Good day, everyone, and welcome to CCU's second quarter 2025 earnings conference call on the seventh of August 2025. Please note that today's call is being recorded. At this time, I'd like to turn the conference call over to Claudio Las Heras, the Head of Investor Relations. Please go ahead, sir.
Welcome and thank you for attending CCU's second quarter 2025 conference call. Today with me are Mr. Felipe Dubernet, Chief Financial Officer, Mr. Joaquín Trejo, Financial Planning and Investor Relations Manager, and Ms. Carolina Burgos, Senior Investor Relations Analyst. You have received a copy of the company's consolidated second quarter 2025 earnings release. The call will start by reviewing our overall results, and then we will move on to a Q&A session. As usual, before we begin, please take note of the following statement. The statements made in this call that relate to CCU's future financial results are forward-looking statements, which of course 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. For today's conference, as we stated in our second quarter 2025 financial report, annual variations and references regarding EBITDA and net income exclude the non-recurring gain from the sale of a portion of land in Chile in the second quarter of 2024. Organic variation, to which we will refer next, excludes the consolidation of Aguas in Argentina and AD in.
Paraguay.
Paraguay. For more details to this, see footnote three of our second quarter 25 financial report. It is now my pleasure to introduce our CFO, Mr. Felipe Dubernet.
Thank you, Claudio, and thank you all for joining the call today. In the second quarter of 2025, CCU delivered higher financial results and increased profitability versus last year, despite a volatile and challenging business environment. Consolidated EBITDA nearly doubled versus last year, mainly driven by our main operating segment, Chile, which expanded EBITDA 59.1%, and to a lesser extent, by the 8.3% growth in the wine operating segment. On the other hand, we keep facing a challenging scenario in Argentina, impacting the international business operating segment's results. Higher consolidated EBITDA, improved EBITDA margin were driven by volume growth, revenue management efforts, and efficiency, more than offsetting cost and expenses pressure from inflation. In line with the higher operation results, net income posted a lower loss versus last year.
Our first half results show that we are taking the right actions to keep delivering higher financial results and profitability in the context of soft volume trends for the beverage industry in the region. For the second half, we will keep executing our 2025/2027 strategic plan and its three pillars, profitability, growth, and sustainability, with a special focus on profitability supported by both revenue management efforts backed by strong and diversified portfolio of brands and efficiencies across all our operating segments. Regarding our main consolidated figures in the second quarter, organic net sales were up 4.8%, explained by 4.7% higher organic volumes, while organic average prices were flat. Gross profit grew 6.7%, 6.7% organically, and gross margin expanded 73 basis points.
In addition, consolidated MSD&A expenses grew 5.8%, mainly due to the consolidation of Aguas de Origen in Argentina, although as a percentage of net sales improved 197 basis points. Without the consolidation of Aguas de Origen that we started first of July last year, MSD&A expenses would have decreased 0.5%. In all, EBITDA expanded 97.1%, and EBITDA margin expanded 150 basis points.
In terms of our segments, in the Chile operating segment, top line expanded 9.4% as a result of 6% increase in average prices and 3.2% higher volumes, where all categories posted positive real growth with a better seasonally adjusted volume pace than previous quarters. Increased average prices were explained mainly by revenue management efforts, more than offsetting negative mix effects, and were key to expand gross profit and gross margin by 12.5% and 115 basis points respectively, in a context of cost pressure related to an unfavorable packaging mix and higher manufacturing costs, mainly associated with our PET recycling plant, Circular. MSD&A expenses grew below inflation, expanding 2.1%, and as a percentage of net sales improved 265 basis points due to efficiencies.
Altogether, EBITDA increased 59.1%, and EBITDA margin expanded 339 basis points. In international business operating segment, organic volumes posted a 9.8% expansion, although net sales recorded an 11.4% contraction, driven by 19.3% lower organic average prices in Chilean pesos. The decline in organic average prices was mainly due to the devaluation of the Argentine peso against the U.S. dollar, and also due to a challenging pricing scenario in Argentina. The volume expansion was mainly explained by a low comparison base in the second quarter 2024 in Argentina, while volumes, seasonally adjusted, continued in a recovery trend for the fourth consecutive quarter. Organic gross profit increased 11.6%, and organic gross margin was flat. MSD&A expenses were up 10.5%, mainly due to the consolidation of Addo and higher marketing expenses.
