Financial Information as per operating segments

12 Months Ended

Dec. 31, 2018

Disclosure of entity's operating segments [text block]

Note 6

Financial Information as per operating segments

The Company has defined three Operating segments, essentially defined with respect to its revenues in the geographic areas of commercial activity: 1. Chile, 2. International business and 3.Wine.

These Operating segments mentioned are consistent with the way the Company is managed and how results are reported by CCU. These segments reflect separate operating results which are regularly reviewed by the chief operating decision maker in order to make decisions about the resources to be allocated to the segment and assess its performance.

Operating segment	Products and services
Chile	Beers, non-alcoholic beverages, spirits and SSU.
International Business	Beers, cider, non-alcoholic beverages and spirits in Argentina, Uruguay, Paraguay and Bolivia.
Wines	Wines, mainly in export markets to more 80 countries.

Corporate revenues and expenses are presented separately within the Other, in addition in the other presents the elimination of transactions between segments.

The Company does not have any customers representing more than 10% of consolidated revenues.

The detail of the segments is presented in the following tables:

Information as per operating segments for the years ended

December 31, 2018 and 2017

	Chile						International Business						Wines						Others						Total
	2018			2017			2018 (4)			2017			2018			2017			2018 (4)			2017			2018 (5)			2017
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Sales revenue external customers		1,080,974,052			1,020,763,055			473,972,819			457,178,413			201,305,759			200,455,713			-			-			1,756,252,630			1,678,397,181
Other income		15,754,493			14,667,777			9,404,839			2,740,533			4,190,594			3,105,064			(2,320,219	)		(549,761	)		27,029,707			19,963,613
Sales revenue between segments		12,845,646			11,688,658			548,184			398,100			1,022,378			893,005			(14,416,208	)		(12,979,763	)		-			-
Net sales		1,109,574,191			1,047,119,490			483,925,842			460,317,046			206,518,731			204,453,782			(16,736,427	)		(13,529,524	)		1,783,282,337			1,698,360,794
Change %		6.0			-			5.1			-			1.0			-			-			-			5.0			-
Cost of sales		(501,255,744	)		(483,604,499	)		(230,068,601	)		(190,387,412	)		(133,271,578	)		(126,244,373	)		4,584,531			1,497,629			(860,011,392	)		(798,738,655	)
% of Net sales		45.2			46.2			47.5			41.4			64.5			61.7			-			-			48.2			47.0
Gross margin		608,318,447			563,514,991			253,857,241			269,929,634			73,247,153			78,209,409			(12,151,896	)		(12,031,895	)		923,270,945			899,622,139
% of Net sales		54.8			53.8			52.5			58.6			35.5			38.3			-			-			51.8			53.0
MSD&A (1)		(407,242,869	)		(383,169,121	)		(210,591,361	)		(225,341,789	)		(52,408,689	)		(53,941,735	)		(11,332,903	)		(6,330,835	)		(681,575,822	)		(668,783,480	)
% of Net sales		36.7			36.6			43.5			49.0			25.4			26.4			-			-			38.2			39.4
Other operating income (expenses)		1,586,173			2,438,416			223,078,626			678,153			1,828,938			251,765			532,889			687,209			227,026,626			4,055,543
Adjusted operating result (2)		202,661,751			182,784,286			266,344,506			45,265,998			22,667,402			24,519,439			(22,951,910	)		(17,675,521	)		468,721,749			234,894,202
Change %		10.9			-			488.4			-			(7.6	)		-			-			-			99.5			-
% of Net sales		18.3			17.5			55.0			9.8			11.0			12.0			-			-			26.3			13.8
Net financial expense		-			-			-			-			-			-			-			-			(7,766,206	)		(19,115,361	)
Equity and income of associates and joint ventures		-			-			-			-			-			-			-			-			(10,815,520	)		(8,914,097	)
Foreign currency exchange differences		-			-			-			-			-			-			-			-			3,299,657			(2,563,019	)
Results as per adjustment units		-			-			-			-			-			-			-			-			742,041			(110,539	)
Other gains (losses)		-			-			-			-			-			-			-			-			4,029,627			(7,716,791	)
Income before taxes																										458,211,348			196,474,395
Tax income (expense)																										(136,126,817	)		(48,365,976	)
Net income for year																										322,084,531			148,108,419
Non-controlling interests																										15,193,739			18,501,066
Net income attributable to equity holders of the parent																										306,890,792			129,607,353
Depreciation and amortization		63,148,804			64,807,818			19,798,708			15,568,301			7,935,006			7,505,440			2,406,676			4,317,945			93,289,194			92,199,504
ORBDA (3)		265,810,555			247,592,104			286,143,214			60,834,299			30,602,408			32,024,879			(20,545,234	)		(13,357,576	)		562,010,943			327,093,706
Change %		7.4			-			370.4			-			(4.4	)		-			-			-			71.8			-
% of Net sales		24.0			23.6			59.1			13.2			14.8			15.7			-			-			31.5			19.3

