UNITED STATES OF AMERICA
SECURITITES AND EXCHANGE COMISION
Washington D.D. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 or 15d-16
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the month of May 2005
QUINENCO S.A.
(Exact name of registrant as specified in charter)
QUINENCO, INC.
(Translation of registrant's name into English)
Quinenco S.A.
Enrique Foster Sur 20, 14th Floor
Santiago, Republic of Chile
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12(g)3-2(b) under the Securities Act of 1934
Yes |_| No |X|
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12(g)3-2(b): ______________
The following document is being filed with this 6-K report and is
attached hereto.
Press Release announcing Quinenco's 1Q 2005 consolidated results
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
For further information contact:
Quinenco S.A.
Cindi Freeman-IRO
(56-2) 750-7221
E-mail: cfreeman@lq.cl
QUINENCO S.A. ANNOUNCES CONSOLIDATED
RESULTS FOR THE FIRST QUARTER OF 2005
(Santiago, Chile, April 29, 2005) Quinenco S.A. (NYSE:LQ), a leading Chilean
business conglomerate, announced today its consolidated financial results in
Chilean GAAP, for the first quarter ended March 31, 2005.
Consolidated financial results are presented in accordance with Chilean GAAP.
All figures are presented in constant Chilean pesos and have been adjusted to
reflect the effects of inflation (2.2% year-over-year). Figures in US$ have been
converted from Chilean pesos (Ch$) at the observed exchange rate on March 31,
2005 (Ch$585.93 = US$1.00) and are only provided for the reader's convenience.
--------------------------------------------------------------------------------
1Q 2005 HIGHLIGHTS
o Consolidated revenues increased by 10.1% to Ch$100,234 million (US$171.1
million), attributable to the strong quarterly sales growth at Madeco of
14.9%.
o Operating income reached Ch$7,557 million (US$12.9 million), up by 10.9%
from the Ch$6,814 million (US$11.6 million) reported in the first quarter
of 2004, attributable to Madeco's operations, which grew by 20.6%.
o Banco de Chile contributed Ch$12,242 million (US$20.9 million) to
Quinenco's results for the first quarter of the year.
o Non-operating results include a gain on the sale and exchange of Almacenes
Paris shares of Ch$20,965 million (US$35.8 million).
o Income taxes increased by Ch$3,702 million (US$6.3 million), mainly in
relation to taxes on the sale and exchange of shares of Almacenes Paris.
o Net income amounted to Ch$29,116 million (US$49.7 million) in the first
quarter of 2005, up by Ch$20,515 million (US$35.0 million) over 1Q 2004.
o Earnings per share amounted to Ch$26.97 (US$0.05) and earnings per ADR to
Ch$269.66 (US$0.46) for the first quarter of 2005.
--------------------------------------------------------------------------------
Page 1 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
GROUP HIGHLIGHTS - FIRST QUARTER 2005 AND SUBSEQUENT EVENTS
Quinenco
At the General Ordinary Shareholders' Meeting held on April 28, 2005,
shareholders approved a dividend distribution corresponding to 2004 net income
of Ch$12.97685 per share, payable to shareholders registered with the company as
of May 5, 2005. The total amount of the dividend is Ch$14,012 million,
equivalent to 60% of 2004 net income. At the same meeting, the entire Board of
Directors was reelected. Immediately following the General Ordinary
Shareholders' Meeting, an Extraordinary Board of Directors' meeting was held,
and Guillermo Luksic Craig and Andronico Luksic Craig were elected Chairman and
Vice-Chairman, respectively.
Almacenes Paris
In October 2004, Quinenco, through its wholly owned subsidiary, Inversiones Rio
Azul S.A., acquired an 11.41% interest in Almacenes Paris through the purchase
of 68,489,407 shares at Ch$514 pesos per share for a total of Ch$35,398 million
(historic pesos).
On March 22, 2005, Quinenco sold 18,718,155 shares of Almacenes Paris for Ch$960
per share (equivalent to 27.33% of its total shareholding) to Cencosud as part
of the tender offer launched by them. In connection with the sale of the Paris
shares, cash proceeds amounted to Ch$17,969 million, resulting in a gain on sale
of Ch$8,361 million for the period ended March 31, 2005.
