VIÑA CONCHA Y TORO S.A. Santiago, Chile, August 31st, 2017 - Viña Concha y Toro S.A. ("The Company" or "Concha y Toro") (NYSE: VCO, IPSA: Conchatoro), global leading winery and the main producer and exporter of Chilean wine, announced today consolidated financial results, stated under IFRS, for the second quarter 2017 ended June 30th, 2017. US dollar figures (US$), except export figures, are based on the exchange rate effective June 30th, 2017 (US$1.00 = Ch$ 664.3).
Highlights 2Q17 vs 2Q16Average sales price, measured in local currencies, increased in our key markets: sales in Chilean peso (+14.9%), sterling pound (+10.8%), US dollar (+6.6%), and euro (+2.9%).
Consolidated sales decreased 4.2%, totaling $165,942 million, due to lower volume and adverse exchange rate impact.
Total volume of wine declined 7.3%, due to the decrease of 10.5% in Non-Premium wine. Premium wine volume increased 1.9%.
Operating Income plus depreciation and amortization was down 14.7% to Ch$22,697 million, on a higher cost of wine and adverse currency fluctuations. Its margin on sales reached 13.7% (-170 basis points).
Net income attributable to owners of the company totaled Ch$11,535 million, down 12.9%.
Highlights 1H17 vs 1H16Average sales price, measured in local currencies, increased in our key markets: +10.0% for sales in Chilean peso, +9.2% for sales in sterling pound, +3.5% for sales in US dollar, and
+3.4% for sales in euro.
Consolidated sales decreased 3.9%, totaling $293,416 million, due to lower volume and adverse exchange rate impact.
Total volume of wine declined 2.4%, due to the decrease of 3.6% in Non-Premium wine. Premium wine volume increased 0.7%.
Operating Income plus depreciation and amortization was down 18.4% to Ch$35,463 million, on a higher cost of wine and adverse currency fluctuations. Its margin on sales reached 12.1% (-170bp).
Net income attributable to owners of the company totaled Ch$151,340 million, down 25.3%.
conchaytoro-ir@conchaytoro.cl www.conchaytoro.com
SummaryResults for the second quarter of 2017 reflect the adverse impact of exchange rate fluctuations and a higher cost of wine following lower grape harvests in Chile and Argentina. Against this backdrop, Viña Concha y Toro has realigned its commercial strategy through price adjustments and reduced promotional activities, focused on profitability and brand building. As a result, sales volume growth was affected, mainly in Non-Premium wine categories, which declined in the period. Premium wines remained growing, showing the strong position held by priority premium brands.
In 2016, the company started a restructuring process aimed to generate operational synergies and cost savings. This process will end in the first quarter of 2018 and its effects are not yet reflected in results. On a reported basis, SG&A/sales was 26.1%, 10bp above the level in the last year. Excluding incremental extraordinary expenses related to restructuring, SG&A/sales was 25.7%, 30bps below the figure of 2Q16.
Regarding the Wine operating segment, sales totaled Ch$152,890 million, down 4.0%, on lower Non-Premium volume and the aforementioned F/X impact. Premium wine volume grew 1.9% and its share of the portfolio mix increased +300bp to 47.6% of sales value.
In the domestic market (Chile), wine sales grew 4.0% in value. This is the result of an increase in prices, and a positive mix effect. Premium volume remained strong, increasing 9.3%, when compared to 2Q16. On the other hand, Non-Premium sales volume declined 10.9%.
Export sales from Chile and distribution subsidiaries declined 4.7%. A higher average price, measured in local currencies was offset by lower sales volume of Non-Premium wine (-7.3%) and negative exchange rate effects. Premium wine volume increased 4.8%, which is in line with the Company's strategy focused on priority brands: Casillero del Diablo, Cono Sur, Trivento Reserve, Bonterra, and 1,000 Stories.
In the second quarter, the Operating Income plus Depreciation and Amortization declined 14.7% to Ch$22,697 million, reflecting a higher cost of wine and negative effects from exchange rate fluctuations. Net Income attributable to owners of the company was Ch$11,535 million, 12.9% below the figure in the same period of the last year.
Osvaldo Solar - Chief Financial Officer Claudia Cavada - Head of Investor Relations Tel: (56 2) 2476 5768conchaytoro-ir@conchaytoro.cl 2
www.conchaytoro.com
Second Quarter 2017 Results 1. Consolidated SalesConsolidated sales totaled Ch$165,942 million in the second quarter (-4.2% YoY). The decline reflects lower volume and the appreciation of the Chilean peso against most exports currencies, partly offset by a higher average price.