(1)

MSD&A included Marketing, Selling, Distribution and Administrative expenses.

(2)

Adjusted operating result (for management purposes we have defined as Net income before other gains (losses), net financial expense, equity and income of joint venture, foreign currency exchange differences, result as per adjustment units and income taxes).

(3)

ORBDA (for management purpose we have defined as Adjusted Operating Result before Depreciation and Amortization).

(4)

The net impact, related to early termination of Budweiser license, on International Business Operating segment earnings was a one-time gain of ThCh$ 211,228,960 in ORBDA and a loss in Other for an amount of ThCh$ 2,386,517.

(5)

The net impact, related to early termination of Budweiser license (

See

Note 1 – General information, letter C

on CCU’s consolidated earnings was a one-time gain of ThCh$ 208,842,443 in

ORBDA and ThCh$ 157,358,973 in Net income attributable to equity holder of the parent.

Information as per operating segments for the years ended

December 31, 2017 and 2016

	Chile						International Business						Wines						Others						Total
	2017			2016			2017			2016			2017			2016			2017			2016			2017			2016
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Sales revenue external customers		1,020,763,055			973,220,715			457,178,413			366,778,056			200,455,713			195,322,270			-			-			1,678,397,181			1,535,321,041
Other income		14,667,777			15,630,481			2,740,533			2,783,615			3,105,064			5,851,015			(549,761	)		(688,444	)		19,963,613			23,576,667
Sales revenue between segments		11,688,658			8,524,493			398,100			546,972			893,005			228,767			(12,979,763	)		(9,300,232	)		-			-
Net sales		1,047,119,490			997,375,689			460,317,046			370,108,643			204,453,782			201,402,052			(13,529,524	)		(9,988,676	)		1,698,360,794			1,558,897,708
Change %		5.0			-			24.4			-			1.5			-			-			-			8.9			-
Cost of sales		(483,604,499	)		(471,151,686	)		(190,387,412	)		(157,485,547	)		(126,244,373	)		(112,938,261	)		1,497,629			(244,422	)		(798,738,655	)		(741,819,916	)
% of Net sales		46.2			47.2			41.4			42.6			61.7			56.1			-			-			47.0			47.6
Gross margin		563,514,991			526,224,003			269,929,634			212,623,096			78,209,409			88,463,791			(12,031,895	)		(10,233,098	)		899,622,139			817,077,792
% of Net sales		53.8			52.8			58.6			57.4			38.3			43.9			-			-			53.0			52.4
MSD&A (1)		(383,169,121	)		(373,407,847	)		(225,341,789	)		(191,413,501	)		(53,941,735	)		(52,007,092	)		(6,330,835	)		(2,714,311	)		(668,783,480	)		(619,542,751	)
% of Net sales		36.6			37.4			49.0			51.7			26.4			25.8			-			-			39.4			39.7
Other operating income (expenses)		2,438,416			1,734,871			678,153			(394,820	)		251,765			732,689			687,209			1,043,939			4,055,543			3,116,679
Adjusted operating result (2)		182,784,286			154,551,027			45,265,998			20,814,775			24,519,439			37,189,388			(17,675,521	)		(11,903,470	)		234,894,202			200,651,720
Change %		18.3			-			117.5			-			(34.1	)		-			-			-			17.1			-
% of Net sales		17.5			15.5			9.8			5.6			12.0			18.5			-			-			13.8			12.9
Net financial expense		-			-			-			-			-			-			-			-			(19,115,361	)		(14,627,170	)
Equity and income of associates and joint ventures		-			-			-			-			-			-			-			-			(8,914,097	)		(5,560,522	)
Foreign currency exchange differences		-			-			-			-			-			-			-			-			(2,563,019	)		456,995
Results as per adjustment units		-			-			-			-			-			-			-			-			(110,539	)		(2,246,846	)
Other gains (losses)		-			-			-			-			-			-			-			-			(7,716,791	)		(8,345,907	)
Income before taxes																										196,474,395			170,328,270
Tax income (expense)																										(48,365,976	)		(30,246,383	)
Net income for year																										148,108,419			140,081,887
Non-controlling interests																										18,501,066			21,624,399
Net income attributable to equity holders of the parent																										129,607,353			118,457,488
Depreciation and amortization		64,807,818			61,736,849			15,568,301			11,928,705			7,505,440			7,078,872			4,317,945			2,783,619			92,199,504			83,528,045
ORBDA (3)		247,592,104			216,287,876			60,834,299			32,743,480			32,024,879			44,268,260			(13,357,576	)		(9,119,851	)		327,093,706			284,179,765
Change %		14.5			-			85.8			-			(27.7	)		-			-			-			15.1			-
% of Net sales		23.6			21.7			13.2			8.8			15.7			22.0			-			-			19.3			18.2