The remaining 49,771,252 shares of Almacenes Paris were exchanged for 41,926,756
shares of Cencosud, in accordance with the terms of the tender offer. Shares
were valued on the March 22nd exchange at Ch$38,153 million. The exchange of
shares generated a one-time gain of Ch$12,604 million for the period ended March
31, 2005.
CCU
On March 12, 2005, an association between Pisconor, a wholly owned subsidiary of
CCU dedicated to the commercialization of pisco products, and Control, one of
the leading pisco producers in Chile, was approved. As a result, Pisconor and a
subsidiary of Control formed Compania Pisquera de Chile S.A. in mid-March. This
new company, controlled 80% by Pisconor, has an estimated 50.1% share of the
Chilean pisco market, according to the last AC Nielsen measurement.
Banco de Chile
On March 24, 2005, Banco de Chile's Board of Directors agreed to initiate the
sale of 1,701,994,590 shares (equivalent to 2.5% of total shares) of stock that
it had bought in 2004 according to articles 27 and 27D of the Chilean Companies
Law No. 18,046.
On January 21, 2005, Banco de Chile announced that the Office of the Comptroller
of the Currency (OCC) was conducting a targeted examination of its New York
branch to determine its compliance with the US Bank Secrecy Act and anti-money
laundering requirements. Simultaneously, the Federal Reserve Bank of Atlanta is
conducting a similar review of the Miami branch. The bank has reported that
these investigations are likely to result in supervisory actions, although the
nature and extent of such actions cannot be determined at this time.
Madeco
On April 4, 2005, Madeco announced that it had reached an agreement with Corning
International Corporation regarding the Brazilian joint venture subsidiary,
Optel Ltda. Corning agreed to sell Madeco its 50% share in Optel for R$1 (one
Brazilian Real). On the same date, Madeco announced that it had reached an
agreement with two of Optel's principal creditors to forgive US$5.3 million of a
US$7.3 million indebtedness (the difference was paid to the creditors). Optel
Ltda. is an optical fiber cable producer with installations in Brazil and
Argentina.
Page 2 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Indalsa- Lucchetti Peru
On February 7, 2005, the International Centre for Settlement of Investment
Disputes in Washington DC (ICSID) ruled that it had no jurisdiction over
arbitration proceedings between Lucchetti Peru and the Peruvian government.
Lucchetti Peru is at present analyzing its legal options in this case.
Net Income Contribution
-------------------------------------------------------------------------------------------------
Quinenco's
ownership % at 1Q 2004 4Q 2004 1Q 2005 1Q 2005
Sector/Company 3/31/2005 MCh$ MCh$ MCh$ MUS$
-------------------------------------------------------------------------------------------------
Financial Services:
Banco de Chile (1)(3) 53.5% 11,290 8,946 12,242 20.9
-------------------------------------------------------------------------------------------------
Food & Beverage:
CCU (4) 30.8% 5,132 7,159 5,862 10.0
-------------------------------------------------------------------------------------------------
Telecommunications:
Telsur (1) 73.7% 1,226 1,352 1,290 2.2
Entel (2) 5.7% 827 1,114 1,083 1.9
-------------------------------------------------------------------------------------------------
Manufacturing:
Madeco (1) 51.2% 955 394 1,961 3.3
-------------------------------------------------------------------------------------------------
Other operating companies (5) 335 (5,892) (528) (0.9)
-------------------------------------------------------------------------------------------------
Total operating companies 19,765 13,073 21,910 37.4
-------------------------------------------------------------------------------------------------
Quinenco & holding companies (11,164) (11,002) 7,206 12.3
-------------------------------------------------------------------------------------------------
Total 8,601 2,071 29,116 49.7
-------------------------------------------------------------------------------------------------
The figures provided in the above table correspond to Quinenco's proportionate
share of each company's net income (loss).
(1) Operating company in which Quinenco has direct or indirect control.
(2) Operating company in which Quinenco holds a minority interest.
(3) Ownership % in the above table corresponds to voting rights in Banco de
Chile.
(4) Operating company which is controlled jointly between Quinenco and
Heineken Int'l (through a shareholders' agreement).
(5) Other operating companies include results from Habitaria, Indalsa, Hoteles
Carrera.
