Vina Concha Y Toro S.a. · BCS:CONCHATORO
Vina Concha Y Toro — Q2 2019 Earnings Presentation
30 slides from Vina Concha Y Toro's earnings presentation, September 2019
Slide 1: Investor Presentation 2Q19 Results
Investor Presentation 2Q19 Results September, 2019
Slide 2: Forward Looking Statements
2 Forward Looking Statements This presentation contains forward-looking statements, that should be considered as good faith estimates. Such statements are subject to risks and uncertainties outside of Viña Concha y Toro’s control that could cause Viña Concha y Toro’s actual results to differ materia
Slide 3: Agenda
3 Agenda I. 2Q2019 Results II. 1H2019 Results III. Outlook
Slide 4: 2Q2019 Results: Top line consistent with new commercial strategy
4 2Q2019 Results 1. Top line consistent with the new commercial strategy (Ch$ million) 2Q19 2Q18 Var % Sales 165,577 151,184 9.5% Wine 158,520 139,474 13.7% Others 7,056 11,710 (39.7%) • Wine sales: +13.7%, on higher volume, better mix, US distribution integration and positive f/x. • Wine volume: +3
Slide 5: Brand Matrix: Higher focus in Principal and Invest brands
Brand Matrix: Higher focus in Principal and Invest brands Brand matrix: 25 brands, represent 79% of group sales Principal & Invest brands : +26% value growth , 40% of sales High INVEST 19% PRINCIPAL 21% • Don Melchor • Trivento Golden • MCC • Trivento Reserve • Casillero del Diablo • Diablo • 1,000
Slide 6: Focus of New Commercial strategy reflected in brands performance
6 2Q2019 Results 2. Focus of New Commercial strategy reflected in brands performance • Brand Matrix Growth by category: (Ch$ million) Value Var. Volume Var. Principal 16% 10% Invest 39% 32% Protect 6% -3% Watch 28% 14% • The protect segment declines due to lower volume of Frontera. However its sales
Slide 7: Key Brands posted strong volume growth
7 2Q2019 Results Key Brands posted strong volume growth : • Principal Casillero del Diablo: +10% • Invest CyT: +38% • Invest Cono Sur: +23% • Invest Trivento : +70% • Invest Fetzer: +11%
Slide 8: Casillero del Diablo
8 Casillero del Diablo Successful performance of Diablo and Casillero del Diablo line extensions. Diablo: 2Q19: 33,500 cases 3X volume growth Devils and Reserva Especial: 2Q19: 50,700 cases 40% volume growth
Slide 9: Brand Matrix – Trivento Reserve
9 Brand Matrix – Trivento Reserve Trivento Reserve: 2Q19: 259,000 cases 70% volume growth
Slide 10: Market Matrix: Specialized commercial areas
10 Market Matrix: Specialized commercial areas Wine sales led by A markets increasing 18%. A MARKETS B MARKETS C MARKETS Continuous Accelerated Priority Growth Growth Next wave Others Presence & > Priority Market COMMERCIAL AND DISTRIBUTION OFFICES Manager 9 MARKETS 9 MARKETS 115 MARKETS Markets > +
Slide 11: 2Q2019 Results – Sales breakdown
11 2Q2019 Results – Sales breakdown Other USA Direct Exports 4.3% 0.9% USA Domestic 17.0% Argentina Direct Exports 1.4% Argentina Domestic 0.6% Export Markets Chile Domestic 63.6% 12.2%
Slide 12: Performance across markets: Export markets
12 2Q2019 Results 3. Performance across markets 3.1 Export markets: positive performance in UK, Mexico, Brazil, Korea and China among others. Value +10.7% • +3.3% volume • Better mix: Premium sales 33.3% of sales volume (30.2% in 2Q2018) Premium sales 46.3% of sales value (43.6% in 2Q2018) • Favorab
Slide 13: Recovery of Chilean wine exports 2Q2019
13 Recovery of Chilean wine exports 2Q2019 Bottled export volume starting to recover in 2Q2019, in a challenging global scenario for wine trade. Volume 2Q2019 9L cases US$ value Value YoY% YoY% CHINA 2,175,036 71,940,516 0.1% 8.3% In 1Q19: ESTADOS UNIDOS 1,302,656 37,208,400 (1.3%) 4.0% BRASIL 1,548
Slide 14: Performance across markets: Chile domestic market
14 2Q2019 Results 3. Performance Across Markets 3.2 Chile domestic market led by Casillero del Diablo and upper Brand extensions. • Value +3.6% • Volume: +3.0% • Premium growth : +12.5 volume +13.1% value
Slide 15: Operation in USA
15 2Q2019 Results 3.3 Operation in USA: Growth led by domestic market volume across all portfolios: Fetzer and the Chilean and Argentine wines • Total : Value +30.9% Volume +3.7% • Domestic: Value +40.4% Volume +12.1% • Exports: Value -28.6% Volume -48.2% • Invest Brands +10.8% volume +25.5% value •