(1)

MSD&A included Marketing, Selling, Distribution and Administrative expenses.

(2)

(3)

ORBDA (for management purpose we have defined as Adjusted Operating Result before Depreciation and Amortization).

Sales information by geographic location

	For the years ended as of December 31,
Net sales per geographical location	2018		2017		2016
	ThCh$		ThCh$		ThCh$
Chile (1)		1,289,513,013		1,226,668,091		1,176,972,109
Argentina (2)		421,607,095		413,466,737		329,585,488
Uruguay		17,708,773		16,402,136		15,204,331
Paraguay		43,565,171		41,823,830		37,135,780
Bolivia (3)		10,888,285		-		-
Foreign countries		493,769,324		471,692,703		381,925,599
Total		1,783,282,337		1,698,360,794		1,558,897,708

(1)

Includes net sales correspond to Corporate Support Unit and eliminations between geographical locations. Additionally, includes net sales made in Chile of the Wines Operating segment.

(2)

Includes net sales made by the subisiaries Finca La Celia S.A. and Los Huemules SRL., registered under the Wines Operating segment and Chile Operating segment, respectively.

(3)

See

Note 15 – Business combinations, letter a)

Sales information by customer

	For the years ended as of December 31,
Net Sales	2018		2017		2016
	ThCh$		ThCh$		ThCh$
Domestic sales		1,664,613,889		1,572,617,473		1,429,152,068
Exports sales		118,668,448		125,743,321		129,745,640
Total		1,783,282,337		1,698,360,794		1,558,897,708

Sales information by product category

	For the years ended as of December 31,
Sales information by product category	2018		2017		2016
	ThCh$		ThCh$		ThCh$
Alcoholic business		1,206,506,503		1,158,451,078		1,041,923,724
Non-alcoholic business		549,746,127		519,946,103		493,397,317
Others (1)		27,029,707		19,963,613		23,576,667
Total		1,783,282,337		1,698,360,794		1,558,897,708

(1)

Others consist mainly of sales of by-products and packaging including bottles, pallets, and glasses.

Depreciation and amortization as per operating segments

	For the years ended as of December 31,
Depreciation and amortization	2018		2017		2016
	ThCh$		ThCh$		ThCh$
Chile operating segment		63,148,804		64,807,818		61,736,849
International Business operating segment		19,798,708		15,568,301		11,928,705
Wines operating segment		7,935,006		7,505,440		7,078,872
Others (1)		2,406,676		4,317,945		2,783,619
Total		93,289,194		92,199,504		83,528,045

(1)

ncludes depreciation and amortization corresponding to the Corporate Support Units.

