Compania Cervecerias Unidas SA (CCU) 2009 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the CCU First Quarter Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions.

(Operator Instructions)

I would now like to turn the conference over to Patricio Jottar, CEO of CCU. Please go ahead.

Good afternoon and thank you for attending CCU's First Quarter 2008 Conference Call. I am here with Ricardo Reyes, CCU's Chief Financial Officer, Rosita Covarrubias, IR Manager and analyst, Macarena Gili.

You have received a copy of the company's results for the first quarter of 2009. On this occasion, I'd like to comment on the results of this business segment and also address some new developments during the quarter. After these remarks, we will gladly answer any questions you may have.

Considering the present economic scenario, we are pleased with CCU's performance in the first quarter of 2009. In comparing figures, we have to keep in mind that the first quarter of 2009 was extraordinary in many respects.

First, the estimated Chilean GDP declined 2.9% versus a growth of 3.4% in Q1 2008 and the Q1 2009 average exchange rate per dollar was CLP617 in comparison to CLP467 in Q1 2008, which is particularly relevant for CCU, since most of our raw material is indexed to the US dollar.

We have had fourth monthly consecutive negative CPI variations from November 2008 to February 2009, showing a sign of economic slowdown. In this scenario, we were able to increase our sales volumes by 3.4% due to the operations we acquired in 2008. Six in Argentina and Vina Tarapaca in the wine segment. The organic volumes decreased by 2.9%. Nevertheless, we're able to grow our revenues by 11%, increased our profit by 0.5% and our EBITDA by 0.4% over the 5.5% inflation year-on-year.

The tea and beer segments have higher average price of 3.1% in real terms, which almost compensated the drop in volumes of 4%, resulting in a slight decrease in revenues of 0.7%. The cost per hectaliter increased mainly due to the approximately 50% higher dollar cost of malt and the higher average exchange rate of the dollar to the Chilean peso.

SG&A expenses were kept under control and showed a decrease of 2.3%. Consequently, the operating profit and EBITDA declined by 8 -- 19.8% and 17.2% respectively. For the coming months, (inaudible) will see a cost relief if the malt market price is close to 15% to 20% lower than the cost of our former contracts.

The Argentine beer business grew its revenues by 80.6%, improved its operating profit and EBITDA by 148.4% and 120.8% respectively. In dollar terms, revenues grew by 48.6%, operating profit increased by 97.7% and EBITDA improved by 74.7%. This performance was due to a 31% growth in volumes and 37% higher price in Chilean pesos. The organic volume growth was 2.6% and the most significant part of the volume increase came then from the former ICSA brands.

The non-alcoholic beverage segment decreased its revenues by 2.5%, mainly as the result of 4% lower volumes, partially offset by 2.3% higher average prices in real terms. Nectars had an outstanding performance with an 8.9% higher volume. The dollar fixed price decreased by 20% with respect to Q1 2008 and having around twice the instance in the costs more than compensated the dollar price increase of sugar. Therefore, the unitary cost in Chilean pesos increased -- increase is related to the higher exchange rate.

The Wine business revenues increased by 44.9% due to an 8.8% increase in volumes, coupled with a 30.7% increase in the average price. The new brands resulting from the merge of Vina San Pedro and Vina Tarapaca explained the volume increase and the improvement in average price. In all, the operating profit improved from CLP292 million to positive CLP377 million. And the EBITDA was higher by 124%.

The Spirits business continued its strategy to focus on higher margin products such as premium products and cocktails. Higher average real prices by 3.9% and lower volumes of 7.4%, coupled with lower expenses improved the operating profit by 32.1% and EBITDA by 19.5%.

In summary, the beer Argentina and wine segments, where we significantly invested in 2008, doubled their EBITDA, which enable us to slightly increase our consolidated EBITDA. By the end of 2008, our anticipation of an economic turmoil, we prepared a contingency plan with focus on maintaining the operating income in real terms even in a scenario where volumes jump up to 5%. The company would compensate the loss of direct margin with savings in costs and SG&A expenses. The purpose of the plan to complete, in the first quarter, we continue to close surveillance on the key factors of success on a permanent basis.

Finally, regarding to our balance sheet structure, in April we issued USD5 million, approximately USD168 million in five and 21-years bonds, in order to refinance our short and mid-term liabilities. The total market demand more than doubled the size of the issue, generating attractive real rates of interest of US plus 3.18% and US plus 4.3%, respectively.