Table 1 Total SalesTotal Sales⁽ *⁾ (in Ch$ million) | 2Q17 | 2Q16 | Change (%) | 6M 2017 | 6M 2016 | Change (%) |
Chile Domestic Market - wine | 19,203 | 18,465 | 4.0% | 33,484 | 32,176 | 4.1% |
Export markets⁽¹⁾ | 111,005 | 116,463 | -4.7% | 192,027 | 200,818 | -4.4% |
Argentina Domestic | 2,425 | 2,178 | 11.4% | 4,407 | 2,959 | 48.9% |
Argentina Exports⁽²⁾ | 4,282 | 5,431 | -21.2% | 7,914 | 10,281 | -23.0% |
U.S.A. Domestic | 14,402 | 15,193 | -5.2% | 27,212 | 27,434 | -0.8% |
U.S.A. Exports⁽²⁾ | 1,573 | 1,592 | -1.2% | 2,946 | 2,787 | 5.7% |
Total Wine Operating Segment | 152,890 | 159,323 | -4.0% | 267,989 | 276,455 | -3.1% |
Chile Domestic Market - new business | 11,152 | 12,203 | -8.6% | 21,042 | 25,891 | -18.7% |
Other Revenues | 1,900 | 1,766 | 7.6% | 4,385 | 3,100 | 41.4% |
Total Other Operating Segment | 13,052 | 13,970 | -6.6% | 25,427 | 28,992 | -12.3% |
Consolidated Sales | 165,942 | 173,292 | -4.2% | 293,416 | 305,447 | -3.9% |
Total Volume⁽ *⁾ (thousand liters) | 2Q17 | 2Q16 | Change (%) | 6M 2017 | 6M 2016 | Change (%) |
Chile Domestic Market - wine | 17,253 | 19,068 | -9.5% | 30,951 | 32,703 | -5.4% |
Export markets⁽¹⁾ | 55,270 | 57,623 | -4.1% | 98,779 | 98,708 | 0.1% |
Argentina Domestic | 1,381 | 2,362 | -41.5% | 3,114 | 3,488 | -10.7% |
Argentina Exports⁽²⁾ | 1,853 | 2,601 | -28.7% | 3,484 | 4,981 | -30.1% |
U.S.A. Domestic | 4,020 | 4,443 | -9.5% | 7,675 | 7,733 | -0.8% |
U.S.A. Exports⁽²⁾ | 527 | 561 | -6.1% | 962 | 893 | 7.7% |
Total Wine Operating Segment | 80,304 | 86,658 | -7.3% | 144,965 | 148,506 | -2.4% |
Chile Domestic Market - New Business | 4,139 | 5,264 | -21.4% | 9,639 | 13,107 | -26.5% |
Total Other Operating Segment | 4,139 | 5,264 | -21.4% | 9,639 | 13,107 | -26.5% |
Consolidated Volume | 84,443 | 91,922 | -8.1% | 154,604 | 161,613 | -4.3% |
A verage Price (per liter) | Currency | 1,113.0 | 968.4 | 14.9% | 1,081.8 | 983.9 | 10.0% |
Chile Domestic Market - wine | Ch$ | ||||||
Export Markets | US$ | 3.09 | 3.05 | 1.3% | 3.02 | 3.03 | -0.3% |
Argentina Domestic | US$ | 2.64 | 1.79 | 48.1% | 2.55 | 1.66 | 54.0% |
Argentina Exports | US$ | 3.61 | 3.17 | 13.7% | 3.55 | 3.11 | 14.0% |
U.S.A. Domestic | US$ | 5.39 | 5.09 | 6.0% | 5.38 | 5.20 | 3.6% |
U.S.A. Exports | US$ | 4.49 | 4.19 | 7.1% | 4.64 | 4.56 | 1.7% |
Export Volumes include exports to third parties and sales volumes of the company's distribution subsidiaries (UK, Nordics, Brazil, Singapore, Mexico).
This figure excludes shipments to the company's distribution subsidiaries. (*) This figure includes bulk wine sales.
Wine Operating Segment
Total sales of wine declined 4.0% in the quarter, primarily due to lower Non-Premium-wine volume and the depreciation of key export currencies against the Chilean peso. On a constant currency basis, total sales of wine were in line with the same quarter last year (-0.1%).
- Export Markets
Export sales from Chile and distribution subsidiaries totaled Ch$111,005 million, declining 4.7% when compared to the same period last year. Higher average price, measured in local currencies of our markets (+10.8% in sterling pound, +6.6% in US dollar, and+2.9% in euro), were offset by lower volume and the negative effect of currency fluctuations.
In the second quarter, the Chilean peso appreciated against U.S. dollar (1.9%), Sterling pound (14.4%), Canadian dollar (6.4%), Euro (4.5%), Mexican peso (4.6%), Swedish krona (9.2%), Norwegian krone (5.3%), and Argentine peso (13.0%). The Chilean peso depreciated only against one of our relevant foreign currencies, the Brazilian Real (6.5%).
Regarding the portfolio mix, in the quarter Premium wine volume increased 4.8%. Non- Premium volume declined 7.3%, impacted by higher sales price and reduced promotional activities. In terms of value, Premium segment was up 2.4% (Ch$ terms) while Non- Premium segment was down 9.7%. Therefore, Premium categories increased their share to 44.3% of the portfolio value, +310bp higher than in the same quarter of the previous year.
Graph 1 Sales volume of bottled wine, by Region Export Markets (*) Second Quarter 2017(*) Includes exports from Chile and Distribution Subsidiaries.
Viña Concha y Toro SA published this content on 31 August 2017 and is solely responsible for the information contained herein.
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