year 2024 in terms of volumes for the categories? In Argentina is extremely poor. I mean, the beer category is decreasing volumes by 30%. The water business or the water category same thing. We are keeping roughly speaking our market shares there. But when volume decrease by 30%, everything in terms of results becomes very extreme. And this is what we are facing. We don't know when the consumption patterns are going to change in Argentina. Hopefully, in Q4 2024, this is what we expect. We don't know, but in the meanwhile, we are capturing again, all the efficiencies of having just one distribution network.
Operator: Next question is for Mr. Pedro Seixas from Neuberger Berman. We'll come back to Mr. Pedro Seixas in a moment. In the meantime, we'll take Mr. Alvaro Garcia from BTG Pactual.
Alvaro Garcia: A question on Columbia, the volumes there were quite strong relative to how the economy is doing. I was wondering if you can comment on initiatives in Columbia for that JV. And then just to follow-up on Argentina, you mentioned share was stable. I was wondering if you can comment if that was volume share, value share. My sense is if you maybe lag on pricing now and gain volume share, you could be in a much better position coming out of the crisis. But any clarity there would be very helpful.
Patricio Jottar: Regarding Columbia, yes, it's true. We are growing our volume by 50%. We're gaining a little bit of market share and I mean, we make public the results in terms of head profit. But EBITDA has being positive year to date and we expect to have a much better result in the last part of the year, because most of the volume comes on October and November and December. I mean, it's tough -- it has been tough, our project in Columbia, but we're moving in the right direction. We're very happy on this. Regarding Argentina, yes our, I mean our volumes and as our market share in terms of volumes are in terms of value, are in the same direction. Looking in 2023, our prices will increase by 11% more than inflation, 10% or 11%. I mean, inflation is 200%. It's very difficult to know exactly or to compare exactly your price with inflation. But let's say that we gain a little bit, or we took a little bit of advantage on inflation. In 2024, we are losing 6 or 7 points compared to inflation. So if you put together ‘23 and ‘24, we are 3 points above inflation. The industry as a whole is moving in the same direction, but it's not a good idea to decrease prices in order not to lose volumes. Because if you do this, at the end of the day, it's going to be extremely difficult to recuperate prices. I prefer to move prices in line with inflation and do our best efforts to keep our scale and trust that the economy will resume normality and growth we expect sooner than later, but it's really very difficult to know when it's going to happen.
Operator: We'll go to, um, Mr. Pedro Seixas, Neuberger Berman. He typed this question. I was wondering if you could elaborate on how much exactly the FX fluctuation impact the 78% drop in EBITDA. How much of the 78% was to do with the FX depreciation and how much was to do with the volume decline?
Patricio Jottar: We have the precise calculation. I will ask Felipe to we have -- I will ask Felipe to give you the right figures Pedro.
Felipe Dubernet: Thank you, Pedro, for your question. At the consolidated level, our EBITDA reduced from CLP47 billion last year second quarter to CLP10 billion the second quarter of this year. So the different CLP37 billion. Of this the external effect as we call. So that's the combination of exchange rate in Chile. So the Chilean peso depreciation against the U.S. dollar offset somewhat for due to some positive effect on raw material cost in U.S. dollar. This affected in total about CLP16 billion in a negative direction. So this was the heat of our results in quarter two. By exchange rate, somewhat compensated with better prices in PET, aluminum cost and malt cost. On the other hand, all operating variables such as price that was positive but not enough to compensate the input cost, and volume very negative. We reduce the volume overall at the consolidated level by 13% and compensated with some efficiencies, especially in logistics. The impact of this operating result was about CLP21 billion negative. So the main causes of the EBITDA decline were due to first external effects about CLP16 billion and volume offset somewhat by price. And efficiencies of about CLP21 billion negative, thus is the breach of the EBITDA.
Operator: [Operator Instructions] We'll open, Nicolas Donoso, we did notice your question from your line in case you have a question. Your line is open. Nicolas Donoso from Compass Group (LON:CPG) Asset Management. [Operator Instructions] We have a question from Fernando Olvera from Bank of America (NYSE:BAC).
Fernando Olvera: My question is related to cost. If you can share, what is your outlook for the remaining of the year? No, given that packaging and sugar costs are down, although the Chilean peso has depreciated no versus the U.S. dollar. And I have another question, but I'll wait.
Patricio Jottar: We'll ask also Felipe to discuss from cost of raw materials and what we expect for the next -- for the rest of your year.
Felipe Dubernet: In terms of raw material, some water, you are right. The sugar has been softened a little bit, but it still is higher than last year. So we continue to be higher and we saw at a better outlook in the future in the last time. The other downside that we have in raw materials, higher cost is pop, orange juices are at the record highest cost, especially due to Brazil. For the rest is the same trend that we have, I think they would be stable. So what is more unstable? And it's very difficult to give you an outlook because I don't know, in the last two months, the Chilean pesos moved from high 900, let's say close to 1,000 to below 900. So this week also was especially volatile in line with the overall markets. So it is difficult to predict. So I prefer not to give an outlook. We used in our projections 940, but at the end, if you go into Bloomberg, you'll find a full array of projection. Also remind that it is very sensible to copper prices. So not only how the financial markets move or how the fed rates would move going forward, but also on capital prices, so difficult to predict. So this is the reason why we took actions in terms of prices because all the market, all the players, we are facing the same input cost pressures and we think that would continue towards the end of the year. We don't see nothing better of what we have seen in the last quarter. So that's important to work on revenue management and price.