As a percentage of net sales, MSD&A expenses decreased 301 basis points. Without the consolidation of Addo, MSD&A expenses would have decreased 5.9%. In all, in spite of volume growth, given the effects mentioned above, EBITDA loss was similar to last year. The wine operating segment posted a top line expansion of 6%, mainly driven by a 4.2% volume and 1.7% higher average prices. Larger volumes were led by a 17.4% growth in exports, partially offset by 4.1% decrease in the Chilean domestic market, while the industry posted a larger decline. The higher average prices were mostly explained by the weaker CLP and its favorable impact on export revenues and revenue management initiatives in domestic markets, compensated by negative mix effects in the portfolio.
Gross profit was flat, and gross margin deteriorated by 222 basis points due to cost pressures from a higher cost of wine due to a lower harvest and higher USD-linked packaging costs. MSD&A expenses dropped 3.7% due to efficiencies and as a percentage of net sales improved 274 basis points. Altogether, EBITDA increased 8.3%, and EBITDA margin was up 32 basis points. Regarding our main JV and associated business in Colombia, we delivered low single-digit volume growth in a soft in-industry context. We continue working in strengthening our brand portfolio and our sales execution to deliver sustainable growth in volume and results in Colombia. Now, I will be glad to answer any questions you may have.
Thank you. We'll now be moving to the Q&A part of the call. If you'd like to ask a question, please press star two on your phone. That is star two. If you're dialed in by the web, you can type your question in the box provided or request to ask a voice question. We'll wait a few moments for the questions to come in. Okay. Our first question is from Felipe Ucros from Scotiabank. Your line is now open. Please go ahead.
Thanks, operator. Good morning, everyone, and thanks for the space. A couple on my end. The first one is on the pricing in Argentina. Can you delve a little deeper into your pricing comments? You know, you talk about a difficulty in pricing, so just wondering if you can talk about whether this comes from the competitive environment with lack of discipline or perhaps it's just the state of the consumer that's keeping you from increasing prices faster and on pace with inflation. The second one is on SG&A in Argentina. Operating leverage seemed to drop pretty strongly this quarter, particularly when you compare it to the last three quarters since you acquired Aguas de Origen .
You know, third quarter of last year, which was, you know, seasonally speaking, kind of similar, also winter, your SG&A was close to 50% of sales, but this quarter it was closer to 66%. Pretty stark difference from one year to another. Perhaps the pricing issue has to do with it, but just wondering what the drivers are, on that deleveraging pace. Thank you.
Hello, Felipe. Good to hear about you. The first thing, yeah, that was key, the pricing. Because at the end of the day, pricing has been very difficult in Argentina, especially in the last, I would say, six months. To give you a reference, last year, beer price in Argentina was, compared to inflation in 2024, above inflation by 4.4%. However, this year to date, is below inflation by 10.5%. If we take into account where the new government took office in Argentina, let's say the period of 18 months since 1st January 2024, our prices in Argentina are 6% below inflation. As you know also, wages are lagging.
Real wages in Argentina are lagging below inflation. This is expected because at the end, the main target of the government is to reduce inflation. Consumer has less Argentine pesos in its wallet. Argentina is expensive right now, and it's in this change. At the end of the day, for the future, it's for good to reduce inflation in Argentina. Also, the good news in Argentina after the announcement of the government mid-April is that we have a new exchange rate policy, let's say. This is what is affecting overall the industry. Also, competition is aggressive because volumes are difficult to recover. Maybe the good sign is that for the fourth consecutive quarter, seasonally adjusted, our volumes have grown.
However, also, we have had mixed effects as we are, as the mixed participation of value brands are higher than before, and this has also to do with this deflationary pressure, I would say, in Argentina. It's very clear that our prices in this period are below inflation. As far as the economy recovery in Argentina in the future, maybe, also a further reduction on inflation, our prices would be in a more healthy perspective, let's say. Regarding the synergies of the water business, no, the synergies are there because at the end, of course, at total expenses level, of course, we have in our P&L the expenses of Aguas.
