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Dear Shareholders,

As I present the 2019 Annual Report and Consolidated Financial Statements for Quiñenco S.A., a pandemic with uncertain consequences is impacting Chile and the world.

We are facing a threat to life, human progress and the global economy, and overcoming it will require a great deal of unity, commitment and leadership. As historian and philosopher Yuval Noah Harari recently stated, in order to defeat an epidemic, people must trust in scientists, citizens must trust in officials and countries must trust in themselves. Unfortunately, this health crisis has come upon us at a time when there is a lack of trust around the world.

I believe that it is time for us to trust one another again. It is time for us to come together again in peace and unite against a virus that will require us to act together in order to defeat it. It is time to follow health officials’ recommendations and the technical judgment of specialists and healthcare workers. Today we must respect and support those responsible for guiding us through this adversity regardless of the opinions that each of us may have. This cause requires discipline, sacrifice and a great spirit of solidarity from all of us.

Today, more than ever, we value the time we could spend with our loved ones without physical limitations, embracing each other or giving a firm handshake, being closer to one another. Coming together again requires greater generosity and willingness to understand each other, resolve our differences and leave that which divides us behind.

Chile’s case is unique in that Covid-19 arrived after nearly five months of unprecedented social crisis that brought with it rampant violence and harmful polarization unlike anything we had seen in the past 30 years. At the same time, social demands that had been left aside for decades—most of them legitimate and important—were expressed. The pandemic caught us at a time in which we were especially weak as a country and a society, which means that we must now act with more energy and cohesion.

The effects both phenomena will have are still uncertain, and the immediate future looks gloomy, though I hope that doubling our efforts will allow us to get back on our feet. As a corporation, our challenge begins with taking care of everyone who works for our companies. In view of this, since the outset of this crisis, we made protecting peoples’ lives a priority at Quiñenco. We also have made an effort to maintain our activities in order to keep the country’s economy moving without impacting the supply chain.

With this in mind, we have launched several initiatives: In October 2019, amid the social crisis, we decided that no direct employee of our subsidiaries in Chile would receive a gross monthly income of less than 500,000 Chilean Pesos. A few weeks ago, in the context of the health crisis, we committed to a policy of zero dismissals for at least four months so that the direct employees of our subsidiaries in Chile will have greater certainty as we face this emergency.

Our operational companies have implemented strict hygiene controls and measures, facilitated social distancing in their work sites, vigorously sought out options for supporting their clients as they face this adversity, and actively worked with officials to fight the virus. Our subsidiaries have even helped public health staff with supplies, including the hand sanitizer that CCU is producing at its plants. This product is being provided free of charge to the country’s hospitals and medical centers.

Perhaps one lesson that we can learn from this dramatic crisis is that in addition to being an effective mode for continuing to do our work, telecommuting has proven to be a concrete option for giving our employees a better quality of life that offers more work-life balance and less travel. At Quiñenco and its companies, we will commit to continuing to develop telecommuting and all of the approaches that allow us to improve our employees’ quality of life while maintaining the sustainability, productivity and effectiveness of our activities.

At times like these in which the markets tend to stall and global growth contracts, a basic premise that is sometimes forgotten or minimized becomes more important: Companies must be economically sustainable and profitable so that they can continue to offer quality employment, goods and services and promote the progress and wellbeing of their employees, their families and everyone who is connected to them.

In this regard, I can say that, thanks to the long-term strategy that we have deployed, Quiñenco is in a solid position to respond to the difficult situation we are experiencing today.

In regard to results, for the year ended December 31, 2019, the company reported net income of CLP$ 210,049,000,000, a 16.4% increase over the previous year. In the pages that follow, you will find all of the details regarding our performance. I would like to note two milestones from this period.

The first is the solid performance of the German shipping line Hapag-Lloyd. We are currently one of the main shareholders in the company through Compañía Sudamericana de Vapores (CSAV). When we entered this partnership in 2011, the firm was facing the worst solvency crisis in its century-long history. By 2019, CSAV has acquired nearly 30% ownership of Hapag-Lloyd, which reported a net income of US$405 million and an EBITDA of US$2,223 million.

I would also like to again note the end of the subordinated debt with the Chilean Central Bank. In April 2019, 17 years prior to the original deadline, SAOS, a subsidiary of SM Chile, the parent company of Banco de Chile, paid the final installment on this obligation. One frequently hears uninformed opinions that incorrectly claim that this was an operation without costs, so it is worth repeating that this debt was undertaken in 1996 by the former controllers of Banco de Chile for a total of 56 million UF for 40 years at a cost of UF+5% interest. Paying off this debt in advance required a major effort on the part of all of Banco de Chile’s teams, which have given the institution a consistent track record of responsibility, prudence and profitability.

The fact that Quiñenco has a solid foundation for responding to the complex situation that the global economy is experiencing is only possible thanks to the essential contributions of each and every person who works with effort, dedication and energy to build this company with us. They are the ones who are the focus of our concerns and our work.

We must be fully aware that we should all be responsible and demonstrate solidarity in order to get through this crisis. Together and united. That is the only way that we can come out of this as a stronger country. It is my hope that we will be able to find each other once again at the end of this obstacle-ridden path. It is my hope that we can rediscover others, value diversity of opinion, genuinely recognize good intentions and initiatives and leave aside the prejudices that have caused so much damage to us as a society once and for all.

In our case, we will also do everything necessary to help restore dynamism and continue to move forward together along a path of progress and wellbeing for everyone.

Let’s take care of each other so that we can take care of Chile.


Andrónico Luksic Craig

Chairman, Quiñenco S.A.

April 2020