Purcari Wineries Public Co., Ltd. · BVB:WINE
Purcari Wineries Public — Purcari Wineries — H1 2020 Earnings Presentation
31 slides from Purcari Wineries Public's earnings presentation, August 2020
Slide 1: Purcari Wineries Plc Investor Presentation 1H2020 Results
Purcari Wineries Plc Investor Presentation 1H2020 Results Virtual wine tasting has been the new normal during the Covid-19 lockdown. August 2020 August 2020
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION IS MADE AVAILABLE ON THIS WEBSITE BY PURCARI WINERIES PUBLIC COMPANY LIMITED (the Company) AND IS FOR INFORMATION PURPOSES ONLY. This presentation and its contents do not, and are not intended to, constitute or form part of, and should not be construed as, constituting o
Slide 3: Today's presenters
Today’s presenters Victor Bostan Eugen Comendant Victor Arapan Vasile Tofan CEO, Founder COO CFO Chairman ▪ Founded the Group in ▪ Over 10 years of ▪ 20 years of experience in ▪ Over 10 years experience 2002 management experience banking, audit, corporate in FMCG ▪ Over 35 years of finance ▪ Ex Virg
Slide 4: Agenda
Agenda Our newest launch, Viorica de Purcari, 1 Our Group caters to the increasing interest in indigenous aromatic grapes. Truly, 2 1H20 Operational Results + COVID-19 Update an explosion of aromas and summer hit. 3 Update on 2020 Outlook + Contingency Plans 4 Q&A Page 4
Slide 5: Purcari Wineries at a glance
1 Purcari Wineries at a glance Leading wine player in Central and Eastern Europe... … with a strong & expanding regional footprint Geographical breakdown of sales in value terms, 1H 2020, % Founded in 1827 by French colonists, Purcari group is now... RO PL MD CZ+SK CN Other Most awarded CEE winery o
Slide 6: Our Group: competitive advantage in an attractive market
1 Our Group: competitive advantage in an attractive market Secular shift from Attractive beer, spirits to Competitive #1 premium wine market wine, especially in advantage brand in Romania CEE Plenty to catch Wine growth ’16- #1 most awarded up: wine #1 fastest growing ’20F in Romania CEE winery at c
Slide 7: Our business model: Affordable Luxury
1 Our business model: Affordable Luxury Modern, cost-competitive winemaking Purcari is positioned at the intersections of three themes: ▪ Modern winemaking: the company is brand, as opposed to appellation- centric and runs a cost-efficient business ▪ Affordable luxury: as an aspirational brand, Purc
Slide 8: Our mission, vision and values
1 Our mission, vision and values Our mission Our values To bring joy in people’s lives, by Hungry offering them high quality, inspiring, We win in the marketplace because we want it more ethical wines and excellent value for Ethical money. Always do the right thing and the money will follow Thrifty
Slide 9: Vision: be the consolidator of a fragmented market
1 Vision: be the consolidator of a fragmented market Volume share top-3 players by country, % 79 77 82 74 #3 67 63 68 #2 41 39* 36 18 #1 10 Beer Spirits Wine Beer Spirits Wine Beer Spirits Wine Beer Spirits Wine Unlike beer or spirits, wine market remains very fragmented; players who have the scale
Slide 10: Topping competition at engagement, quality
1 Topping competition at engagement, quality Aspirational brand which consumers like sharing about Highest number of ratings and highest scores on Vivino Number of #brand uses on Instagram, thousand, by key Romanian brands X axis – number of Vivino ratings; Y axis – average Vivino score 11.1 4.2 4.1
Slide 11: Quality highly commended, remain the most awarded winery in CEE
1 Quality highly commended, remain the most awarded winery in CEE Leading medal-winning winery1 in CEE at Decanter, Increasing number of medals won from year to year the Wine ”Olympics” # of Decanter medals in 2015 - 19 # of medals #1 52 Mundus Vini 56 Concours Mondial de Bruxelles 45 45 Challenge I
Slide 12: Agenda
Agenda Negru de Purcari 2013, 1 Our Group 4.4 score on Vivino, top 1% wine globally 2 1H20 Operational Results + COVID-19 Update 3 Update on 2020 Outlook + Contingency Plans 4 Q&A Page 12
Slide 13: Pandemic depressed 2Q sales, erasing 1Q gains
2 Pandemic depressed 2Q sales, erasing 1Q gains Revenues EBITDA Net Income RON m RON m RON m -3% -6% 87.8 30.1 17.1 -9% 84.9 1H 28.3 15.6 38.5 10.9 8.4 45.6 -15% Q2 16.2 -31% -11% 7.6 17.4 +10% 46.4 Q1 +25% 8.7 -7% 42.2 13.9 8.0 1H19 1H20 1H19 1H20 1H19 1H20 49% 48% 34% 33% 19% 18% Gross Profit marg
Slide 14: Key operational highlights for 1H20
2 Key operational highlights for 1H20 • 2Q20 performance solid across CEE markets, except for Moldova. China continued to remain weak too. Strong performance The two markets weigh disproportionately in profitability given a higher share of premium sales. in Romania, other CEE, pulled back by • HoReC
Slide 15: Markets: strong Romania, Ukraine, Poland; weak China, Moldova
2 Markets: strong Romania, Ukraine, Poland; weak China, Moldova Market Share of sales, 1H20 Growth, 1H20 YoY Comments • RO: Sales continue growing despite COVID-19 restrictive measures. Strong Purcari performance, 1H20 sales up 29% YoY. Crama Ceptura RO 51% +24% reinvigorated growth on the back of q
Slide 16: Spike in market share in pandemic, distancing as clear #1 in premium