There are marketing expenses because these are completely allocated to the category. There is more distribution cost of course, but also we have, let's say we are only owners of the 61% of the company. We have a benefit there because we charge ABBA with admin at minimum, so there is a minority interest that you need to look. At the end, you have more marketing expenses because at third quarter last year we didn't have this. The good indicator, and this is why we did the pro forma, is that if you exclude ABBA, the consolidation ABBA, our MSD&A expenses have decreased 5.9% and a percentage of net sales.
This is what is very important because in a scenario where you have high inflation and difficulties in pricing, our MSD&A expenses organically decreased 300 basis points. This is the key indicator. Of course the volumes were disappointing in terms of what we expected as recovery, but what was more difficult was the pricing scenario, Felipe.
No. Understood. That's very clear. If I can do a follow-up, you know, on the other side, on Chile, you have very good results on gross margins. Wondering if you can discuss what was the key driver here on the expansion of gross margins in Chile?
Yeah, of course. Okay, Felipe. Yes, Chile. Thank you for noticing that in Chile we have had good results. In fact, I think we have had good results in Chile, not only overall, but in all categories, let's say beer, non-alcoholic and also spirits. First of all, this is, as always, we did a commentary on that. Our brand equity is very strong in Chile. So our pricing power, so because increasing in this context, the price increase is 6%. This is real average prices. It's not mix effect, it's real average prices. This is much above inflation.
At the same time, we have maintained overall market share and recovering market share, especially in alcoholic products, again, previous quarter. This sounds a good equation, I would say. Increasing prices, recovering market share in alcoholic products, we posted in overall alcoholic products a low single digits growth where competition have had negative growth. In a very difficult industry, as I mentioned last quarter in alcohol beverages, and this is based on sound brand equity. Along with this good equation top line, I would like to say also a good effort in efficiencies, especially in logistics. Overall, it's a good quarter in our core operating segment, which is Chile.
Thanks. Thanks a lot for that.
Thank you very much. Our next question is from Vidhi Vira from Goldman Sachs.
Can you give guidance for the second half of 2025 profitability and revenue expectations? Can you share color on the free cash flow you expect to generate this year after interest, tax, working capital, CapEx, et cetera?
Okay. Thank you, Vidhi, for your question. First of all, we don't do forward-looking estimates, so I cannot answer this question. On top of that, it's very volatile. U.S. dollar is volatile, the exchange rate, so we have had at the beginning of a month ago, U.S. dollar was at 940. We experienced 5% devaluation, so it's very volatile. Consumption, as I mentioned in my previous answer, especially for Chile, seems to be low single digits, but we need to wait. Pricing scenario has been favorable so far, but we don't know, of course, we don't know how competition would seem to be. I cannot give you a guidance on a more precise guidance.
Regarding free cash flow, we have a very good execution on operating cash flow. Not only because we increased our EBITDA, but also in working capital, thanks to inventory reduction, thanks to initiatives. Because of efficiencies, you can look at efficiencies on the one hand in expenses, in costs, but also in working capital. We are implementing a new planning platform. We do have a new logistic and planning process. That is delivering its fruits. As a consequence, we experience days inventory reduction, also good work on accounts receivables by the team. Also, in this particular quarter, we changed our operating model with Red Bull, which allow us to free up extra cash flow.
In terms of CapEx, we are a little behind the pacing of the estimate we published in the 20-F, that we could find in the 20-F, but that was more than compensated by this excellent working capital result.
Thank you. Our next question is from Kevin Chang from Western Asset Management. Your line is now open. Please go ahead. Hello, Kevin. Your line is now open. Okay, looks like Kevin dropped. We'll move on to the next question. Our next question is from Lucas Tejada from JP Morgan. Your line is now open. Please go ahead.
Hello, everyone. Hope you can hear me. My first question is on.
Yes.
Yeah, perfect. My first question is on your expectations on COGS for the rest of the year. There was an important drop in aluminum prices, right, in the beginning of the second quarter. Wondering if some of this already was reflected in this quarter's results, or if you expect that drop to be something in favor of the company in the third quarter. And then, you know, if you can comment a little bit, especially in Chile, how you see your expectations. You had an important improvement in margins year-over-year in 2Q. If that's still the case for the second half of last year, especially in the fourth quarter, right? Company had a good improvement in profitability.