Net Income - 1Q 2005
Quinenco reported net income for the first quarter of 2005, which amounted to
Ch$29,116 million (US$49.7 million), compared to net income of Ch$8,601 million
(US$14.7 million) in the first quarter of 2004. 1Q 2005 income (at the Quinenco
holding company level) included a non-recurring gain on the sale and exchange of
shares of Almacenes Paris of Ch$20,965 million (US$35.8 million), mainly
explaining the variation in net income between the two quarters.
The net income contribution from operating companies reached Ch$21,910 million
(US$37.4 million), up by 10.9% compared to the same quarter in 2004. The
increase was attributable to higher results from all of Quinenco main operating
companies which benefited from strong growth under the favorable economic
conditions seen during the first quarter.
Earnings per ordinary share amounted to Ch$26.97 (US$0.05) and earnings per ADR,
Ch$269.66 (US$0.46).
Page 3 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Consolidated Income Statement Breakdown
----------------------------------------------------------------------------------------
1Q 2004 4Q 2004 1Q 2005 1Q 2005
MCh$ MCh$ MCh$ MUS$
----------------------------------------------------------------------------------------
Revenues
----------------------------------------------------------------------------------------
Madeco 75,494 73,915 86,733 148.0
Telsur 12,830 13,489 12,895 22.0
Quinenco & holding 2,755 806 606 1.1
----------------------------------------------------------------------------------------
Total 91,079 88,210 100,234 171.1
----------------------------------------------------------------------------------------
Operating income (loss)
----------------------------------------------------------------------------------------
Madeco 6,047 4,655 7,294 12.5
Telsur 2,900 3,267 2,890 4.9
Quinenco & holding (2,133) (3,034) (2,627) (4.5)
----------------------------------------------------------------------------------------
Total 6,814 4,888 7,557 12.9
----------------------------------------------------------------------------------------
Non-operating income (loss)
----------------------------------------------------------------------------------------
Interest income 567 287 618 1.1
Share of net income/loss from related co:
Banco de Chile 11,290 8,946 12,242 20.9
CCU 5,132 7,159 5,862 10.0
Entel 827 1,114 1,083 1.8
Other equity investments (289) (3,645) (57) (0.1)
Other non-op income 1,635 1,413 23,960 40.9
Amortization of GW expense (5,179) (4,957) (5,115) (8.7)
Interest expense (8,682) (7,402) (7,013) (12.0)
Other non-op expenses (1,418) (5,252) (2,152) (3.7)
Price-level restatement 1,254 (886) (93) (0.2)
Foreign exchange gains & losses (519) 637 (78) (0.1)
----------------------------------------------------------------------------------------
Total 4,618 (2,586) 29,257 49.9
----------------------------------------------------------------------------------------
Income tax (1,788) (680) (5,490) (9.3)
Extraordinary items -- -- -- --
Minority interest (1,520) (1,074) (2,506) (4.3)
Amortization of negative GW 477 1,523 298 0.5
----------------------------------------------------------------------------------------
Net income (loss) 8,601 2,071 29,116 49.7
----------------------------------------------------------------------------------------
Revenues - 1Q 2005
Consolidated revenues for the first quarter of 2005 were Ch$100,234 million
(US$171.1 million), up by 10.1% from the Ch$91,079 million (US$155.4 million)
reported in the first quarter of 2004, explained by a 14.9% increase in Madeco's
sales as a result of sustained demand for copper rod and copper and aluminum
cables in its main markets.
Consolidated sales can be broken down as follows: Madeco (86.5%), Telefonica del
Sur (12.9%) and others (0.6%).
Operating Income - 1Q 2005
Operating income for the first quarter of 2005 was Ch$7,557 million (US$12.9
million), up by 10.9% from the Ch$6,814 million (US$11.6 million) reported in
the first quarter of 2004. The sharp increase in consolidated operating income
was attributable to Madeco's operations, which benefited from the higher sales
level and reductions in SG&A expenses in the wire and cable business unit.
Page 4 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
EBITDA - 1Q 2005
EBITDA reached Ch$13,906 million (US$23.7 million) in 1Q 2005, compared to
Ch$13,401 million (US$22.9 million) in 1Q 2004, an increase of 3.8% compared to
the same period of 2004.