Before going to the Q&A session, Ricardo Reyes will give you some news regarding [IS arrays] and business segment definitions.

Good morning to everybody. Regarding the premium segment, we are in this press release currently reflecting the results in the same way that each business segment -- business unit are internally managed and reported.

Corporate share service and distribution and (inaudible) expenses have been allocated to each SVUs based on internal service level agreement. And the non-allocated corporate overhead expenses and the results of the associated facility, which until last year were distributed between each business segment have been included now in others eliminations. For comparison purposes, last year figures were reclassified according to these criteria.

As of 2009, confectionery sales are directed to perform now by Foods Compania Alimentos through, which is not consolidated into CCU's financial statement. Until December 2008, confectionery sales were done by [Ecosa], the non-alcoholic beverage subsidiary, therefore were consolidated and included last year, others and eliminations revenues.

Regarding IFRS, we are in the process of -- to integrate to these accounting rules during this year as a result of this [rebation] some changes will occur, as we explained in the [fact sheet] released last Thursday. For more intel information, please see note 41 of the -- that [fact sheet].

For comparison purposes, the 2008 financial statement will have to be adapted to IFRS rules. The financial statement prepared in such a way could be [heard] in some aspect from the present financial statement, prepared according to Chilean GAAP. The company has developed a plan to finish the conversion process in the fourth quarter of 2009.

Notwithstanding, we are still in the process. The company primarily has estimated that the present quarter net income under IFRS rules would be CLP44,953 million as compared to CLP44,655 million resulting from the application of Chilean GAAP.

And for last year, the numbers also changed according to IFRS, would be CLP37,345 in the first quarter of 2008 instead of net of CLP32,695 million according to Chilean GAAP.

The final IFRS result could differ from these figures because we are in the process, therefore any investment decision would be based upon Chilean GAAP financial explaining and -- until we made the official transition in the fourth quarter.

Okay. Thank you. And we are ready for Q&A session after these remarks.

Luke? Operator? Operator?

We will now begin the question and answer session. (Operator Instructions) Our first question comes from the line of Robert Ford. Please go ahead.

Pardon me.

Mr. Ford?

Yes, am I on?

Patricio, I was very impressed with the pricing. And just anecdotally, it appears as if we're seeing pretty widespread reductions in promotion, in advertising, across the industry. And I would it seems to be common to most consumer product companies that almost on a global-basis. And I was curious if you could comment on the dynamics that you're seeing, perhaps some of the down trading activity, if any at all, and if you could address that across geographies and products for us?

Yes. Thank you for your question, Robert, and I will go into details immediately. But probably before going into details, let me say that as I anticipated in the previous conference call, I think that Q1 2009 is the toughest quarter in the year for CCU. When we compare the results with Q1 2008, you have to consider that Q1 2009 has the, as I mentioned before, four elements, which are very complicated and very difficult to overcome.

Number one, inflation. The inflation in 12 months has been 5.5% and as we still are reporting figures in Chilean GAAP, where we adjust figures by inflation, we need to increase results by 5.5% on nominal terms in order to grow 0% in real terms. This is going to be corrected when we implement IFRS at the end of this year. Secondly, because of the recession, it's true that the unemployment rate has not grown a lot during Q1 2009 and we expect it to grow much more during Q2 2009. But the economy would -- and the GDP, the growth was very bad in Q1 2009, as I said before, minus 2.9%. It's what we expect.

Additionally, the cost of raw materials, which is much lower today than it is in the past, will benefit us since in some in cases, April, in other cases, July, will benefit 100% of the effect of lower price of commodities, since Q2 and Q3. But in Q1, we are paying full price for commodities.

And finally, the exchange rate, which is very -- which was very high in Q1 compared with Q1 2008, which is not going to be the same thing for the rest of the year because the exchange rate -- or the Chilean peso began to devaluate in the second half of 2000 -- on 2008.

Having said that, of course, we create a contingency plan in December 2008 in order to face the situation. And we fully implemented it in Q1 2009 and we've continued implementing this contingency plan in the rest of the year. And in the contingency plan, there are some things related to price, with promotions, with margin expenses and with discounts.

And as you know, in our categories, we need to be very careful. Because if we cut margin expense strongly today, probably nothing is going to happen tomorrow. But the brands are going to suffer in a few more months. There's -- then we need to keep a very smart balance in terms of how much money we save, how much money are our competitors saving? How much money are our substitutes saving?

