Vina Concha y Toro : 25/08/2016 – Viña Concha y Toro announces second quarter and 6-month period 2016 results

Santiago, Chile, August 25th, 2016 - Viña Concha y Toro S.A. ("The Company" or "Concha y Toro") (NYSE: VCO, IPSA: Conchatoro), global leading winery and the principal wine producer and exporter of Chile, announced today its consolidated financial results, stated under IFRS, for the second quarter 2016 ended June 30st, 2016.

• Increase of 32.2% of the Net Income totaling Ch$13,248 million, representing an expansion of 130bp in comparison to the second quarter of 2015.

• Expansion of 226bp in the EBIT Margin, reaching a 12.6% as percentage over sales, figure that represents operating income of Ch$21,825 million.

• The Operating Income plus depreciation and amortization increased 23.5%, representing an expansion of 170bp, figure that represent 15.5% as percentage over sales.

• Stands out the performance of Casillero del Diablo, a truly global brand with presence in 147 countries, with higher sales of 12% and 8% in terms of value and volume.

• Total sales increased by 9.9% totaling Ch$173,292 million in the quarter, highlighting:

• Export Markets from Chile increased 10.5% in value totaling Ch$116,463 million, driven by a 5.5% of higher commercialized volumes. Stand out the role and performance delivered by distribution subsidiaries of the Company.

  • Asian markets presented an increase of 18% in cases, driven by increases in China (+64%), Japan (+12%) and Australia (+114%).

  • The Canadian market registered higher sales of 23% in cases, positively impacted by higher sales of Casillero del Diablo (+64%) Frontera (+20%) and Cono Sur's brands (+15%)

  • UK contributed with a 4.8% of growth in volume with outstanding sales of core brands: Casillero del Diablo (+17%), Trivento Reserve (+35%) and Cono Sur Bicicleta (+39%).

  • The Mexican market rose its volumes in 21%, boosted by higher sales of Reservado CyT (+19%), Maipo Blend (+50%) and Casillero del Diablo (+33%).

• The Chilean domestic market grew a 5.7% in volumes, driven by higher sales of Casillero del Diablo (+15%) and Cono Sur's Portfolio (30%).

• Fetzer Vineyards registered higher sales of 12.1% of cases of bottled wine, boosted by higher sales in the domestic market (9.8%) and export markets (35.1%). Fetzer's core brands Fetzer, Bonterra and 1000 Stories are showing an attractive momentum.

- Sales in the Argentinean subsidiary, Trivento Bodegas y Viñedos, grew 26% in value and 38.7% in volume, based on positive results in export markets and domestic markets. Trivento has shown a positive performance of its brands in USA, Brazil and Japan.

During the second quarter of 2016, net sales showed an increase of 9.9%, totaling Ch$173,292 million. Higher sales are explained by higher commercialized volumes in most markets and businesses of the Company, in conjunction with a positive effect derived from exchange rate fluctuations.

Keeping trends saw in previous quarters, export and domestic markets from Chile are increasing in two digits growth in value and over mid-single digit growth in volume.

In export markets stand out the performance and dynamism shown by Japan (+12%) and China (+64%) in volumes. In China, the Company has been investing in the category development and the positioning of its premium brands. In same line has been launching new products in order to respond to the growing interest by the market. The Canadian market grew 23% in volumes, driven by an outstanding performance of Casillero del Diablo (64%) and the Cono Sur's brands (15%). In UK sales increased 4.8% in cases, with a strong performance of core brands: Cono Sur Bicicleta (39%) and Casillero del Diablo (17%). While, in Mexico Sales in volume increased 21%.

In Chile, sales increased 5.7% in volume, highlighting the performance of the premium category with a growth of 17%. Higher sales were exhibited in Concha y Toro's premium portfolio: Casillero del Diablo (+15%), Marques de Casa Concha (+10%), Trio (+7%), Gran Reserva Serie Ribera (+52%) and Terrunyo (+79%).

In the quarter, stand out the performance of the U.S. subsidiary - Fetzer Vineyards - which registered growth over the U.S. average in the domestic market (+9.8%) as well as in export markets (+35.1%) in cases. After a consolidation and positioning process, Fetzer is presenting an attractive portfolio conformed by brands like Fetzer, Bonterra and the new and innovative Zinfandel 1000 Stories. Fetzer has registered growths for five consecutive quarters.