Non-Operating Results - 1Q 2005
Quinenco reported non-operating income of Ch$29,257 million (US$49.9 million) in
the first quarter of 2005, compared to non-operating income of Ch$4,618 million
(US$7.9 million) in the same quarter of 2004. The variation between the two
periods is mostly explained by an increase of Ch$22,325 million (US$38.1
million) in other non-operating income as a result of the sale and exchange of
Almacenes Paris shares in March 2005. The main items included in non-operating
results are discussed below:
Proportionate share of net income of equity method investments (net)
Quinenco's proportionate share of net income from equity method investments
(net), which includes the results from Banco de Chile and CCU, Quinenco's most
significant investments, reached Ch$19,130 million (US$32.6 million), compared
to Ch$16,960 million (US$28.9 million) in 1Q 2004, an increase of 12.8%. The
increase corresponded to growth in the proportionate share of net income from
Banco de Chile (+8.4%), CCU (+14.2%) and Entel (+31.0%).
Other non-operating income
Other non-operating income was Ch$23,960 million (US$40.9 million), compared to
Ch$1,635 million (US$2.8 million) in the first quarter of 2004. Other
non-operating income in 1Q 2005 was mainly composed of a gain on the sale and
exchange of shares of Almacenes Paris amounting to Ch$20,965 million (US$35.8
million), explaining the difference between the two quarters.
Amortization of goodwill expense
Amortization of goodwill expense amounted to Ch$5,115 million (US$8.7 million)
in the first quarter of 2005, almost unchanged from the Ch$5,179 million (US$8.8
million) reported in the same period of 2004. Goodwill expense is almost
entirely related to the Banco de Chile acquisition in 2001, and to a lesser
extent, the Banco Edwards acquisition in 1999 (now kept on the books as Bank of
Chile). Of the total balance of goodwill at the consolidated level of Ch$296,184
million (US$505.5 million) as of March 31, 2005, Ch$279,271 million (US$476.6
million) was associated with the Banco de Chile acquisition. Goodwill is
amortized using the straight-line method over twenty years.
Interest Expense
Interest expense for the first quarter of 2005 amounted to Ch$7,013 million
(US$12.0 million), a reduction of 19.2% compared to the same period in 2004. The
decrease corresponds to lower interest expense at Madeco, Telsur and the
corporate level due to a lighter consolidated debt load (Madeco and Telsur) and
low prevailing interest rates.
Price-level restatement and foreign currency translation losses
Price-level restatement and foreign currency translation losses amounted to
Ch$171 million (US$0.3 million) in the first quarter of 2005, compared to gains
of Ch$735 million (US$1.3 million) in the same period in 2004. In 1Q 2005, the
losses specific to foreign currency differences amounted to Ch$78 million
(US$0.1 million), down from the losses of Ch$519 million (US$0.9 million)
reported in the first quarter of 2004, primarily attributable to Madeco's
operations as a result of the financial restructuring carried out in 2004 that
reduced Madeco's exposure to the US dollar as well as the revaluation of the
Chilean peso vis-a-vis the US dollar during the quarter. Price-level restatement
losses amounted to Ch$93 million (US$0.2 million), compared to gains of Ch$1,254
million (US$2.1 million) in 1Q 2004.
Page 5 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Income Taxes - 1Q 2005
Quinenco reported income tax expense of Ch$5,490 million (US$9.4 million),
compared to income tax expense of Ch$1,789 million (US$3.1 million) in the same
period of 2004. The increase mainly corresponded to corporate level provisions
for taxes related to the sale and exchange of Almacenes Paris.
Minority Interest - 1Q 2005
In the first quarter of 2005, Quinenco reported a deduction from income of
Ch$2,506 million (US$4.3 million), compared to a deduction from income of
Ch$1,520 million (US$2.6 million) in 1Q 2004. The amount is mainly related to
minority shareholders' proportionate share of Madeco's and Telefonica del Sur's
first quarter 2005 income.