Fernando Olvera: Highlighted in the press release that recovering profitability is your short-term priority. So can you share what additional measures? Are you already implemented or are you or you are about to implement to recover margins? And how do you ambition this recovery on margins?
Patricio Jottar: Indeed, it's our short-term priority. I mean long term, you need to move 3 pillars to yield up a good business in the long term. You need to move the pillar or to work in the pillar of profitability, growth and sustainability. And of course, we put emphasis on these 3 pills growth, profitability and sustainability. Having said that, the priority for the next 6 months and the priority today is profitability and we're putting all our behind it. Cost expenses, number one, we have our HerCCUles plan devoted to be much more efficient on one hand, revenue management initiatives on the other control of full-time employees and some efficiencies regarding full-time employees controlling on SKUs and some efficiencies regarding SKUs and some digital transformation programs, particularly in terms of the way we sell and the way we distribute. If you want us to elaborate more on this, indeed, we could. But those are the main elements, and we are fully focused on this. That's our first priority for the more, but first priority today, and it was our first priority yesterday, and we're working on this. And we expect to improve our financial results in the second half of the year, important. I mean this is our number one priority.
Operator: Our next question comes from Ms. Constanza Gonzalez from Quest Capital.
Constanza Gonzalez: I have a question regarding Argentina. Could you clarify about what are you expecting in volumes and prices in the next quarter? Or if you are expecting some recovery on the end of this year or the beginning of 2025?
Patricio Jottar: Thank you, Constanza. Extremely difficult to know exactly, look, if our volumes were handed before the beginning of crisis, and today, at 70, we expect to keep in the level of 70 during Q3, and we expect to start it in the level of 85 in Q4. But this is just an expectation because we really don't know. And if we do this, if we're able to establish 85, we could make profitable end of the year. But again, this is what we expect, we don't know exactly. Regarding price, as I explained before, we expect to move in line with inflation.
Operator: Next question comes from Ms. [indiscernible] from Compass Group.
Unidentified Analyst: My question is if you have another nonrecurring asset that can be put on sale as the land that we saw this quarter?
Patricio Jottar: No, we expect not to have something like this in the second half of the year.
Operator: The next question comes from Lucas from JPMorgan (NYSE:JPM).
Lucas Ferreira: I hope you hear me well. My first question is -- yes, so my first question is in light of this very uncertain scenario for commodities effects the company wouldn't be able to reconsider its policy not to hedge commodities and facts. So how do you see the benefits of the cost of hedges versus the ability of having a bit more, let's say, predictability on these lines? So that's the first question. The second question is just to clarify, third quarter, the company is seeing an improvement in volumes. If you can give us more information on how the premium segments performed this bad weather situation in the second quarter? And if you see sort of a premium accelerating more now in the third quarter versus the whole industry. In other words, if on top of the price increases you're implementing, if you believe that mix should also be helpful to improve your average price?
Patricio Jottar: Thank you, Lucas, for your question. Look, regarding hitting now, we have a very clear policy, and we do not hedge raw materials. I mean because you have 12 termites, you had or you do not yet -- if you do not hit you face the spot curve of prices. If you hit, you face the future curve of prices. And if you face the spot price, there's the price, if you want to face the future curve of price, you have to pay the cost of intermediaries. So at the end of the day, you lose money. And if you ask me, but if you hedge when it's a good idea and if you do not hedge when it's a bad idea, I think if I would be able to do this indeed, we would do it but we do not have visibility indeed. So we are very clear on this. We do not hedge and we will not hedge. Regarding premium, it's very it's very strange that has happened because let me take the beer category in Chile, for example. Before the pandemic in 2019, premium was 25% to 27% of our volumes. After pandemic premium is in the level of 50%. In the best moment, it was something like 60% in 2021. When the withdrawals of money from the pension fans, people have a lot of men in their pockets and the premium down to 60%. Now premium decreasing to 50%, but still much better than much better than it was in 2019. And we have we have decreased the percentage of premium in the last month from 53% to 50%, 49%, and we expect it to stay in that in that level. I prefer we assume that no major changes are going to happen in the rest of the year.
Operator: We have a question from Nicol Helm from MetLife (NYSE:MET) Investment Management. Okay. We'll come back later. Next question is a follow-up question from Alvaro Garcia from BTG Pactual.
Alvaro Garcia: Sorry about that. I meant to ask about COGS and then I meant to ask about the Chile volumes, but both of those questions have been answered.
Operator: [Operator Instructions] Okay. It looks like we have no further questions at this point. I'll be passing the line back to the management team for the concluding remarks.
Patricio Jottar: Thank you very much. To conclude, I would like to reiterate that our second quarter of 2024 results were very weak and were negatively impacted by a particular difficult context for demand in China and Argentina and the depreciation for main local currencies, which resulted in higher cost pressures. Given this scenario, we are confident that our multi-category beverage strategy based on focus on synergies should help us to return to the profitability path, which is our short-term priority going forward, as I mentioned during the conference call. Thank you very much for attending.
Operator: Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you, and goodbye.
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