And on hand -- and on the other hand, the brand equity of our brands. And we think that what we made in the -- in Q1 2001 was very bad and because we are measuring permanently the brand equity for our brands and I think that they have not suffered because of the efforts we made in Q1.

And we expect to keep this path into Q1 and into Q3. Additionally, we have been able to better negotiate with TV channels in order to decrease the price of advertising. Then not all the -- not all the reductions we have made in marketing have been less TV spots or less share of voice because we are buying a cheaper marketing TV spots today than we used to buy in the past.

Then, I mean, this is the answer to your question, Robert. More than into precise details on which kind of things we're going to do, my answer is the following. We are going to save money in marketing efforts, but we'll never risk the brand equity of our brands. And we'll never risk the competitive position compared with the competitors or (inaudible).

No, that's very helpful, Patricio. I was just curious, can you comment a little bit on how your competition is reacting to some of your changes in behavior? Are they doing similar things? You mentioned that the brand equity is still very healthy. That would imply to me that that's the case. But they may not even be picked up that quickly in the measures and the brand equity measures if for some reason you're seeing more opportunistic behavior short term from some of your bigger competitors?

Yes. I mean, the behavior of our competitors has been different in the different categories. In beer, they reduced dramatically their marketing efforts. Practically, they made no TV spots in summer time, which is strange. Because they were heavily advertising in the last summers. And I think it has relation with the fact that InBev is focused all over the world, increasing their EBITDA, particularly in the first six months of 2009.

In the case of the non-alcoholic beverage, I'll say that the Coca-Cola system, I mean, they are very focused also on creating brands and supporting their brands and they reduced a little bit their marketing efforts, but they are still doing a lot of marketing. And in the -- this core business, our competitor reduced, also dramatically, their marketing efforts in the -- I think that we are taking advantage on this.

Great. Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Jorge Opaso. Please go ahead.

Hello, everyone. Well, I have three questions. The first was already answered by you regarding the malt prices. Malt costs for second quarter and ahead. And the other questions are regarding Argentina. I was pleased because the cost of sales in Argentina the gross margin, I want to, if you can give a little bit more the effects of the synergies of ICSA in this quarter, what can we expect for the year? Because the reduction in the costs was, as a percentage of sales, was considerable. What are the effects there, the price increases, what are -- what's the [stuff] there?

And the second question, the third question, is regarding the non-alcoholic business. I know you have the dollar effect and the sugar cost writing, but you also have the refined cost decreasing. So I want -- if you can give a little bit more the cost of sales and the gross margin there in the non-alcoholic segment?

Thank you.

Thank you firstly for your questions. I mean, regarding malt prices, we will, in Chile, we will begin for lower prices during Q2 2009. But the effect is not going to be for the whole quarter.

Two-thirds of the quarter or 60% of the quarter, roughly, will have expensive malt and one-third of the quarter or 40% of the quarter will have cheap malt. Then the effect will be seen partially in Q2 and totally in Q3, Q4 and Q1 2010.

Regarding Q2 2010, we don't have information yet.

Regarding Argentina H2, we are very happy with the results and with the synergies of the ICSA brand. And you have to consider, ICSA, I mean, brought a lot of advantages to CCU, but one problem, and the problem is that the ICSA brands are cheaper than the average brands of CCU and the average brands of the Argentine market are discount brands, mainly, with the exception of Imperial, which is a premium brand, but Imperial is less than 10% of the volumes of ICSA. More than 90% of our volumes are discounted brands.

And we were expecting to lose volumes during 2009 after the acquisition and we are losing some volumes, but much less than we expected at the very beginning because mainly consumers in Argentina are moving from more expensive brands to cheaper brands because of the recession. And it will give time to us to create brand equity behind these brands and to increase the price a little bit in order not to lose those volumes. That is number one.

Number two, the -- I would say that finally, after many years, we finally have a real critical mass in Argentina, to have a profitable business. 21% of the market, and as such, big market as Argentina is an important amount of hectaliters. And again, by the first time we are beginning to have critical mass in different areas and in different channels in order to have a profitable operation.

What do we expect for the future? The only risk is devaluation. I mean, if the Argentine peso keeps its current level or it devaluates in a reasonable way, let's say, then for 20% or no more than that, we will have a very good year in Argentina.

