Beverage stocks have been a hit-or-miss proposition in the U.S., both for megabrewers and for smaller players in the craft beer, spirits, and soft drink industries. But there are plenty of opportunities internationally to invest in the companies that produce drinks. In Chile, Compania Cervecerias Unidas (NYSE: CCU) produces beer, wine, and soft drinks for several South American countries, and after having seen a slow period to finish 2017, CCU had hoped to find ways to bounce back to start the new year.

Coming into Wednesday's first-quarter financial report, CCU investors expected the company to keep coming up with the modest gains in sales and earnings that they've seen over time. CCU's results bounced back from weakness in the fourth quarter of 2017, and the beverage company sees good times ahead for its market.

Image source: CCU.

CCU warms up

CCU's first-quarter results reflected a nice bounce in earnings growth. Net sales were higher by 5.2% to 472 billion Chilean pesos, and that figure was in line with what most of those following the beverage stock had expected. Net income jumped 22% to 56.7 billion pesos, doing better than the consensus forecast among investors and doing far better than the flat performance that CCU's bottom line gave in late 2017.

Fundamental metrics showed the improvement at CCU. Consolidated unit volume growth accelerated to 3.7%, yielding production of 7.61 million hectoliters. Price increases of 1.5% on average also helped to bolster top-line growth.

The big success for CCU came from its international business, where volume sold in its Argentina, Uruguay, and Paraguay markets soared 22%. That helped boost segment revenue by 16%, although local-currency fluctuations held back the unit's pricing power in Chilean peso terms. More efficient operations lifted segment adjusted pre-tax operating earnings by nearly two-thirds from year-ago levels, with reductions in expenses responsible for most of the strong performance.

Chile continued to struggle, although CCU did a good job of battling adverse trends. Unit volume was down 1.7%, but nearly 6% higher prices helped to generate a 3.7% boost to Chilean revenue. Weather conditions weren't quite as favorable this year as they were in the year-earlier period, but here, too, better gross margin helped to offset downward pressure elsewhere, and the segment's bottom line improved by 7%.

For the wine segment, the weak U.S. dollar weighed on results. Segment sales fell 7.6% on a 6.8% drop in volume, and operating costs remained high following subpar harvests in both 2016 and 2017.