CONSOLIDATED BALANCE SHEET ANALYSIS (vis-a-vis the 4th quarter of 2004)
Condensed Consolidated Balance Sheet
----------------------------------------------------------------------------------------------
As of As of As of As of
3/31/04 12/31/04 3/31/05 3/31/05
MCh$ MCh$ MCh$ MUS$
----------------------------------------------------------------------------------------------
Current assets 271,222 209,875 276,753 472.3
Fixed assets 296,892 272,150 276,662 472.2
Other assets 805,742 842,987 803,609 1,371.5
----------------------------------------------------------------------------------------------
Total assets 1,373,856 1,325,012 1,357,024 2,316.0
----------------------------------------------------------------------------------------------
Current liabilities 147,786 142,752 125,005 213.4
Long-term liabilities 465,896 444,828 454,753 776.1
Minority interest 102,395 107,467 113,095 193.0
Shareholders' equity 657,779 629,965 664,171 1,133.5
----------------------------------------------------------------------------------------------
Total liabilities & shareholders' equity 1,373,856 1,325,012 1,357,024 2,316.0
----------------------------------------------------------------------------------------------
Current Assets
Current assets increased 31.9% compared to the fourth quarter of 2004, mainly
due to an increase in cash and cash equivalents related to the reception of
dividends from Banco de Chile and cash proceeds from the sale of 27.3% of the
shares held in Almacenes Paris (as part of Cencosud's tender offer).
Fixed Assets and Other Assets
Fixed assets did not vary significantly from the fourth quarter of 2004. Other
assets decreased by 4.7%, mainly due to the sale of 27.3% of Almacenes Paris.
Current Liabilities
Current liabilities decreased by 12.4% compared to the fourth quarter of 2004,
primarily due to a reduction in bank obligations at the corporate level.
Long-term Liabilities
Long-term liabilities did not vary significantly from the fourth quarter of
2004.
Minority Interest
Minority interest increased by 5.2% compared to the fourth quarter of 2004,
mostly attributable to minority interest in Madeco.
Equity
Shareholders' equity increased by 5.4% as a result of the period earnings.
Page 6 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Quinenco Corporate Level Debt and Cash
As of March 31, 2005, financial debt at the corporate level was Ch$340,643
million (US$581.4 million). As of the same date, cash and cash equivalents
amounted to Ch$74,907 million (US$127.8 million). The debt to total
capitalization ratio at the corporate level was 33.8%.
NAV
As of March 31, 2005, the estimated net asset value (NAV) of Quinenco was
US$1.911 billion (Ch$1,037 per share) and market capitalization was US$1.308
billion (Ch$710 per share). The discount to NAV is estimated at 31.5% for the
same period.
NAV as of 3/31/2005
US$1.911 billion
[THE FOLLOWING MATERIAL WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Financial Services 50%
Telecom 9%
Food & Beverage 21%
Manufacturing 9%
Others 6%
Cash 5%
NAV as of 3/31/2005
US$1.911 bln
[LINE CHART OMITTED]
Page 7 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
SECTOR /OPERATING COMPANY ANALYSIS
FINANCIAL SERVICES SECTOR
The following table details Quinenco's proportionate share of income from
investments in the Financial Services sector during 2004 and 2005:
--------------------------------------------------------------------------------
FINANCIAL SERVICES
--------------------------------------------------------------------------------
Ownership 1Q 2004 4Q 2004 1Q 2005 1Q 2005
% MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Banco de Chile (1) 53.5% 11,290 8,946 12,242 20.9
--------------------------------------------------------------------------------
Ownership % in the above table corresponds to voting rights in Banco de Chile.
BANCO DE CHILE
--------------------------------------------------------------------------------
1Q 2004 4Q 2004 1Q 2005 1Q 2005
MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Operating revenues 108,843 120,388 109,445 186.8
Provision for loan losses (14,788) (20,748) (13,499) (23.0)
Operating expenses (56,646) (69,505) (61,028) (104.2)
Net Income (loss) 38,729 30,722 40,839 69.7
--------------------------------------------------------------------------------
Loan portfolio 6,490,023 6,833,800 7,085,422 12,092.6
Total assets 9,773,996 9,572,012 9,988,726 17,047.6
Shareholders' equity 613,948 669,137 558,833 953.8
--------------------------------------------------------------------------------
Net financial margin 3.5% 4.3% 3.6%
Efficiency ratio 52.0% 57.7% 55.8%
ROAE 21.8% 18.7% 24.4%
ROAA 1.6% 1.3% 1.7%
--------------------------------------------------------------------------------
1Q 2005 Results
Operating revenues increased by 0.6% to Ch$109,445 million (US$186.8 million) in
the first quarter of 2005. The rise in operating revenues was partially due to a
2.0% increase in the amount of fee income earned during the first quarter of the
year, which reached Ch$30,480 million (US$52.0 million), equivalent to 27.8% of
total operating revenues, mainly as a result of higher fee income generated by
the stock brokerage subsidiary. Likewise, net financial income, which increased
by 5.8% to Ch$77,679 million (US$132.6 million) contributed to the higher level
of operating revenues due to the growth in average interest earning assets and a
better funding mix. Net financial income, which is calculated as the sum of net
interest revenue and foreign exchange transactions (net), comprised 71.0% of
operating revenues in 1Q 2005. The aforementioned increases in operating
revenues were partially offset by a reduction of 76.7% in gains on sales of
financial instruments (net), which were affected by low returns from the sale of
Central Bank and bank issued mortgage bonds, the effect amounting to a decline
of Ch$4,225 million (US$7.2 million) in 1Q 2005.