If you think this is offering tough comps for you, or if you are comfortable to once again, especially in the fourth quarter, reach the near 20% margin in Chile. Thank you very much.
We are seeing more in terms of commodity. We are seeing a little bit higher aluminum prices, as you mentioned, 5% more than last year, so at $3,500 per ton. As we don't hedge, we prefer to be a bit cautious on that, especially given the trade discussions that the U.S. government is having with China, Brazil and other countries. There are other raw materials that are in a better shape, let's say sugar, reducing 14% compared to last year so far. Somewhat also, barley reducing 15% compared to last year.
We are seeing more rather a stable aluminum price going forward. On the other hand, we are a little bit worried about, as I mentioned in my previous answer, the U.S. dollar, because so far it's around 970 CLP. It was 933 CLP for the entire quarter too. Now we are facing U.S. dollar pressure. Of course, towards the end of the year, you know, margin will depend a lot on how we sustain our prices. I would say that signs are positive because second quarter was very encouraging. We are at best-ever brand equity levels in all categories with our surveys.
Consumers are preferring, despite prices, our products. At the end of the day, this is a sound foundation of the business. What will happen, as I mentioned in my previous answer, I will not give you a forward-looking view, but if we sustain this level of prices, we have of course some pressures ongoing given the recent this week's devaluation of the Chilean peso. But the volumes we maintain the commentary I made this quarter, I think we are growing low single digits the volumes. We could have a good second half.
Perfect. Thank you very much.
Thank you. Our next question is from Horacio Herrera from MBI Inversiones.
How do you see the situation in Argentina? Is there any green shoots in terms of profitability?
Thank you, Horacio. I think I know I prefer to have interaction, but it seems that I have answered the question. We are facing a difficult pricing scenario. Argentina is in a deflation mode. If it continues this trend, I think it's something that Argentina has to do, let's say, reduce inflation levels. Because I don't know, two or three years ago, we have hyperinflation. We increased prices, volume didn't suffer, but we couldn't get dividend from this operation. Now we are in a moment of change. The green spot, as I think you asked me a question, if this new macroeconomic program achieve to a good end, would be good in the long term for our business.
We have a solid foundation in Argentina in terms of brand preference, completely aligned with our market share position. We have a good operation that is making efficiencies. We incorporate a new more scale, adding the water, the Aguas de Origen water business. For the long term, I say if the macroeconomic plan in Argentina works and the country has more investment, I'm seeing a better future. Now we are in the middle of the transition from a hyperinflation economy to a deflation. Of course our P&L is suffering because it's difficult with the consumer, where the salaries are lagging inflation to further increase prices. Competition is aggressive. As I said, the things that are under our control is the brand equity and the good work we are doing there.
Thank you. Our next question is from Ewald Stark, from BICE Inversiones. Your line is now open. Please go ahead.
Hello, everyone. Thanks for taking my question. I saw that exportation volumes increased by 14% year-over-year. I was wondering what do you expect going forward? Do you still expect volumes to increase by double digits given that you are taking an active approach on opening distribution channels? Hello?
Hello everyone. We are pushing the mute/unmute button. This is why I didn't answer quickly. Yes. While our main priority in the export business was to recover scale, remember we have a terrible 2023 with the global destocking of inventory. This is, I would say, a very encouraging quarter where our volumes grew by 17.4%, with very good performance in Japan, Brazil, and South America, while the U.S. market continued to be very complicated. Going forward, we expect, let's say, for the overall year to continue the recovery we did in 2024 and, let's say, something like mid-single digit growth in our exports. The second quarter was very good, also above our expectations somewhat.
As I mentioned, other business was below our expectation, the volume in Argentina. On the other hand, export of wine was above our expectation. This is the multi-category. As I said, there are some business that we do good performance some quarters, some business we don't. This is why CCU is a leading multi-category company, in order to have a good diversification.
Okay, perfect. Thanks.
Thank you. Our next question is from Álvaro García, from BTG Pactual.
Can you comment on the dynamics of beer versus soft drinks in Chile? Thanks.
Oh. No. Both categories have practically the same growth, low single digit growth, I would say, beer and non-alcoholic. In the case of the spirits, we have a very solid growth because we are the market leaders in the new trendy categories such as ready to drink, with our Austral Light brand, we are a sound leader there. Both were in line in terms of low single digit growth. In the case of beer also, outpacing our market share in quarter two of what we had in quarter one. It's a good market share recovery in beer across all the brands. That was good.