Cash flows Operating Segments

	For the years ended as of December 31,
Cash flows Operating Segments	2018			2017			2016
	ThCh$			ThCh$			ThCh$
Cash flows from (used in ) Operating activities		429,313,131			262,161,431			190,014,348
Chile operating segment		157,294,023			161,413,504			152,862,350
International business operating segment		228,740,495			58,773,027			13,065,093
Wines operating segment		14,340,011			16,167,068			32,949,789
Others (1)		28,938,602			25,807,832			(8,862,884	)

Cash flows from (used in ) Investing Activities		(199,002,101	)		(173,614,379	)		(155,007,390	)
Chile operating segment		(98,325,850	)		(78,746,298	)		(57,119,431	)
International business operating segment		(35,475,310	)		(32,312,751	)		(40,032,866	)
Wines operating segment		(16,749,301	)		(10,870,574	)		(13,499,538	)
Others (1) (*)		(48,451,640	)		(51,684,756	)		(44,355,555	)

Cash flows from (used in ) Financing Activities		(52,963,862	)		(53,001,198	)		(95,059,905	)
Chile operating segment		(78,048,783	)		(65,996,567	)		(90,636,820	)
International business operating segment		(100,573,425	)		(8,217,846	)		18,820,789
Wines operating segment		3,741,241			(15,171,642	)		(18,841,106	)
Others (1)		121,917,105			36,384,857			(4,402,768	)

(1)

Others includes Corporate Support Units, due to cash flows are managed by CCU.

(*)

Includes contribution to joint ventures. See

Note 8 - Cash and cash equivalents

Capital expenditures as per operating segments

	For the years ended as of December 31,
Capital expenditures (property, plant and equipment and software additions)	2018		2017		2016
	ThCh$		ThCh$		ThCh$
Chile operating segment		78,887,075		80,866,369		53,809,780
International Business operating segment		32,756,828		32,312,751		39,592,739
Wines operating segment		16,961,638		10,948,212		14,767,858
Others (1)		2,834,881		1,638,148		20,713,048
Total		131,440,422		125,765,480		128,883,425

(1)

Others includes the capital investments corresponding to the Corporate Support Units.

Assets as per operating segments

	As of December 31, 2018		As of December 31, 2017
Assets as per Operating segment	ThCh$		ThCh$
Chile operating segment		1,183,145,732		1,045,791,551
International Business operating segment		463,913,523		274,766,962
Wines operating segment		341,959,321		315,298,950
Others (1)		416,846,340		340,371,624
Total		2,405,864,916		1,976,229,087

(1)

ncludes assets corresponding to the Corporate Support Units.

Assets per geographic location

	As of December 31, 2018		As of December 31, 2017
Assets per geographical location	ThCh$		ThCh$
Chile (1)		1,924,196,897		1,689,394,491
Argentina (2)		373,091,516		213,714,384
Uruguay		26,925,415		25,015,615
Paraguay		53,126,091		48,104,597
Bolivia (3)		28,524,997		-
Total		2,405,864,916		1,976,229,087

(1)

Includes the assets corresponding to the Corporate Support Units and eliminations between geographic location and investments in associates and joint ventures. Additionally, includes part of Wines Operating segment and excludes its argentine subsidiary Finca La Celia S.A.

(2)

Includes the assets of the subisiaries Finca La Celia S.A. and Los Huemules SRL., registered under the Wines Operating segment and Chile Operating segment, respectively.

(3)

See

Note 15 – Business combinations, letter a)

Liabilities as per operating segments

	As of December 31, 2018		As of December 31, 2017
Liabilities as per Operating segment	ThCh$		ThCh$
Chile operating segment		457,517,605		388,121,093
International Business operating segment		172,893,966		119,351,344
Wines operating segment		112,427,830		95,094,080
Others (1)		273,909,572		146,833,962
Total		1,016,748,973		749,400,479

(1)

thers includes liabilities corresponding to the Corporate Support Units.

