Slide 1: Purcari Wineries Plc 1Q2020 Results Presentation
Purcari Wineries Plc 1Q2020 Results Presentation 15 May 2020 This picture was taken at the Purcari vineyard on April 15. It shows a Merlot grape bud, pushing stubbornly ahead, oblivious to the pandemic. Page 1
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 in 2002 management experience banking, audit, corporate FMCG ▪ Over 35 years of finance ▪ Ex Virg
Slide 4: Agenda
Agenda Our newest launch, 1 Our Group Viorica de Purcari, caters to the increasing interest in indigenous aromatic grapes. Truly, 2 1Q20 Operational Results + COVID19 Update an explosion of aromas and likely 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, 2020, % Founded in 1827 by French colonists, Purcari group is now... RO MD PL CN UA Other #1 Most awarded CEE winery of t
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 10,7 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: Clear #1 in premium in Romania, keep gaining share, ample headroom
1 Clear #1 in premium in Romania, keep gaining share, ample headroom Overall, Purcari has tripled MS in 5 years…. …while becoming a clear #1 in Premium1 Value share of TOTAL retail market, Romania, % Value share of Premium (RON 30+/liter) retail market, Romania, % 18 Purcari (Group) 24 Samburesti 16
Slide 13: Agenda
Agenda Negru de Purcari 2013, 4.4 score on 1 Our Group Vivino, top 1% wine globally 2 1Q20 Operational Results + COVID19 Update 3 Update on 2020 Outlook + Contingency Plans 4 Q&A Page 13
Slide 14: Solid 1Q20 growth, despite headwind in China, HoReCa, DutyFree
2 Solid 1Q20 growth, despite headwind in China, HoReCa, DutyFree Revenues EBITDA Normalized Net Income RON m RON m RON m 3 m RON FX balance sheet loss, on +10% MDL depreciation vs. hard 46.4 currencies as of March 31, 2020. net of non operating FX impact, the 42.2 +25% Net Income grew +20%. 17.4 +20
Slide 15: Temporary depreciation spike in MDL FX related to COVID outbreak
2 Temporary depreciation spike in MDL FX related to COVID outbreak MDL vs EUR MDL vs USD MDL vs RON 20.4 19.0 4.20 18.8 20.2 20.1 4.15 18.6 4.14 20.0 18.4 4.10 18.2 18.2 19.8 4.05 18.0 18.0 4.05 4.03 17.9 4.05 19.6 17.8 17.8 4.00 4.01 4.01 17.6 19.4 19.4 19.4 17.6 19.3 19.3 19.4 17.4 3.95 19.2 17.2
Slide 16: Key operational highlights for 1Q2020
2 Key operational highlights for 1Q2020 • Sales up +10%, mainly driven by strong performance in modern-retail segment in core CEE markets Solid growth, • Shipments to China down by half, given lockdown peak in 1Q20 despite China, HoReCa weakness • HoReCa segment, accounting for <15% of revenues, mos
Slide 17: Markets: Romania remains key growth driver
2 Markets: Romania remains key growth driver Market Share of sales, 1Q20 Growth, 1Q20 YoY Comments • RO: Strong Purcari performance, up 42% YoY. Crama Ceptura RO 48% +39% reinvigorated growth on back of quality improvements, active marketing, up 35%; Bardar +80%, albeit from lower base. Growth engin
Slide 18: Premium Purcari and Crama Ceptura lead the growth
2 Premium Purcari and Crama Ceptura lead the growth Brand Share of sales, 1Q20 Growth, 1Q20 YoY Comments • PURCARI: ongoing strong traction in Romania, largely in the IKA 41% +29% segment, compensating for the headwind in HoReCa. Promising performance in newer markets, such as PL +21%, UA +186%. MD
Slide 19: P&L – solid growth and margins given circumstances
2 P&L – solid growth and margins given circumstances Comments RON m 1Q19 1Q20 ∆ '19/'18 ▪ Gross margin up 3pp with revenues growing faster than Revenue 42.2 46.4 10% cost of goods sold, on improved mix and select price raises combined with a revision of cost lines. Cost of Sales (22.0) (22.8) 3% Gro
Slide 20: 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 +11% RON m -7% ▪ Solid Cash position up 14.0 98.2 11% QoQ Cash and 12.6 91.5 Receivables ▪ Net Debt improved by 7% due to both decrease of Debt and increase of Cash balance 31-Dec-19 31-Mar-20 31-Dec-1
Slide 21: Health & safety remains a top priority amid suspected staff infections
2 Health & safety remains a top priority amid suspected staff infections Health and Safety measures Update on SARS-CoV-2 infections Actions undertaken • Work for home rule for all • Five employees at Vinaria Bostavan • All four production underwent administrative staff, as of March 16 subsidiary hos
Slide 22: 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 • Export clearance to / from • No major out of stock measures in place at all measures in place at all Romania and from issues in shipments to vin
Slide 23: Agenda
Agenda Freedom Blend, indigenous grapes 1 Our Group from Moldova, Georgia, Ukraine; 91 points by Wine Enthusiast 2 1Q20 Operational Results + COVID19 Update 3 Update on 2020 Outlook + Contingency Plans 4 Q&A Page 23
Slide 24: Vivino feedback very strong, particularly important for online sales
3 Vivino feedback very strong, particularly important for online sales #1 presence in the RON <30 and RON 30-60 segment; Hold 10 out of TOP-25 positions in the crucial RON 30-60 segment • We remain obsessed about the quality of our wines, which pays off in excellent consumer feedback • In our core p
Slide 25: Ready for summer: outstanding 2019 vintage whites, rosé
3 Ready for summer: outstanding 2019 vintage whites, rosé 4.2 4.3 4.0 4.2 Note: based on the Vivino score for the respective 2019 vintages, as of May 13, 2020 Page 25
Slide 26: Our key operating markets have been coping well with the outbreak to date
3 Our key operating markets have been coping well with the outbreak to date 1 1 1 1 Share of sales, Number of Infections Number of Fatalities 2 3 3 Market FY19 infections per mln fatalities per mln RO number* Doubling time** Trend*** RO 42% 15.778 820 1.002 52 1.0 - MD 23% 4.995 1,238 175 43 0.9 - P
Slide 27: Globally, wine category holding well so far; yet can't conclude on steady state
3 Globally, wine category holding well so far; yet can’t conclude on steady state Wine has been holding well through March, across markets…. • Wine sales in US up +10% in March, according to industry body1, though unclear if consumers buy more or consume more. Wine sales up +28% in the week to March
Slide 28: Executed promptly on adapting our marketing to the new COVID reality
3 Executed promptly on adapting our marketing to the new COVID reality 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: So
Slide 29: 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 7,0 (-31%) 31% of original CAPEX program 22,7 A CAPEX cut • Management had reached out
Slide 30: We suspend our guidance for 2020; to be updated upon more clarity
3 We suspend our guidance for 2020; to be updated upon more clarity 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 markets
Slide 31: Agenda
Agenda Cuvée de Purcari, 1 Our Group the extension to sparkling launched in 2017. Made according to 2 1Q20 Operational Results + COVID19 Update the traditional, Champenoise method, with in- 3 Update on 2020 Outlook + Contingency Plans bottle fermentation 4 Q&A Page 31
Slide 32: Thank you.
Thank you. Page 32