In the case of non-alcoholic, we grew low single digits% despite an unfavorable mix for us, as colas continue to take more of the whole non-alcoholic beverage or within soft drinks, colas where we are not the market leaders are taking more portion of the mix. This has been a trend since the pandemic. However, our Pepsi brand continue to gain brand equity, which is important to compete against the market leader in colas. Despite all of this, we experience this low single digit growth in a very competitive, by the way, scenario in non-alcoholic, also in beer.
In non-alcoholic, that sometimes is more rational, has been very competitive in the last quarters.
Thank you. Our next question is from Constanza González from Quest Capital. Your lines are open. Please go ahead.
Hello, everyone. Thank you Felipe for taking my question. I have two. The first one is in relation with Argentina. You said before that you cannot give us a guidance for the year, but could you give us more details about the pass-through to prices of inflation in the month of July? Also, just to clarify, in the short term, the priority of the company is to keep the market share in Argentina instead of increase the profitability? Thanks.
Yeah. Thank you, Constanza, for this. Yeah. I mentioned to you that the gap in the last 18 months of beer prices in Argentina compared to inflation in a previous question, I answered that was a 6% low. We expect towards the end of the year to reduce this gap. It was difficult in the 18 months to be in December this year in line with inflation, especially looking at the salaries evolution in Argentina without losing volume and scale. Argentina for us is a mature business. We don't want to gain share through aggressive promotions. We as I mentioned in a previous question, I think we have our fair share compared to our brand equity, let's say.
Answering you, if we maintain our brand equity, we will maintain our share. I think what else? No. I think this was your the answer to you. That's it. On the other hand, water business presented better. I didn't mention, but in the accumulated 18 months, water is just 3% below inflation. This is why soft drinks and non-alcoholic beverage are suffering less in their P&L compared to alcoholic beverages. Because also alcoholic beverage in the past has had more exposure to the valuation of the currency. Also, remember another thing that we have had a big drop in terms of the valuation in April. So if everything continue in the current pace, let's say that the government announced that this is already predicted, let's say.
We expect that inflation levels continue to lower in Argentina. This is the plan of the government. For the long term, as I said, this is good. Argentina is a special country. Argentina is getting out. It's not here. Argentina is getting out from a hyperinflationary economy to a normal standard economy. This is the price we are somewhat paying as the consumer in order to have a better future.
Thank you, Felipe.
Thank you. Our next question is from Martín Calderón, from BTG Pactual. He has a few questions.
Thank you for taking my question. I wanted to ask how the implementation of the REP Law has impacted your operations so far, and how you're preparing for the upcoming, more demanding targets. What kinds of operational and financial implications have you seen, and to what extent have you passed these additional costs through to consumer prices? And secondly, how are you currently seeing the outlook of key raw materials such as sugar, fruit pulp, PET, aluminum and other relevant inputs across your main categories?
Yeah. Okay. Thank you. Again, we have difficulties for unmuting the platform. But here we go. I think the second part of the question, I already answered. We saw better prices in sugar, fruit pulp, especially in sugar. PET is, I would say, stable. Green PET. The PET we import from China. Aluminum, I said, we are seeing a $2,500 price stable, let's say so. But as I mentioned, input costs are subject to the U.S. dollar. This is not a good week for us regarding the U.S. dollar going forward. The first part of the question regarding Circular and the REP Law regarding packaging recycling or PET recycling or PET bottles recycling.
I will hand over this question to Joaquín Trejo to give you some color on that.
Thank you, Felipe. Thanks Martín for your question. Yeah. The impact of the REP Law can be seen in the costs and expenditures associated with our PET recycling plant, Circular, to give you more color on that, in the second quarter, the impact is approximately.
CLP 3 billion. It is mainly due to two factors. One, the manufacturing expenses, and second, the additional cost of the recycled material over the virgin material. On a year-to-date basis, it's about CLP 7 billion more or less. Obviously this is significant impact considering our total scale, because we are talking about more or less the 7% of the EBITDA of the Chile operations segment in the quarter. Yeah, definitely. Regarding prices, we think it's difficult to pass this on to consumers. In fact, the prices of the non-alcoholic categories in the second quarter grew in line with inflation. I would say that passing on this cost to prices is difficult to do, so as long as consumers actually don't or do value that.