Provisions, which amounted to Ch$13,499 million (US$23.0 million), showed a
decrease of 8.7% from the Ch$14,788 million (US$25.2 million) reported in the
first quarter of 2004, reflecting a healthier loan portfolio in line with
improved economic conditions.
Other income and expenses amounted to Ch$6,615 million (US$11.3 million), an
increase of 92.4% over the Ch$3,439 million (US$5.9 million) reported in 1Q
2004. Other income and expenses was mainly composed of loan recoveries
previously written off.
Page 8 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Operating expenses rose by 7.7% to Ch$61,028 million (US$104.2 million) compared
to the first quarter of 2004, primarily due to higher personnel and
administrative expenses reflecting headcount of an additional 297 employees.
Price-level restatement gains totaled Ch$3,929 million (US$6.7 million) compared
to price-level restatement gains of Ch$2,653 million (US$4.5 million) reported
in 1Q 2004. The gains in 1Q 2005 reflect the higher negative inflation rate in
1Q 2005 vis-a-vis 1Q 2004.
Net income increased by 5.4% reaching Ch$40,839 million (US$69.7 million) in 1Q
2005, driven by a solid operational performance, lower loan loss provisions,
higher loan loss recoveries and reduced non-operating expenses. The effect of
these increases on net income was partially offset by the aforementioned rise in
operating expenses associated with the personnel and administration areas.
As of March 2005, the Bank's loan portfolio (net of inter-bank loans) had grown
by 9.2% over the last twelve month period, mostly in commercial, consumer and
contingent loans, driven by the dynamic economic scenario.
Banco de Chile is the second ranked bank in the country with a market share of
17.5% according to information published by the Chilean Superintendency of Banks
for the period ended March 31, 2005. Its return on capital and reserves after
taxes (annualized) reached 31.5%, compared to 18.3% for the local financial
system, according to the same source.
FOOD & BEVERAGE SECTOR
The following table details Quinenco's proportionate share of income (loss) from
investments in the Food & Beverage sector during 2004 and 2005:
--------------------------------------------------------------------------------
FOOD & BEVERAGE
--------------------------------------------------------------------------------
Ownership 1Q 2004 4Q 2004 1Q 2005 1Q 2005
% MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
CCU 30.8% 5,132 7,159 5,862 10.0
--------------------------------------------------------------------------------
CCU
--------------------------------------------------------------------------------
1Q 2004 4Q 2004 1Q 2005 1Q 2005
MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Sales 112,720 125,487 124,632 212.7
Operating income (loss) 23,725 22,540 24,697 42.2
Net Income (loss) 16,661 23,237 19,026 32.5
--------------------------------------------------------------------------------
Total assets 585,498 587,503 594,189 1,014.1
Shareholders' equity 302,562 299,687 322,087 549.7
--------------------------------------------------------------------------------
1Q 2005 Results
CCU's sales in the first quarter of 2005 grew by 10.6% compared to the first
quarter of 2004, due to an increase in consolidated sales volumes, partially
offset by lower average prices. The growth in sales volume was led by the
Chilean beer segment (+12.0%), the Argentine beer segment (+7.7%), the soft
drink, nectar and mineral water segment (+10.2%), the Chilean wine segment
(+3.6%) and the Argentine wine segment (+72.8%). The 0.4% decrease in average
prices was attributable to the Chilean beer segment (-2.4%) and the soft drinks
segment (-1.8%), partially offset by higher prices associated with the Argentine
beer and wine segments.
