Vina Concha y Toro S.A. · BCS:CONCHATORO
Vina Concha y Toro — 3Q 2016 Earnings Presentation
53 slides from Vina Concha y Toro's earnings presentation, Dec 7, 2016
Slide 1: Investor Presentation 3Q2016 & 9M2016 Results
Investor Presentation 3Q2016 & 9M2016 Results December 7, 2016
Slide 2: Agenda
Agenda 1. Highlights 3Q2016 2. 3Q2016 review 3. 2016 Accumulated figures 4. What to expect after Brexit? 5. Financial position 6. Drivers of growth
Slide 3: Highlights: 3Q 2016 vs 3Q 2015
Highlights: 3Q 2016 vs 3Q 2015 • Higher volumes: 6.5% • Flat sales: -0.2% – FX negative contribution • Premiumization: – Exports sales, growth of 11% in volume (YTD). – Domestic sales, growth of 13% in volume (YTD). • Lower EBITDA: -12.1% Negative FX and Higher Cost of Wine • Lower Net Income: -14.
Slide 4: Agenda
Agenda 1. Highlights 3Q2016 2. 3Q2016 Review 3. 2016 Accumulated Figures 4. What to expect after Brexit? 5. Financial Position 6. Drivers of growth
Slide 5: 3Q2016 Review
2. 3Q2016 Review • 2.1 Sales and Volumes • 2.2 Premiumization • 2.3 FX Impact • 2.4 Performance & Results
Slide 6: Consolidated Sales 3Q2016 (million Ch$)
Consolidated Sales 3Q2016(million Ch$) Vol: +5.4% Vol: +3.6% Px: +1.6% Vol: +7.5% Vol: Vol: Px: +6.3% Vol: +20% +34.4% +10.3% - 6
Slide 7: Consolidated Volumes 3Q2016
Consolidated Volumes 3Q2016 +20.0% -90.1% -0.3% 7
Slide 8: Consolidated Volumes 3Q2016
Consolidated Volumes 3Q2016 Bottled Exports (CL, AR and US) by Region (% over total volume) Africa & Others +60.3% Asia +16.8% South America +6.5% C. America & Caribbean +8.4% Canada +8.2% USA -5.2% Europe +5.5% Europe Increasing 5.5% Asia Increasing 16.8% Africa Increasing 60.3% 8
Slide 9: 3Q2016 Review
2. 3Q2016 Review • 2.1 Sales and Volumes • 2.2 Premiumization • 2.3 FX Impact • 2.4 Performance & Results
Slide 10: Premiumization of Sales
2.1 PREMIUMIZATION Premiumization of Sales Sales in Volume Sales in Value • Premium Growth: +8.2% in 3Q2016 • Growth driven by core brands • Representing • Casillero del Diablo 28.5% over total volume • Trivento Reserve 48.9% over total sales • 1000 Stories 10
Slide 11: Performance Premium Core Brands
2.1 PREMIUMIZATION Performance Premium Core Brands Casillero del Diablo: +8.4% Trivento Reserve: +22.1% (Base 100 = 3Q2015, volume) (Base 100 = 3Q2015, volume) 11
Slide 12: 3Q2016 Review
2. 3Q2016 Review • 2.1 Sales and Volumes • 2.2 Premiumization • 2.3 FX Impact • 2.4 Performance & Results
Slide 13: Foreign Exchange 3Q2016 in Sales
Foreign Exchange 3Q2016 in Sales Currency % over Sales FX Change (Currency/CLP) USD 36.8% -2.7% CLP 19.8% 0% GBP 17.2% -17.4% EUR 11.2% -2.5% BRL 5.4% 5.2% CAD 3.4% -2.0% SEK 2.2% -2.6% MXN 1.9% -14.4% ARG 1.3% -39.7% NOK 0.8% -3.4% 13
Slide 14: 3Q2016 Review
2. 3Q2016 Review • 2.1 Sales and Volumes • 2.2 Premiumization • 2.3 FX Impact • 2.4 Performance & Results
Slide 15: Operating Results 3Q2016
Operating Results 3Q2016 Operating Income EBITDA (Million Ch$) (Million Ch$) Net Income (Million Ch$) Results Impacted by: • Negative impact of FX fluctuations • Higher costs derived from a weak harvest in 2016 15
Slide 16: Agenda
Agenda 1. Highlights 3Q2016 2. 3Q2016 Review 3. 2016 Accumulated Figures 4. What to expect after Brexit? 5. Financial Position 6. Drivers of growth
Slide 17: 2016 Accumulated Figures
3. 2016 Accumulated Figure • 3.1 Sales and Volumes • 3.2 Premiumization • 3.3 Distribution Strategy • 3.4 Fetzer Vineyards • 3.5 FX Impact • 3.6 Performance & Results
Slide 18: Consolidated Sales 9M2016 (million Ch$)
Consolidated Sales 9M2016 (million Ch$) +7.0% 18
Slide 19: Consolidated Sales 9M2016 (million Ch$)
Consolidated Sales 9M2016 (million Ch$) Vol: 5.7% Vol: +24.5% Vol: +11.0% bottled Vol: Vol: +6.8% +48.7% Vol: +12.5% Vol: +6.4% Px: +3.2% 19
Slide 20: Consolidated Volumes 2007 - 9M2016