If we have a disaster regarding this and the Argentine peso devaluates a lot, we expect it not to happen in 2009, but we are not economists and it could perfectly happen tomorrow. If it happens, our results are not going to be as good as 2009. I think that it's difficult to have a worse results or it's difficult, our results in 2009 to be worse than the one we got in 2008. Even in a scenario with a big devaluation. But if it doesn't happen, and if the Argentine currency is stable, we expect to grow our results significantly.

And finally, regarding the non-alcoholic beverage [system], the Non-Alcoholic business, it's true that on one hand we have higher cost of sugar, but on the other hand, we have lower cost of resins, both effects compensate roughly one with the other.

But we have a much higher -- I mean, a devaluated Chilean peso. Then we are importing raw materials at a much higher cost in Chilean pesos. And this is going to be true for the rest of the year, which pool also is that in 2008, we have devaluated Chilean pesos since Q3, I mean in the second half of the year.

Then for comparison-basis, the second half of 2009 is going to be -- is not going to be as difficult as Q1 2009.

Again, I mean, if you see 2009, we have bad results in beer and bad results in soft drinks and very good results in the rest of the businesses. We expect that we will keep the good results in the rest of the business for the rest of the year on one hand and that we -- we will improve compared -- when we compare the results of 2009 and 2008, we'll improve the results of the year in soft drinks. But put it all together, we are optimistic regarding 2009.

But as you know, we are in the middle of a big recession. Volatility is very high. And many things could happen. But again, we remain optimistic. And in addition, we have the contingency plan and I explained this before, which is a very stern and severe plan in order to reduce SG&A and other costs.

And I expect that if we put it all together, we'll have a good 2009. This is -- this is at least where we are putting our efforts and where we have our focus. But again, we prefer not to make projections. Because, again, there is a lot of volatility and many things could happen in the future.

Okay. Thank you.

Are you regarding Argentina, if you can detail about the fixed volumes, what's the behavior there?

I didn't say. Main production is set to such volumes in Argentina grew by 2.6%, if I remember correctly. Exactly. The organic volume growth of 2.6% in the quarter, which is not bad and it is not bad. And -- something. 2.6%.

No. Perfect. Thank you.

Okay. Thank you, Jorge.

Thank you. Our next question comes from the line of [Sohile Amar]. Please go ahead.

Good morning. I actually had three questions. First, I noticed the effective tax rate for Q1 '09 was very low, even on a seasonal basis. So I was wondering if you could comment on that? And what your effective tax is likely to be for the full year?

Secondly, on the question of commodities and your margins, you said 50% higher cost model. Just wondering if that is in Chilean pesos?

And in terms of margins, I mean given what you expect on the growth side, do you expect margins to be, for the rest of the year, around the same levels as Q1 '09?

And then finally, in terms of the debt you have on your books, what percentage of that will be denominated in US dollars? Thank you.

Thank you for your questions. I mean, I will go, regarding -- I will answer you regarding commodities, price and margins and debt and then I will ask Ricardo Reyes to answer -- to discuss regarding taxes.

Of course we expect to increase the margins in the beer business. As I said before, Q1 2009 was very bad for margin purposes. Because the cost of raw materials is particularly high and we expect to recuperate our margins at the end -- I mean, in the second half of 2000 -- in the second half of 2009. To recuperate the margins we have, in 2008, this is regarding margins in the beer segment.

Regarding debt, 100% of our debt is -- most of our debt is in US or Chilean pesos. We do not have debt in dollars. We have a little bit of debt in dollar terms in Vina San Pedro, in order to offset some assets that we have also in dollar terms in that operation. But in the level of CCU sales, 100%. I mean, 0% of our debt is in dollar terms.

And finally, regarding tax, please, Ricardo?

Yes. Well, we had in the quarter lower operating and lower non-operating results, I think, implied lower taxes. But the lower tax rate is related with one-time tax spread that we have as a result of our investment in Vina Tarapaca and the subsequent merger with Vina San Pedro. And this is a one-time effect that would not continue in the rest of the year. So we -- for the rest of the quarter, the tax rate will go to normal levels.

Right. Thank you.

Just a quick follow-up to margins. I mean, yes, your raw materials costs are going to be lower. But the exchange rate is going to be unfavorable. So when you say margins are going to be better, is that factoring in both of these effects?