Page 9 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Operating income increased by 4.1% to Ch$24,697 million (US$42.2 million) due to
the higher sales level, the effect of which was partially offset by an increase
in COGS and SG&A expenses. The consolidated operating margin was 19.8% of sales,
compared to 21.0% in the same period of 2004.
CCU reported non-operating losses of Ch$1,321 million (US$2.3 million), down
from the Ch$2,068 million (US$3.5 million) reported in 1Q 2004. The improvement
in non-operating results was primarily attributable to a reduction in interest
expenses as a consequence of a lighter debt load and low prevailing interest
rates. Additionally, non-operating results benefited from an increase in the
amount of interest income earned during the period due to larger average cash
balances on hand and higher interest rates on deposits.
Net income was Ch$19,026 million (US$32.5 million), an increase of 14.2% from
the net income of Ch$16,661 million (US$28.4 million) reported in the first
quarter of 2004. The rise in period profits was due to the improvement in
operating and non-operating results during the quarter, as well as a reduction
in income taxes, which in 1Q 2004 included extraordinary charges related to
prior periods.
TELECOMMUNICATIONS SECTOR
The following table details Quinenco's proportionate share of income from
investments in the Telecommunications sector during 2004 and 2005:
--------------------------------------------------------------------------------
TELECOMMUNICATIONS
--------------------------------------------------------------------------------
Ownership 1Q 2004 4Q 2004 1Q 2005 1Q 2005
% MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Telsur 73.7% 1,226 1,352 1,290 2.2
Entel (1) 5.7% 827 1,114 1,083 1.9
--------------------------------------------------------------------------------
(1) Non-controlling interest.
TELSUR
--------------------------------------------------------------------------------
1Q 2004 4Q 2004 1Q 2005 1Q 2005
MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Sales 12,830 13,489 12,895 22.0
Operating income (loss) 2,901 3,267 2,889 4.9
Net Income (loss) 1,665 1,834 1,751 3.0
--------------------------------------------------------------------------------
Total assets 133,017 136,728 132,168 225.6
Shareholders' equity 63,478 63,484 64,987 110.9
--------------------------------------------------------------------------------
1Q 2005 Results
Telefonica del Sur's revenues, which reached Ch$12,895 million (US$22.0 million)
in the first quarter of 2005, varied slightly from the Ch$12,830 million
(US$21.9 million) reported in the first quarter of 2004. Nonetheless, the
revenue mix favored non-regulated services such as wide band internet, security
services and data transmission services which made up 29.6% of revenues in 1Q
2005, compared to 25.7% in the same period of 2004.
Revenue from Internet, security services and data transmission grew by 15.5%
during the first quarter reaching Ch$3,813 million (US$6.5 million). Most
notable was the growth experienced in Internet services whose client base now
includes 28,199 clients, implying an increase in revenue for the quarter of
Ch$571 million (US$1.0 million).
The decline in revenue associated with Telsur's traditional services such as
fixed telephony, access charges, long distance and public telephony services was
partially offset by prepaid and fixed price bundling of phone services however,
substitution of fixed telephony for mobile telephony and other alternatives
continue to capture a portion of the company's traditional sale base.
Page 10 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Basic telephony services accounted for 46.3% of all revenues, followed by user
access charges (9.4%), long distance services (8.6%), public telephones (6.1%),
and other non-regulated services (29.6%).
Operating profit remained stable at Ch$2,889 million (US$4.9 million), compared
to Ch$2,901 million (US$5.0 million) in the first quarter of 2004. The slight
drop in operating income in 1Q 2005 (0.4%) mainly corresponded to an increase in
SG&A expenses associated with salaries expense.
Telsur reported non-operating losses of Ch$571 million (US$1.0 million), down by
18.6% from the non-operating losses of Ch$702 million (US$1.2 million) reported
in 1Q 2004. The decline in non-operating losses was primarily attributable to
lower interest expense as a consequence of a lighter debt load and low
prevailing interest rates and an increase in interest income.
Telsur reported net income of Ch$1,751 million (US$3.0 million), an increase of
5.1% compared to the same period in 2004, mainly as a result of the
aforementioned improvement in non-operating performance during the quarter.