Consolidated Volumes 2007 - 9M2016 Bottled Exports (CL, AR and US) by Region (% over total volume) Africa & Others Asia +24.8% South America +21.9% +6.1% C. America & Caribbean +8.8% Canada +11.6% USA -6.7% +6.6% Europe Asia Increasing its Share from 6.6% to 13.2% Africa Increasing its Share fro
Slide 21: Asia leading the growth in bottled exports
Asia leading the growth in bottled exports Concha y Toro in Asia (VCT Asia) In 2010 the Company created a new Commercial Region focus exclusively in Asia. In 2010 the Company started operations in Singapore through a distribution subsidiary In 2013 the Company entered in China with a Commercia
Slide 22: Asia leading the growth in bottled exports
Asia leading the growth in bottled exports Sales VCT Asia (thousand USD) Sales VCT Asia (thousand cases) 2,787 2,243 1,835 1,574 1,337 1,248 936 Asia duplicated sales in value and volume since the starting of Asian operations in 2010 22
Slide 23: Asia leading the growth in bottled exports
Asia leading the growth in bottled exports Premium Sales VCT Asia (thousand cases) 413 331 261 236 173 129 98 Premium categories growing faster than total sales in Asia 23
Slide 24: Leading Position over Chilean Bottled Exports
Leading Position over Chilean Bottled Exports Source: Chilean Custom ** Since 2013, the Company started exporting bulk wine to be bottled in UK ~3.0 million cases per year 24
Slide 25: Top Winery in Volume in the Chilean Domestic Market
Top 3 Winery in Volume in the Chilean Domestic Market Source: Nielsen 25
Slide 26: 2016 Accumulated Figures
3. 2016 Accumulated Figure • 3.1 Sales and Volumes • 3.2 Premiumization • 3.3 Distribution Strategy • 3.4 Fetzer Vineyards • 3.5 FX Impact • 3.6 Performance & Results
Slide 27: Premiumization of Sales
Premiumization of Sales Sales in Volume Sales in Value +10.2% +8.3% • Premium Growth: +10.2% in 9M2016 (volume) • Growth driven by core brands • Representing Casillero del Diablo 28.4% over total volume Trivento Reserve 47.9% over total sales Bonterra 1000 Stories 27
Slide 28: Performance Premium Core Brands
2.1 PREMIUMIZATION Performance Premium Core Brands • Casillero del Diablo + 13% in volume YoY • Trivento Reserve + 36% in volume YoY • Bonterra + 4% in volume YoY • 1000 Stories + 407% in volume YoY 28
Slide 29: Total Bonterra's Sales growth vs category
2.1 PREMIUMIZATION Total Bonterra’s Sales: +19.2% vs $11 – 11.99 Category at +8.1% Bonterra Cabernet Sauvignon: +17.8% Bonterra Chardonnay: +28.8% vs just 3.8% category growth at the same price point Bonterra Merlot: The FASTEST growing SKU in the range, +25.6% vs the rest of the Merlot catego
Slide 30: 2016 Accumulated Figures
3. 2016 Accumulated Figure • 3.1 Sales and Volumes • 3.2 Premiumization • 3.3 Distribution Strategy • 3.4 Fetzer Vineyards • 3.5 FX Impact • 3.6 Performance & Results
Slide 31: Distribution Subsidiaries: Driving the Growth
Distribution Subsidiaries: Driving the Growth Distribution Subsidiaries (bottled sales) 9M 2016 vs 9M 2015 Concha y Toro UK: +7% VCT Nordics: +6% VCT Chile: +6% VCT MX: +17% Trivento Domestic: +25% Fetzer Domestic: +6% 31
Slide 32: 2016 Accumulated Figures
3. 2016 Accumulated Figure • 3.1 Sales and Volumes • 3.2 Premiumization • 3.3 Distribution Strategy • 3.4 Fetzer Vineyards • 3.5 FX Impact • 3.6 Performance & Results
Slide 33: Fetzer Vineyards – Sales (thousand liters)
Fetzer Vineyards – Sales (thousand liters) -89.8% +5.7% +24.5% +7.4% 33
Slide 34: 2016 Accumulated Figures
3. 2016 Accumulated Figure • 3.1 Sales and Volumes • 3.2 Premiumization • 3.3 Distribution Strategy • 3.4 Fetzer Vineyards • 3.5 FX Impact • 3.6 Performance & Results
Slide 35: Foreign Exchange 9M2016 in Sales
Foreign Exchange 9M2016 in Sales Currency % over Sales FX Change (Currency/CLP) USD 35.1% 5.2% CLP 19.9% 0% GBP 18.8% -4.1% EUR 10.6% 5.5% BRL 5.2% 26.7% CAD 3.4% 1.2% SEK 2.6% 6.6% MXN 2.4% -9.3% ARG 1.1% -36.0% NOK 0.9% 0.1% 35
