After having sold its Argentine operation in 2001 and following the forced closure of its plant facilities on the outskirts of Lima, Peru, in early 2003, Lucchetti’s only remaining business was its Chilean-based pasta, edible oil and soup operation. Under this scenario, the company decided to redirect its development strategy to the local ready-to-eat food market. Financed by a capital increase at the end of 2003, Lucchetti entered into a joint venture with CCU’s soft drinks subsidiary, ECUSA, to acquire Calaf, a local cookies and candy manufacturer. Together, the two companies hope to capitalize on their combined distribution channels, synergies and known-how to explore this new business opportunity.

Unexpectedly, at the end of 2003, Lucchetti received an offer from a local food company to buy its Chilean pasta, edible oil and soup business for Ch$60,000 million. After an extensive evaluation, Lucchetti’s Board of Directors decided to accept the offer in a deal which is expected to be finalized in the first half of 2004. Assuming that the sale goes through, it will mean the divestment of approximately 85% of Lucchetti’s total consolidated assets. Thereafter, Lucchetti will concentrate on its investment in Calaf. It is also awaiting the resolution from arbitrators at CIADI in Washington on the Lucchetti Perú case.

2003 Results
Lucchetti reported sales of Ch$59,115 million for the year 2003, down by 30.2% from 2002. The reduction in sales is mainly due to the discontinuation of activities in Peru following the forced closure of plant facilities in early 2003. Sales in Chile also experienced a downturn, falling from Ch$65,656 million in 2002 to Ch$59,115 million in 2003. Sales in Chile were affected by a sharp reduction in the volume of edible oils sold as the domestic market was flooded by Argentine imports. Pasta and soup sales in Chile rose by 5.2% and 22.1% respectively, although this did not compensate for the decline in edible oil sales.

Operating profit was Ch$2,894 million, up by 7% from the Ch$2,705 million reported in 2002. In 2002, the Peruvian operation generated operating losses of Ch$903 million. The absence of these losses in 2003 partly explain the positive variation in operating results, although a reduction in the operating profits attributable to the Chilean operations of Ch$714 million partially offsets this effect. Operating profits in the Chilean operations were mainly due to the aforementioned drop in sales of edible oils.

Non-operating losses amounted to Ch$6,733 million, compared to operating losses of Ch$40,119 million in 2002. 2002 non-operating results included the write-off of 100% of the investment in Peru of Ch$30,110 million following its forced closure, mainly explaining the variation between the two years. In spite of the aforementioned improvements at the operating and non-operating levels in 2003, Lucchetti reported a net loss of Ch$2,136 million for the year.