Yes, it happens that they -- I mean, we expect the exchange rate not to be good in the second half of 2009. But what is true is that in the second half of 2008, also the exchange rate was not convenient for -- it was not convenient for us. Then the exchange rate is not going to -- is not going to affect the results in the second half of 2009 compared with the second half of 2008. But we have a much cheaper raw materials. In US dollars.

Great. Thank you very much.

Thank you.

Thank you.

Thank you. (Operator Instructions) Our next question comes from the line of Jose Yordan. Please go ahead.

Good morning, everyone.

I had a couple of questions. One was just a clarification on Argentina. With all the distortions in translating Argentina, it's hard to get what the dollar revenue per hectaliter is. If you could give us an idea of where you are these days and -- in dollar revenue per hectaliter in local -- in -- without all the adjustments of Chilean GAAP?

And then I just wanted to explore a little bit more the first question, I think it was Bob asking about the brand equity and all that stuff. Because it seems to me like you lost market share in many of the categories. I mean, certainly looking at your soft drink volumes versus those of Coca-Cola, it's pretty sure that there was a market share loss.

In terms of beer, we don't know what the competitors' volumes were. But given that GDP was down to 2.8 or whatever, a 4% decline seems like to me like it's probably a slight market share loss. Can you give us any better sense of where your market shares are going? And maybe does that sort of support the argument that maybe your reduction in SG&A wasn't -- went a little bit too far? Or feel free to challenge my assertion there. But just a little color on that would be helpful.

Jose, excuse me. I have a problem. Thank you for your question.

Regarding Argentina, we have increased our price a lot in Argentine pesos, on one hand. And on the other, we have been improving our mix because Budweiser has been growing a lot and particularly Heineken and Corona.

Putting it all together, our average price today is in the range of the $60, $65 per hectaliters. And I mean it changed every month regarding -- depending on the valuations and exchange rates and depending on the variations on our average price, but today we are in the range of $65 per hectaliter, which is very good. And in dollar terms, it's 13.2% higher than Q1 2009 compared to Q1 2008. This is number one.

Regarding the market share, we -- I mean, our market share in the non-alcoholic beverage system has been very, very stable in the last many years. And in -- what happened is that we have lost a little bit of market share in soft drinks, but we have been gaining a little bit -- or more than a little bit.

We have been gaining market share in all the segments, which are not soft drinks. This is mineral water, nectars, products like Gatorade. Putting all together, we have kept our market share in volumes and increased a little bit our market share in revenues and margins in the last many years. And we don't have any signal that this is changing in Q1 2009.

I mean, you have to consider that in one quarter we could increase our volumes a little bit more than our competitors and in the next quarter, they grow a little bit more than us. But year-on-year, we have been able to keep our market share and we feel confident regarding this.

In the case of beer, we don't have information for our competitor because they made public -- I mean on a year-basis, something like this. But we have --.

Not even that any more.

Yes. No, exactly. That's true. That now they publish consolidated volumes. But we have the news in another internal and external measurements, which show us that we are not losing market share. And in the case of Argentina, we're gaining a little bit. I mean, factoring out the extra effect we are gaining a little bit in our organic growth.

In the case of fiscal, probably, we are gaining also a little bit of market share. But put them all together, I would say that we are not gaining, we are not losing market share.

Great. And if I can follow -- if I can ask a follow-up about the wine business, I'd be interested in your view of how has the acceptance and demand for Chilean exports grown or declined in the last six months to a year? How do you see the competitive position of Chile as a wine exporter?

And in general, I mean, how happy are you with the acquisition so far in terms of how the synergy that is generating and how it is being integrated into the system?

Yes. In January and February, we suffered a lot. In December, January and February, we suffered a lot in our volumes. Because most of our distributors were decreasing strongly their inventories. And then the reduction in our exports was not the effect of a lower consumer, but lower inventories.

Analyzing the depletions of -- for most of our distributors, we feel very happy because while you could see that we are not losing volumes as we could have lost because of the international recession. And the reason that our wines are, as an average, the wines with lower price than the price of our competitors and the wine imported from other regions of the world.

Then we are not suffering importantly and we expect not to suffer importantly in the future. And the inventory effects are one-time effects and we began to see more regular and normal volumes since then and feel positive regarding the future.