Slide 16: Operation in Argentina
16 2Q2019 Results 3.4 Operation in Argentina: focus on exports and key markets. • Sales led by shipments to distribution offices. • Total Value: +24% • Total Volume: +13.5% • Invest Brands +70% volume +81% value • Trivento Reserve (74% vol. 87% value) and trivento golden (20% vol y 46% value)
Slide 17: Operating profit increased 35%
17 2Q2019 Results 4. Operating profit increased 35% mainly reflecting • Higher volume & mix, and favorable f/x effect. • Lower wine cost in Chile, Argentina and the US, • Partially offset by higher SG&A, and productive cost in Chile. (Ch$ million) 2Q19 2Q18 Var.% Sales 165,577 151,184 9.5% EBIT 19,7
Slide 18: Non operating profit
18 Non operating profit 5. Non- Operating profit declined on lower exchange differences • In 2Q18, gains from hedging strategy amounted CH$ 5,832 million, mostly related to the Argentine peso depreciation. (Ch$ million) 2Q19 2Q18 Var % Var $ Financial income 144,063 295,655 (51.3%) (151,592) Financi
Slide 19: 2Q2019 Results
19 2Q2019 Results (Ch$ million) 2Q19 2Q18 Var % Sales 165,577 151,184 9.5% Gross profit 60,521 49,451 22.4% Gross margin 36.6% 32.7% 380 bp EBIT 19,787 14,677 34.8% EBIT margin 12.0% 9.7% 220 bp Non-operating profit (1,760) 3,140 Net profit 13,985 13,536 3.3% Net margin 8.4% 9.0% (50 bp)
Slide 20: Successful bond placement
20 Successful bond placement This issuance is part of a debt restructuring plan to take advantage of lower interest rates. Issued in the local market, UF denominated: UF 2,000,000 (equivalent to US$ 78 million) Maturity: 25- year with a 20-year grace period and 18.8-year duration. Rating: AA- (Felle
Slide 21: Agenda
21 Agenda I. 2Q2019 Results II. 1H2019 Results III. Outlook
Slide 22: 1H2019 Results
22 1H2019 Results (Ch$ million) 1H19 1H18 Var % Sales 296,263 275,626 7.5% Gross profit 103,682 88,852 16.7% Gross margin 35.0% 32.2% 280 bp EBIT 29,193 24,348 19.9% EBIT margin 9.9% 8.8% 100 bp Non-operating profit (3,622) 2,451 Net profit 19,314 19,998 (3.4%) Net margin 6.5% 7.3% (70 bp)
Slide 23: Agenda
23 Agenda I. 2Q2019 Results II. 1H2019 Results III. Outlook
Slide 24: 2019 harvest - Chile
24 2019 harvest - Chile • The 2019 harvest in Chile decreased 7.4%, to 1,194 million liters. • Excluding wine from table grapes, production declined 2.1% YoY. Chile wine harvest - (MM liters) 1400 1,282 1,287 1,290 1,255 1,194 1200 1,046 1,014 990 949 1000 915 800 600 400 200 0 2010 2011 2012 2013 2
Slide 25: 2018 harvest - Argentina
25 2018 harvest - Argentina • The 2019 harvest totaled 2.4 million tons, 3.6% lower when compared to 2018. • The Malbec variety increased 4%, and represents 36% of red grapes. Argentina wine harvest - th. tons 3000 2,807 2,786 2,539 2,587 2,516 2,338 2,425 2500 2,174 1,922 2000 1,704 1500 1000 500 0
Slide 26: 2019 harvest - USA
26 2019 harvest - USA • The 2018 California crush reveals a bountiful 2018 winegrape harvest up 6.6% in volume to 4.3 million tons. USA harvest - thousand tons. 4500 4,246 4,282 4,018 3,894 4,031 4,016 4000 3,589 3,705 3500 3,347 3000 2500 2000 1500 1000 500 0 2010 2011 2012 2013 2014 2015 2016 2017
Slide 27: Global wine production
27 Global wine production • World wine production in 2018 reached 279 Mhl, an increase of 13% YoY. • Inventory stocks have recovered after an abundant harvest in 2018, bringing global industry market to a balanced situation. 320 300 300 281 282 292 280 280 284 275 279 272 266 268 Millions of HL 267
Slide 28: Outlook
28 Outlook • The 2019 harvest in the southern hemisphere in general is lower than the previous year on strong comparables. • In Chile and Argentina wine prices for 2019 harvest have declined, reflecting the recovery of inventory stocks. • 2019 - 2020 season in the central valleys of Chile, from Curi
Slide 29: Investor Presentation 2Q19 Results
Investor Presentation 2Q19 Results September, 2019
Slide 30: Currency mix
30 Currency mix 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 CLP 21.5% 19.3% 23.5% 20.6% 21.1% 15.6% 18.3% 16.3% USD 35.0% 40.2% 30.3% 33.6% 36.0% 40.1% 31.3% 37.2% GBP 18.4% 15.5% 19.4% 21.0% 20.5% 19.9% 24.5% 20.0% EUR 9.6% 8.7% 11.7% 8.2% 8.1% 7.9% 11.2% 9.8% CAD 3.2% 3.1% 4.1% 3.1% 3.4% 3.2% 3.5% 3.1