Vina Concha Y Toro S.a. · BCS:CONCHATORO
Vina Concha Y Toro — Q2 2018 Earnings Presentation
27 slides from Vina Concha Y Toro's earnings presentation, Sep 10, 2018
Slide 1: 2Q18 Results
2 Q 1 8 R E S U LT S September 10, 2018
Slide 2: Forward Looking Statements
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 materiall
Slide 3: Contents
CONTENTS I. 2Q18 Results II. 2022 Strategy Follow-Up
Slide 4: Earnings Highlights
I. 2Q18 - EARNINGS HIGHLIGHTS • New commercial strategy focused on value is reflected in higher average prices in Export Markets, Chile, USA, and Argentina exports. • Restructuring process is delivering efficiency gains and savings. • Volume resumes growth in Chile, after significant price increases
Slide 5: Results
I. 2Q18 - RESULTS Change % (million Ch$) 2Q18 2Q17 Change % Constant Currency Sales 151,291 158,916 (4.8%) (0.5%) Gross profit 49,451 53,307 (7.2%) 0.2% Gross margin 32.7% 33.5% (90 bp) 20 bp Operating profit 14,677 16,896 (13.1%) 7.5% Operating margin 9.7% 10.6% (90 bp) 70 bp Non-operating profit 3
Slide 6: Currency Impact on Results
I. 2Q18 - CURRENCY IMPACT ON RESULTS 2Q17 Change % F/X (million Ch$) 2Q18 2Q17 Change $ Constant Constant Impact Currency Currency Sales 151,291 158,916 (7,626) 151,996 (0.5%) (6,920) Cost of Sales (101,840) (105,610) 3,770 (102,624) (0.8%) 2,986 Gross profit 49,451 53,307 (3,855) 49,372 0.2% (3,935
Slide 7: Revenue in Export Markets
I. 2Q18 - REVENUE IN EXPORT MARKETS 2Q18 2Q17 Change% Revenue (million Ch$) 101,544 106,421 (4.6%) Revenue (Thousand US$) 162,912 160,115 1.7% Volume (million 9-liter case) 5.79 6.14 (5.7%) Average Price (US$ / liter) 3.20 2.96 8.0% • Export sales (US$) grew in Europe (+3.5%) driven by United Kingdo
Slide 8: Revenue in Chile Domestic Market
I. 2Q18 - REVENUE IN CHILE DOMESTIC MARKET 2Q18 2Q17 Change% Revenue (million Ch$) 19,461 17,725 9.8% Volume (million 9-liter case) 1.97 1.92 2.9% Average Price (Ch$ / liter) 1,097 1,028 6.8% • Premium wine value up 13.4%, volume up 7.1%. • Casillero del Diablo: +11% value, +3% volume. • Marques de
Slide 9: Revenue in Chile Domestic Market
I. 2Q18 - REVENUE IN CHILE DOMESTIC MARKET *For a meaningful comparison with 2Q18, 2Q17 prices are restated according to IFRS 15 accounting rule adopted as of Jan-2018. 9
Slide 10: Revenue in USA (Fetzer Vineyards)
I. 2Q18 - REVENUE IN USA (FETZER VINEYARDS) 2Q18 2Q17 Change% Revenue (million Ch$) 14,356 15,971 (10.1%) Revenue (Thousand US$) 23,010 24,033 (4.3%) Volume (million 9-liter case) 0.45 0.51 (11.2%) Average Price (US$ / liter) 5.67 5.28 7.4% • Higher prices were offset by a decline in volume mainly e
Slide 11: Revenue in Argentina
I. 2Q18 - REVENUE IN ARGENTINA 2Q18 2Q17 Change% Revenue (million Ch$) 4,220 6,102 (30.8%) Volume (million 9-liter case) 0.29 0.36 (19.7%) Average Price (US$ / liter) 2.62 2.89 (9.3%) • Lower volume reflecting lower availability of wine and the Company´s strategy of exiting less- profitable products
Slide 12: Cost of Sales and SG&A
I. 2Q18 - COST OF SALES AND SG&A (million Ch$) 2Q18 2Q17 Change Change% Sales 151,291 158,916 (7,626) (4.8%) Costs of sales (101,840) (105,610) 3,770 (3.6%) Cost of Sales / sales (67.3%) (66.5%) 90 bp Gross profit 49,451 53,307 (3,855) (7.2%) Gross margin 32.7% 33.5% (90 bp) SG&A (34,469) (36,286) 1
Slide 13: Adjusted Operating Profit
I. 2Q18 - ADJUSTED OPERATING PROFIT (million Ch$) 2Q18 2Q17 Restructuring (ROIC) Costs 368 445 Expenses 1,363 842 Other Non Recurring Items 375 0 ROIC Costs + Expenses + NRI 2,105 1,287 (million Ch$) 2Q18 2Q17 Change Change% Operating profit 14,677 16,896 (2,219) (13.1%) Operating margin 9.7% 10.6%