The cost of integrating Vina Tarapaca and Vina San Pedro, we are very happy because the process almost terminated in all the shared services issues. I mean, accounting, engineering, human resources, auditing, purchasing, distribution, etceteras, etceteras. And in -- this is number one. And in terms of the commercial efforts, what we have done is the following.

In Chile, we have integrated both systems 100% and it is working perfectly. And we are improving the distribution of the Vina Tarapaca products because they had a very small distribution and we have a much better distribution than Vina Tarapaca. Then we are going to improve our volumes and margins.

In the case of the international markets, we keep separated the team of Vina San Pedro and the team of Tarapaca. And we will begin the process of integration very soon, but we will be very wise and we'll take a lot of time in order to do that. Because we don't like to lose any case in the export side to this.

Then for months or for years, probably, we keep two separate distribution systems, one for Vina San Pedro and one for Tarapaca and we'll be integrating the countries one after the other, beginning for those countries where we see a clear opportunity in doing the integration. And we will take much more time in those countries where the integration could bring us problems in terms of volumes.

And I have to say that most of the savings are not in the sales, in the sales areas of the areas of the export side of the business, but are more related with wineries, the shared services, distribution and we are going to advance various cuts in all these areas.

Again, our purpose is to keep our volume base on one hand and to grow it and to reduce costs in all the other areas. And, again, until now we are very happy and we'll -- I would say we'll see most of the results of the integration in the second half of 2009. And again, many things could happen because we are living very hard times, but we feel optimistic about this.

Great. Thanks.

Thank you, Jose.

Thank you. Our next question comes from the line of [Alan Alanis]. Please go ahead.

Hi. Yes. I had a quick question regarding the dividend policy. I mean, you know better than I do what's the situation that Heineken is going through. When we think about CCU's dividend going forward, is it fair to think of it as 60% of net income? Which is what I'm using right now. Or is that -- would that be too conservative or too aggressive, given the current environment?

Thank you, Alan, for your questions. It's difficult to answer this because it, finally, it's not our decision.

Yes.

But it's other shareholders who decide about this. But I -- probably I would say regarding this that CCU has been very stable in the past regarding its dividend policy. And I don't see any reason why to change this in the future.

Okay. Now in terms of -- that's useful, Patricio, thank you. In terms of preferred use of cash, not moving out of dividends, but in terms of CapEx, I mean, how -- where would you prefer to invest? Or how do you see your investments going forward? Do you see growing even further in wine? Or would you give preference to more international expansion, like the one you had in Argentina last year?

I mean, in the case of Argentina, what we have been building all these years is a platform with a critical mass in the beer business. As we did in Chile many years ago, I think that today we have or we are very near to have the platform we need to increase our business there and in other categories. And I think that in the future, we should move into this address or in this direction, excuse me, in Argentina. This is another one.

In the case of wine business, more than investment. What we need to do is to increase the profitability of all the investments we have then -- we have done in the future. This is number two.

And number three, we keep open to doing investments in other countries in the region, but as you know, we are a conservative company, the -- we will not go fast if we are not sure that the investments we're going to do is a clear investment where we have a clear advantages to make a profitable operation.

Then we keep open to invest in other countries, but we don't have the urgency of doing this. I mean, what I'm trying to say is that we're going to invest in other countries only if we have a clear path to a profitable and -- a profitable business. This is regarding new businesses.

Regarding our classical and year-to-year CapEx, we expect in 2009 to invest 50% of what we invested in 2008. That's mainly because we are not increasing the capacity of our different businesses, because we don't expect volumes to grow, half of our investment in -- at least half of our capacity.

And the other half, which is -- which are investments related with cost reductions, improving the quality of our products, improving the execution, the point of sale, of course, we will continue investment -- we will continue investing as usual.

That is very useful. Thank you very much. Thank you.

Thank you. And, Mr. Jottar, I show that there are no further questions in the queue.

Okay.

Thank you so much, Luke.

Thank you.

Okay.

Just for -- to terminate, probably I would like to say that the strength of our brands and distribution coupled with the efforts to reduce costs, which is our contingency plan, and the lower expected raw material costs in dollar terms allow us to face with confidence the slowing down economic scenario for 2009.

Thank you again for attending our conference call and I hope to see you soon.

Ladies and gentlemen, this concludes the CCU First Quarter Results Conference Call. You may now disconnect. Thank you for AT&T Teleconferencing.