2 Spike in market share in pandemic, distancing as clear #1 in premium Edged to #4 in overall market, reaching 10%+ share… …while distancing by 20+ percentage points vs #2 in premium Value share of TOTAL retail market, Romania, % Value share of Premium (RON 30+/liter) retail market, Romania, % 18 Pu
Slide 17: Premium Purcari and Crama Ceptura lead the growth
2 Premium Purcari and Crama Ceptura lead the growth Brand Share of sales, 1H20 Growth, 1H20 YoY Comments • PURCARI: Ongoing strong traction in Romania, largely in the IKA segment, compensating for the restrictions in HoReCa. Promising performance in newer markets, such as doubling sales in Poland, 4
Slide 18: P&L – solid performance and margins given circumstances
2 P&L – solid performance and margins given circumstances Comments 2Q 1H ▪ Gross Margins shrank 6pp in 2Q20, on back of significant sales drop in Moldova, China – two markets RON m 2019 2020 ∆ 2Q 2019 2020 ∆ 1H with higher premium skew in the portfolio. Revenue 45.6 38.5 -15% 87.8 84.9 -3% ▪ SG&A fl
Slide 19: Agenda
Agenda Freedom Blend, indigenous grapes 1 Our Group from Moldova, Georgia, Ukraine; 91 points by Wine Enthusiast 2 1Q20 Operational Results + COVID-19 Update 3 Update on 2020 Outlook + Contingency Plans 4 Q&A Page 19
Slide 20: Agri, production, distribution – adapted to new COVID-19 reality
2 Agri, production, distribution – adapted to new COVID-19 reality Vineyards Wineries Distribution Retail • Operating with safety • Operating with safety • Transportation • No major out of stock measures in place at all measures in place at all operating as usual. No issues in shipments to vineyard
Slide 21: Performance significantly better than April stress test scenarios
2 Performance significantly better than April stress test scenarios RON 1 – “Headwind” 2 – “Storm” 3 – “Hurricane” Actual 1H20 • Revenue 2020 vs. 2019 - 6% - 12% - 18% - 3% • EBITDA 2020 vs. 2019 - 20% - 26% - 32% - 6% • EBITDA margin 29% 28% 28% 33% • Net Income 2020 vs. 2019 - 21% - 28% - 36% - 9%
Slide 22: Balance Sheet strong, providing sufficient leeway to weather crisis
2 Balance Sheet strong, providing sufficient leeway to weather crisis Cash position Net Debt RON m RON m -10% ▪ Solid Cash position up +26% 26% BoP 15.9 98.2 88.7 Cash and 12.6 Receivables ▪ Net Debt decreased by 10% due to both decrease of Debt and increase of Cash balance 31-Dec-19 30-Jun-20 31-De
Slide 23: Continued performing strong in competitions, despite lockdown
3 Continued performing strong in competitions, despite lockdown Most Awarded Winery from Moldova at Challenge International Uncontested leader among CEE wineries at TELEVINARIUM Du Vin 2020 20202 IWSC Spirits 2020 Contest1: “A silky-smooth, very enjoyable “Appealing sweet spice and oak brandy. Plent
Slide 24: Continue to excel at quality, enabling market share gains
3 Continue to excel at quality, enabling market share gains 4.1 4.2 4.0 4.0 4.1 Note: based on the Vivino score for the respective 2019 vintages, as of August 7, 2020 Page 24
Slide 25: Vivino feedback remains very strong, key for online sales too
3 Vivino feedback remains very strong, key for online sales too #1 presence in the crucial RON 30-60 segment, holding 8 out of TOP-25 positions #1 • We remain obsessed about the quality of our wines, which pays off in excellent consumer feedback • In our core premium segment, 30-60 RON per bottle sh
Slide 26: Executed promptly to adapt marketing to new COVID-19 reality (1/2)
3 Executed promptly to adapt marketing to new COVID-19 reality (1/2) Crama Ceptura All brands - Community Crama Ceptura • Campaign: “Elbow bump” • Campaign: “Breath freely” • Campaign: “Easter on Zoom” • Launched: March 17 • Launched: March 24 • Launched: April 14 • Medium: TV, Social • Medium: Soci
Slide 27: Executed promptly to adapt marketing to new COVID-19 reality (2/2)
3 Executed promptly to adapt marketing to new COVID-19 reality (2/2) Purcari Wine Industry - Purcari Crama Ceptura • Campaign: “Viorica launch” • Campaign: “Women in • Campaign: “Support local • Launched: May 19 winemaking” producers” • Medium: Digital, Social • Launched: May • Launched: June 9 • Me
Slide 28: Broad and deep cost and cash optimization program initiated
3 Broad and deep cost and cash optimization program initiated 2020 CAPEX Program, RON mln • CAPEX program was revised with all non-critical projects terminated / postponed, resulting in circa RON 7 mln savings, or 6.6 (-32%) 32% of original CAPEX program 20.9 A CAPEX cut • Management had reached out
Slide 29: No updated guidance for 2020, until better grip on new steady state
3 No updated guidance for 2020, until better grip on new steady state Guidance for 2020 Guidance suspended Target 2020 guidance Comments • Due to high • Romania to remain growth driver, continue focusing on Poland, Czech, Slovakia, uncertainty related to Organic Ukraine; continue seeding newer marke
Slide 30: Agenda
Agenda Cuvée de Purcari, 1 Our Group the extension to sparkling launched in 2017. Made according to 2 1Q20 Operational Results + COVID-19 Update the traditional, Champenoise method, with in- 3 Update on 2020 Outlook + Contingency Plans bottle fermentation 4 Q&A Page 30
Slide 31: Thank you.
Thank you.