Operating Segment’s additional information

The Consolidated Statement of Income classified according to the Company’s operations management is as follows:

		For the years ended December 31,
CONSOLIDATED STATEMENT OF INCOME	Notes	2018 (*)			2017			2016
		ThCh$			ThCh$			ThCh$
Sales revenue external customers			1,756,252,630			1,678,397,181			1,535,321,041
Other income			27,029,707			19,963,613			23,576,667
Net sales			1,783,282,337			1,698,360,794			1,558,897,708
Change %			5.0			8.9			-
Cost of sales			(860,011,392	)		(798,738,655	)		(741,819,916	)
% of Net sales			48.2			47.0			47.6
Gross margin			923,270,945			899,622,139			817,077,792
% of Net sales			51.8			53.0			52.4
MSD&A (1)			(681,575,822	)		(668,783,480	)		(619,542,751	)
% of Net sales			38.2			39.4			39.7
Other operating income (expenses)			227,026,626			4,055,543			3,116,679
Adjusted operating result (2)			468,721,749			234,894,202			200,651,720
Change %			99.5			17.1			-
% of Net sales			26.3			13.8			12.9
Net financial expense	32		(7,766,206	)		(19,115,361	)		(14,627,170	)
Equity and income of associates and joint ventures	16		(10,815,520	)		(8,914,097	)		(5,560,522	)
Foreign currency exchange differences	32		3,299,657			(2,563,019	)		456,995
Results as per adjustment units	32		742,041			(110,539	)		(2,246,846	)
Other gains (losses)	31		4,029,627			(7,716,791	)		(8,345,907	)
Income before taxes			458,211,348			196,474,395			170,328,270
Tax income (expense)	24		(136,126,817	)		(48,365,976	)		(30,246,383	)
Net income for year			322,084,531			148,108,419			140,081,887
Non-controlling interests	28		15,193,739			18,501,066			21,624,399
Net income attributable to equity holders of the parent			306,890,792			129,607,353			118,457,488
Depreciation and amortization	29		93,289,194			92,199,504			83,528,045
ORBDA (3)			562,010,943			327,093,706			284,179,765
Change %			71.8			15.1			-
% of Net sales			31.5			19.3			18.2

(*)

The

net impact, related to early termination of Budweiser license (See

Note 1 – General information, letter C

), on CCU’s consolidated earnings was a one-time gain of ThCh$ 208,842,443 in ORBDA and ThCh$ 157,358,973 in Net income attributable to equity holder of the parent.

See definition of (1), (2) and (3) in information as per Operating segment under this Note.

The following is a reconciliation of our Net income, the main comparable IFRS measure to Adjusted Operating Result for the years ended

December 31, 2018, 2017 and 2016

	For the years ended December 31,
	2018 (*)			2017			2016
	ThCh$			ThCh$			ThCh$
Net income of year		322.084.531			148,108,419			140,081,887
Add (Subtract):
Other gains (losses)		(4.029.627	)		7,716,791			8,345,907
Finance income		(15.794.456	)		(5,050,952	)		(5,680,068	)
Finance costs		23.560.662			24,166,313			20,307,238
Share of net loss of joint ventures and associates accounted for using the equity method		10.815.520			8,914,097			5,560,522
Foreign currency exchange differences		(3.299.657	)		2,563,019			(456,995	)
Result as per adjustment units		(742.041	)		110,539			2,246,846
Tax income (expense)		136.126.817			48,365,976			30,246,383
Adjusted operating result		468.721.749			234,894,202			200,651,720
Depreciation and amortization		93.289.194			92,199,504			83,528,045
ORBDA		562.010.943			327,093,706			284,179,765

(*)

The

net impact, related to early termination of Budweiser license (See

Note 1 – General information, letter C

), on CCU’s consolidated earnings was a one-time gain of ThCh$ 208,842,443 in ORBDA and ThCh$ 157,358,973 in Net income attributable to equity holder of the parent.

The following is a reconciliation of the consolidated amounts presented for MSD&A with the comparable amounts presented on the face of our consolidated statement of income:

	For the years ended December 31.
	2018			2017			2016
	ThCh$			ThCh$			ThCh$
Consolidated statement of income
Distribution costs		(314,391,183	)		(290,227,129	)		(270,835,822	)
Administrative expenses		(152,376,458	)		(142,514,649	)		(155,322,295	)
Other expenses by function		(216,236,609	)		(238,704,061	)		(195,412,109	)
Other expenses included in ´Other expenses by function´		1,428,428			2,662,359			2,027,475
Total MSD&A		(681,575,822	)		(668,783,480	)		(619,542,751	)

Segment information by joint ventures and associates

The Administration of the Company review the financial situation and result of the all of their joint ventures and associated that is described in

Note 16 – Investments accounted for using equity method