In Argentina, sales of Trivento Bodegas y Viñedos - the Argentinean subsidiary - increased 26.0% in value and 38.7% in volume. Higher sales are explained by higher commercialized volume in export markets (6.5%) and the domestic market (107.5%). In addition, export sales were positively impacted by the removal of the exchange rate control in December of 2015, giving them the competitiveness lost in the past.

The Operating Income plus Depreciation and Amortization increased 23.5% totaling Ch$26,859 million. The mentioned increase represented an expansion of 170bp and a margin of 15.5% over sales. The improvement is driven by higher commercialized volumes, lower costs, a higher participation of premium categories in the mix of sales, a major dilution of expenses and a positive effect of derived from currencies fluctuations.

Finally, the net income attributable to owners of the company totaled Ch$13,248 million, registering an increase of 32.2% in the quarter and an expansion of 130bp. The figure over sales reached a 7.6%.

1. Consolidated Sales

   Consolidated sales increased 9.9% totaling Ch$173,292 million in the quarter. Higher commercialized volumes in each wine businesses unit explain the growth. Additionally, the premiumization of sales and a positive impact from the exchange rate fluctuations contributed to the growth in the quarter. Regarding the premiumization of sales, it is important to highlight the role of Trivento and Fetzer, which were fundamental in the consecution of this achievement due to the dynamism and contribution of their sales. Refer to Table N°1.

   Table 1 Total Sales

   Total Sales⁽ *⁾ (in Ch$ million)	2Q16	2Q15	Change (%)	6M 2016	6M 2015	Change (%)
   Chile Domestic Market - wine	18,465	16,493	12.0%	32,176	28,811	11.7%
   Export markets⁽¹⁾	116,463	105,419	10.5%	200,818	181,327	10.7%
   Argentina Domestic	2,178	1,418	53.6%	2,959	2,505	18.1%
   Argentina Exports⁽²⁾	5,431	4,621	17.5%	10,281	8,550	20.2%
   U.S.A. Domestic	15,193	14,086	7.9%	27,434	24,712	11.0%
   U.S.A. Exports⁽²⁾	1,592	1,569	1.5%	2,787	2,402	16.0%
   Total Wine Operating Segment	159,323	143,606	10.9%	276,455	248,307	11.3%
   Chile Domestic Market - new business	12,203	12,043	1.3%	25,891	22,099	17.2%
   Other Revenues	1,766	1,961	-9.9%	3,100	3,517	-11.8%
   Total Other Operating Segment	13,970	14,004	-0.2%	28,992	25,615	13.2%
   Consolidated Sales	173,292	157,610	9.9%	305,447	273,922	11.5%

   Total Volume⁽ *⁾ (thousand liters)	2Q16	2Q15	Change (%)	6M 2016	6M 2015	Change (%)
   Chile Domestic Market - wine	19,068	18,037	5.7%	32,703	30,530	7.1%
   Export markets⁽¹⁾	57,623	54,603	5.5%	98,708	92,742	6.4%
   Argentina Domestic	2,362	1,138	107.5%	3,488	2,229	56.5%
   Argentina Exports⁽²⁾	2,587	2,430	6.5%	4,963	4,452	11.5%
   U.S.A. Domestic	4,443	4,274	3.9%	7,733	7,641	1.2%
   U.S.A. Exports⁽²⁾	561	415	35.1%	893	703	27.1%
   Total Wine Operating Segment	86,644	80,897	7.1%	148,488	138,297	7.4%
   Chile Domestic Market - New Business	5,264	5,336	-1.3%	13,107	11,211	16.9%
   Total Other Operating Segment	5,264	5,336	-1.3%	13,107	11,211	16.9%
   Consolidated Volume	91,908	86,233	6.6%	161,595	149,508	8.1%

   A verage Price (per liter)	Currency	968.4	914.4	5.9%	983.9	943.7	4.3%
   Chile Domestic Market - wine	Ch$
   Export Markets	US$	3.05	3.19	-4.6%	3.03	3.22	-6.0%
   Argentina Domestic	US$	1.79	2.07	-13.8%	1.66	1.96	-15.6%
   Argentina Exports	US$	3.19	3.34	-4.4%	3.12	3.25	-3.9%
   U.S.A. Domestic	US$	5.09	5.52	-7.8%	5.20	5.41	-4.0%
   U.S.A. Exports	US$	4.19	6.08	-31.1%	4.56	5.49	-16.9%

2. Export Volumes include exports to third parties and sales volumes of the company's distribution subsidiaries (UK, Nordics, Brazil, Singapore, Mexico).

3. This figure excludes shipments to the company's distribution subsidiaries. (*) This figure includes bulk wine sales.