Slide 14: Non-Operating Profit
I. 2Q18 - NON-OPERATING PROFIT (million Ch$) 2Q18 2Q17 Change % Net Financial Expenses (2,645) (2,627) 0.7% Exchange Rate Differences 5,832 1,421 310.4% Share of profit (loss) of (47) (305) (84.7%) associates and JV Non-operating profit 3,140 (1,510) • Higher exchange rate differences are explained
Slide 15: Consolidated Results
I. 2Q18 - CONSOLIDATED RESULTS 2Q18 2Q17 2Q18 2Q17 (million Ch$) Change % Change % Reported Reported Adjusted Adjusted Sales 151,291 158,916 (4.8%) 151,291 158,916 (4.8%) EBITDA 20,365 22,697 (10.3%) 22,471 23,985 (6.3%) EBITDA margin 13.5% 14.3% (80 bp) 14.9% 15.1% (20 bp) Non-operating profit 3,14
Slide 16: Contents
CONTENTS I. 2Q18 Results II. 2022 Strategy Follow-Up
Slide 17: Restructuring Process and Cost Savings
II. RESTRUCTURING PROCESS AND COST SAVINGS • Net estimated savings of Ch$18,800 million. • As of Jun-18: 34% of completion of 2018 estimated savings. (Ch$ million) 2017 2018 2019 Full Year Efficiencies and synergies from 4,383 10,466 17,656 18,802 program Severance payments and (3,153) (4,460) (1,29
Slide 18: Positive Evolution of SG&A
II. POSITIVE EVOLUTION OF SG&A • SG&A down 3,8% yoy, to 23.4% of sales. 50 basis points lower than 6M17. • Adjusted SG&A was 22.6%, down 80 basis points. • SG&A/sales for June 2017 was restated from 27.3% to 23.9%, according to IFRS 15. (Ch$ million) 18
Slide 19: Brand Matrix: New Focus for Our Commercial Strategy
II. BRAND MATRIX: NEW FOCUS FOR OUR COMMERCIAL STRATEGY • Commercial area working with brand matrix tool. • Portfolio rationalization: from 304 brands in 2017 to 222 brands in 2018. High At corporate level INVEST PRINCIPAL matrix contains POTENTIAL ~20% ~80% of total of total WATCH MAINTAIN brands r
Slide 20: Increasing Contribution of Principal and Invest Brands
II. INCREASING CONTRIBUTION OF PRINCIPAL AND INVEST BRANDS 100% 11% 6% 90% 16% 15% 13% 10% 80% 10% 10% 3% 4% 70% 11% 10% 19% 60% 24% 50% 28% 29% 27% 40% 24% 30% 17% 17% 20% 27% 32% 10% 18% 19% 0% Sales 1H17 Op. Profit 1H17 Sales 1H18 Op. Profit 1H18 Principal Invest Maintain Watch Portfolio Others
Slide 21: Casillero del Diablo Brand: Growing in Volume & Value
II. CASILLERO DEL DIABLO BRAND: GROWING IN VOLUME & VALUE • Sales driven by Chile, UK, Ireland and Denmark • Line extensions at higher price points, representing 6% of value. • Launch of Diablo in Europe, Central America, and Chile. (Th. 9-l cases) 6M18: US$ Sales: +11.4% Volume: +2.0% 21
Slide 22: 6M18 - Consolidated Results
II. 6M18 - CONSOLIDATED RESULTS 6M18 6M17 6M18 6M17 (million Ch$) Change % Change % Reported Reported Adjusted Adjusted Sales 275,733 280,396 (1.7%) 275,733 280,396 (1.7%) Gross profit 88,852 91,799 (3.2%) 89,441 92,434 (3.2%) Gross margin 32.2% 32.7% (50 bp) 32.4% 33.0% (50 bp) SG&A (64,543) (67,09
Slide 23: 2Q18 Results
2 Q 1 8 R E S U LT S September 10, 2018
Slide 24: Sales Currency Mix
SALES CURRENCY MIX Sales Currency 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 mix CLP 18.7% 19.8% 19.2% 19.7% 20.9% 19.1% 21.8% 19.8% 20.4% 23.5% 20.6% USD 35.6% 36.8% 39.2% 36.2% 34.9% 34.8% 34.5% 39.5% 36.0% 30.3% 33.6% GBP 18.0% 17.2% 15.0% 17.7% 18.1% 19.5% 17.8% 15.5% 17.5% 19.4% 21.
Slide 25: Average Exchange Rates
AVERAGE EXCHANGE RATES *3Q18 up to September 09, 2018. 26
Slide 26: Average Exchange Rates
AVERAGE EXCHANGE RATES *3Q18 up to September 09, 2018. 27
Slide 27: Average Exchange Rates
AVERAGE EXCHANGE RATES *3Q18 up to September 09, 2018. 28