MANUFACTURING SECTOR
The following table details Quinenco's proportionate share of income (loss) from
investments in the Manufacturing sector during 2004 and 2005:
--------------------------------------------------------------------------------
MANUFACTURING
--------------------------------------------------------------------------------
Ownership 1Q 2004 4Q 2004 1Q 2005 1Q 2005
% MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Madeco 51.2% 955 394 1,961 3.3
--------------------------------------------------------------------------------
MADECO
--------------------------------------------------------------------------------
1Q 2004 4Q 2004 1Q 2005 1Q 2005
MCh$ MCh$ MCh$ MUS$
--------------------------------------------------------------------------------
Sales 75,494 73,916 86,733 148.0
Operating income (loss) 6,047 4,655 7,294 12.4
Net Income (loss) 1,729 772 3,829 6.5
--------------------------------------------------------------------------------
Total assets 373,673 340,167 356,441 608.3
Shareholders' equity 157,649 157,244 168,090 286.9
--------------------------------------------------------------------------------
1Q 2005 Results
Madeco's sales in the first quarter of 2005 increased by Ch$11,239 million
(US$19.2 million) or 14.9% from Ch$75,494 million (US$128.8 million) to
Ch$86,733 million (US$148.0 million), primarily attributable to higher volume
sales and price increases associated with the wire and cable business unit,
which rose by 32.8% or Ch$12,676 million (US$21.6 million). Additionally, the
flexible packaging and aluminum profiles business units experienced sales
increases of 2.2% and 2.7%, respectively, although the effect of the growth in
sales at a consolidated level was partially offset by a decline in brass mill
sales of 9.4%.
Wire and cable sales benefited from strong demand for copper rod and copper and
aluminum cables, particularly in Brazil. Sales of the brass mill unit, which
declined by Ch$1,845 million (US$3.2 million) were affected by low volume in
Chile and a reduction in exports, although this was partially offset by an
increase in volume sales in Argentina and higher average prices.
Sales of the wire and cable business unit (whose principal operation is Ficap
Brazil) accounted for 59.1% of total sales, followed by brass mills (20.4%),
flexible packaging (12.2%) and aluminum profiles (8.3%).
Page 11 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
[LOGO]
QUINENCO S.A.
www.quinenco.cl
www.quinencogroup.cl First quarter 2005
--------------------------------------------------------------------------------
Operating income rose by 20.6% to Ch$7,294 million (US$12.4 million), mainly due
to the 165.7% or Ch$3,014 million (US$5.1 million) increase in operating income
associated with the cable business unit. The marked increase in the operating
income of this business unit was a direct result of the sales increase
experienced during the quarter as well as an 11.4% decline in SG&A expenses. The
increase in consolidated income was partially offset by decreases in the
operating income earned in the brass mills, flexible packaging and aluminum
profiles business units. As a percentage of sales, the operating margin reached
8.4%, up from 8% one year ago.
Non-operating losses were cut by 31.4% to Ch$1,943 million (US$3.3 million)
versus Ch$2,835 million (US$4.8 million) in 1Q 2004. The decrease in
non-operating losses was mainly attributable to an increase in other
non-operating income associated with a reduction in provisions related to the
Optel subsidiary in Brazil and a sharp 19.0% reduction in interest expense as a
consequence of a lower debt level and low prevailing interest rates.
Madeco reported a net profit of Ch$3,829 million (US$6.5 million) for the first
quarter of 2005, compared to net income of Ch$1,729 million (US$3.0 million) in
1Q 2004. The improvement in net quarterly earnings was attributable to the
improvement in both operating and non-operating results vis-a-vis one year ago.
#
All of Quinenco's Earnings and Press Releases and other relevant information on
the Company, including quarterly financial statements, are available for viewing
on the Company's website:
www. quinenco.cl
www. quinencogroup.cl
Page 12 of 12
--------------------------------------------------------------------------------
QUINENCO S.A.
Enrique Foster Sur N(0) 20, 14th Floor
Santiago / CHILE
Phone (56-2) 750-7100
Fax # (56-2) 750-7101
--------------------------------------------------------------------------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
QUINENCO S.A.
By: /s/ Luis Fernando Antunez
----------------------------------
Name: Luis Fernando Antunez
Title: Authorized Representative
Dated: May 2, 2005