I would say that, yeah, it's a challenge because prices in non-alcoholic categories in Chile grew in line with inflation in the second quarter, not above or well above inflation.
Thank you. Our next question is from Fernando Olvera from Bank of America. Your line is now open. Please go ahead.
Hi, thanks for taking my question. The two are related to Chile. Now, regarding the volume performance that we have seen year-to-date , I was just wondering, how does this compares versus your initial expectation, you know, at the beginning of the year? My second question, also related to Chile, is based on the strong pricing that we have seen, you know, how your market share has performed on beer, so far this year. Thank you.
Hello, Fernando. Nice to hear from you. Regarding Chile volume performance, as I said, we grew low single digits. Year-to-date , I would say, we are flat in terms of volume. Also because the comparison of the first quarter of last year was a little bit high, also the second quarter. We are flat, but with a good seasonally adjusted trend, I would say, or stable. It stabilized in the case of beer. In the last three quarters, let's say, seasonally adjusted, industry volumes in Argentina were stable. Of course, we have less volume of per capita consumption compared to 2021.
Let me remind you about the pension fund withdrawal and the consumption parity in Chile, let's say. We are seeing a stabilization on the beer volumes. Non-alcoholic, on the other hand, we are seeing a positive trend, seasonally adjusted, with a very good because seasonally the quarter was much better than same quarter last year, even seasonally adjusted. We continue seasonally adjusted to see better volumes in the last, let's say, four quarters, okay, in non-alcoholic. In conclusion, I think it's possible to have a low single digit growth in beer towards the year. In the case of non-alcoholic, between, let's say, low single digit and mid-single digit, a little bit higher.
This is in the overall equation. On the other hand, we are doing very well in beers, especially because of the ready-to-drink products. I don't know if I answered your question.
No. Yes, that's great. Felipe, regarding the market share, you know, on beer?
No, I already mentioned in the previous question the market share.
Sorry, I missed it.
Overall, it's stable compared to last year. I would say stable. Which is very encouraging, is that it's not stable because it's growing, is our brand equity in beer. This is why the pricing power we are having.
Okay. Awesome. Thank you.
Thank you. Our next question is from Thiago Bortolucci from Goldman Sachs. Your line is now open. Please go ahead.
Hola, Felipe. Hola, Claudio. Thank you very much for taking our questions. Great to talk to you. I have two, but let me start with Chile, right? When I put together, Felipe, a few of the things that you said, you said stable market share in beer. You said consolidated prices moving above inflation with non-alcoholic growing at inflation, right? Which implies you are growing materially above inflation on beer, right? What is driving this momentum for beer in your view, right? You are growing real prices, still keeping market share. Is this about to do with, you know, competition moderating? Is this to do with channel mix? What is your assessment on this? I'll pause here and then I have another one in international. Thank you very much.
Hey. Hola, Thiago. Nice to hear all you. As you know, the beer business all over the world has suffered from very high inflation in the last two years. The driver is our priority in recovering profitability in our businesses and the category that suffered the most after the pandemic because of raw materials, because of exchange rate, is beer, particularly beer. The driver is that we have a solid brand equity, so it's internal driver at the end in order to increase prices. We need to recover the profitability we had before the pandemic, and that's clear. We continue our revenue management efforts, working on our mixes. The good news is that the mixes has not deteriorated in beer in the last two years.
Despite having a softer industry, mixes remain the same. Of course, we have a higher market share in mainstream, lower market share in premium. In spite of this, our market share is almost stable. Of course, in the first quarter we lost a little bit market share, but we recovered then in quarter two while increasing prices. That's a good news, I would say. Did I answer your question?
Clearly. Thank you very much, Felipe. If I may have follow up in international.
Yeah.
We all understand quite well what's happening in Argentina, right? We know the activity, momentum and inflation, all the volatility there, but none of this is new to the story, right? Everything was already in place in the beginning of the year with one exception. That is clearly the FX effects that moved a lot. Now, this is more of a conceptual question, right? Rather than getting the number. What changed from the first quarter to the second quarter for us to see a shift to mid-teens% EBITDA margin in the first quarter to - 20s EBITDA margin in the second quarter. Again, I know, I understand the FX effects part of this equation, but apart from this, how should we think about the underlying momentum, right? Particularly when I compare your performance on a quarter-over-quarter basis. Thank you.