Slide 36: 2016 Accumulated Figures
3. 2016 Accumulated Figure • 3.1 Sales and Volumes • 3.2 Premiumization • 3.3 Distribution Strategy • 3.4 Fetzer Vineyards • 3.5 FX Impact • 3.6 Performance & Results
Slide 37: Operating Results 9M2016
Operating Results 9M2016 EBITDA (Million Ch$) +7.3% * *Reimbursement of insurance after the earthquake of 2010 EBITDA Margin (% over sales) 37
Slide 38: Net Income 9M2016 (million Ch$)
Net Income 9M2016 (million Ch$) +7.4% 38
Slide 39: Agenda
Agenda 1. Highlights 3Q2016 2. 3Q2016 review 3. 2016 Accumulated figures 4. What to expect after Brexit? 5. Financial position 6. Drivers of growth
Slide 40: Concha y Toro UK
Concha y Toro UK • UK market at Glance • FX scenario across wine producers • Measures to keep profitability • Strong positioning of Concha y Toro’s brands in UK 40
Slide 41: Concha y Toro UK: UK market at glance
Concha y Toro UK UK market at glance The sixth largest consumer of wine in the world - 144 million cases per year - Consumption: ~20 liters per capita per year The UK is not a producer country. UK is the second importer of wine in the world 41
Slide 42: Concha y Toro UK: FX scenario across wine producers
Concha y Toro UK • FX scenario across wine producers UK Wine Category per Origin Brexit hit world’s currencies. GBP depreciating against currencies of main producer countries. GBP Depreciation (Currency/GBP, base 100) 42
Slide 43: Concha y Toro UK: Measures to keep profitability
Concha y Toro UK • Measures to keep profitability the Company implemented an increase in prices in order to mitigate the impact of the Pound’s devaluation the Company has been assessing several initiatives in order to obtain efficiencies in its processes and brand´s investments • Consumer’s perc
Slide 44: Concha y Toro UK: Strong Positioning and Track-Record
Concha y Toro UK • Strong Positioning and Successful Track-Record of Growth Volume (thousand cases) • Milestones: Casillero del Diablo: top 4 selling brand. Top selling cabernet sauvignon Cono Sur: top selling pinot noir Trivento Reserve: top selling malbec 44
Slide 45: Agenda
Agenda 1. Highlights 3Q2016 2. 3Q2016 review 3. 2016 Accumulated figures 4. What to expect after Brexit? 5. Financial position 6. Drivers of growth
Slide 46: Conservative Capital Structure (As of Sep-16)
Conservative Capital Structure (As of Sep-16) Net Financial Debt / EBITDA (1) Net Financial Debt / Equity EBITDA (1) / Financial Expenses (1) 1.2(*) 2,5(**) Liabilities: Current Liabilities + Non Current Liabilities Financial expenses excludes financial income Financial Debt: Other current financial
Slide 47: Agenda
Agenda 1. Highlights 3Q2016 2. 3Q2016 review 3. 2016 Accumulated figures 4. What to expect after Brexit? 5. Financial position 6. Drivers of growth
Slide 48: Drivers of Growth
Drivers of Growth Premiumization: +10.2% in volume and +8.3% in value (9M2016) Distribution Subsidiaries: representing 66.4% of volumes sold Brand Building: Bonterra awarded as American Winery of the Year by Wine Enthusiast Fetzer Vineyards: Bottled sales growing +7.4% in volume (9M2016).
Slide 49: Investor Presentation 3Q2016 & 9M2016 Results
Investor Presentation 3Q2016 & 9M2016 Results December 7, 2016
Slide 50: V. Exhibits
V. Exhibits 50
Slide 51: Bottled Sales 3Q2016 & 9M2016
Bottled Sales 3Q2016 & 9M2016 Change Change Total Sales⁽*⁾ (in Ch$ million) 3Q16 3Q15 9M 2016 9M 2015 (%) (%) Chile Domestic Market - wine 20,182 18,844 7.1% 52,359 47,655 9.9% Export markets⁽¹⁾ 111,215 113,726 -2.2% 312,033 295,053 5.8% Argentina Domestic 2,168 1,991 8.9% 5,127 4,497 14.0% Argentin
Slide 52: Chilean Harvest through years
Chilean Harvest through years Historical Harvest Volume (million liters) 52
Slide 53: Significant shift in Chilean bulk wine price curve
Significant shift in Chilean bulk wine price curve Chilean Bulk Wine Price (Cabernet Sauvignon, Maule Valley) 53