Our pricing, when you compare with inflation, deteriorated in the second quarter, along with the valuation of the currency. Let me first start with the devaluation, because there is something in the second quarter you need to take into account. We disclosed this in our first release. If you saw there is a table which is the Exhibit 7, which is the impact of the hyperinflation accounting. This impacted us a lot. It impacted us around $3 million at the EBITDA level. The impact of the IAS 29, which is the update in the quarter of the first quarter. The first quarter result is adjusted into the second quarter result.
Sorry to mention this, sometimes it's complex to you, Thiago, to take into account that, because this hyperinflation accounting is very. It's a unique country covering that. This has an impact also in our result. Anyway, despite the accounting matters, let's say, which deteriorated, I think the pace of the recovery has slowed down. Although we have a recovery, but it's slowed down. The recovery in quarter one was much higher when you compare seasonally adjusted with quarter four. It seems the consumer has less purchasing power, let's say. Salaries are below inflation, so it is difficult, this thing. Also the mix deteriorated in Argentina, but it's part of the equation. We saw.
This trend has happened between quarter two and quarter one, to be honest. A lower pace of volume recovery. The gap of pricing compared to inflation, wide open. Aggressive competition also. We have to continue to work on efficiencies, on expense control. We think in the coming months, maybe with this good trend in terms of inflation in Argentina, as the consumer recovers its purchasing power, there would be a more favorable scenario in order to start to close this gap in terms of pricing against inflation. Yeah.
Well understood, Felipe. Thank you very much.
Thank you very much. Just a reminder, if you'd like to ask a question, press star two on your phone, and if you're dialed in by the web, you can type your question in the box provided or request to ask a voice question. We have a follow-up question from Vidhi Vira from Goldman Sachs.
Can you share color on the health of the consumer in Chile? How are you seeing volumes and pricing evolve in July 2025? Are you in a position to increase prices in the second half of 2025 to maintain and improve profitability?
Yeah. I think the health of the consumer of Chile, as I mentioned, alcoholic beverage, especially beer, stabilized. It's too early to call how would be the volume. You know, our business is very seasonal. It's a very seasonal business, okay? It's difficult to anticipate quarter four, which is very important. Then in July because of price increases of last year, but seasonally adjusted volumes of July were better than quarter two, which is the only thing I can mention. Let's say, seasonally adjusted beer volumes were better than quarter two. In non-alcoholic, it also maintained seasonally adjusted. The July seasonally adjusted was in line with quarter two. We will continue to see, let's say, this low- to mid-single-digit growth in non-alcoholic, okay.
Regarding pricing scenario, Chile is a very competitive market. I cannot forecast, but always if there are opportunities for revenue management, believe me, we will take them. We'll take them along, see other KPIs such as market share, our brand equity. You know, it's not just to say, "Okay, price, how is volume July 2025?" We're stable. We haven't seen, you know, something changing on sustaining our prices already achieved. A good thing would be, let's say to further enhance our revenue management, but I cannot commit on that because it's, it would be, it's a very competitive market.
Thank you. Looks like we have no further questions. I'll now hand it back to the CCU team for the closing remarks.
Hello, everyone who attend this conference call. In summary, in Q2 2025, we almost doubled consolidated EBITDA for a robust expansion in our core operating segment, which is Chile, and a high single-digit EBITDA expansion in the wine operating segment. As I mentioned, we still face a very challenging scenario in Argentina, but for the future we think it is for good, as I said. Revenue management and efficiencies were key to achieve this quarter too. Moreover, we were able to deliver volume growth in all operating segments and core categories in a context of soft industries. To conclude, I would like to mention that at the end of this call, this is a very symbolic year for CCU as we are celebrating 175 years of history.
We continue implementing in this year our 2025-2027 strategic plan, supported in our multi-category strategy and our vast business experience to ensure sustainable and profitable growth for our company. I wish you a wonderful afternoon. Thank you all of you.
That concludes the call for today. Thank you and have a nice day.