Vina Concha Y Toro S.a. · BCS:CONCHATORO
Vina Concha Y Toro — Q3 2018 Earnings Presentation
17 slides from Vina Concha Y Toro's earnings presentation, Nov 21, 2018
Slide 1: 3Q18 Results
3Q18 Results November 21, 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: 3Q18 highlights
3Q18 highlights 1. Internal Restructuring Process advancing according to plan 2. Implementation of the New Commercial Strategy has impacted volumes 3. Unification of Excelsior – Fetzer commercial branches 3
Slide 4: 3Q18 operating profit
3Q18 operating profit ($ million) 3Q18 3Q17 Var% Sales 155,021 153,728 0.8% Gross profit 50,946 51,193 (0.5%) Gross margin 32.9% 33.3% (40 bp) SG&A (39,033) (36,461) 7.1% SG&A / sales (25.2%) (23.7%) (150 bp) Other Income/Expenses 5,543 160 3374.2% Operating profit 17,457 14,891 17.2% Operating marg
Slide 5: 3Q18 non-recurring items
3Q18 non-recurring items ($ million) 3Q18 3Q17 Restructuring Costs 846 499 Expenses 1,483 1,037 Restructuring costs + expenses 2,329 1,536 Revaluation 50% Excelsior 6,218 0 5
Slide 6: 3Q18 adjusted operating profit
3Q18 adjusted operating profit ($ million) 3Q18 3Q17 Var mm $ Var % Operating profit 17,457 14,891 2,566 17.2% Operating margin 11.3% 9.7% 160bp Restructuring costs + expenses 2,329 1,536 793 Non-recurring income (6,218) 0 (6,218) Adjusted operating profit 13,568 16,427 (2,859) (17.4%) Adj. Operatin
Slide 7: 3Q18 results – Impact from lower sales volume
3Q18 results – Impact from lower sales volume 1. Portfolio Rationalization: Exit from 82 out of 304 brands. 2. Volume decline concentrated in non-priority brands: • Total reduction 455,720 cases • Brands in the matrix: 263,590 cases (3.6% of segment) - Protect and Watch: 81% • Brands out of the matr
Slide 8: 3Q18 results – Impact from lower sales volume
3Q18 results – Impact from lower sales volume 3. Integration of Excelsior in Fetzer from July 1st, 2018. Large adjustment in the quarter. • Decline in shipments to USA: -19.2% 4. Fewer business days in September 2018 Bottled exports from Chile (var. 2018/17) • Jan –mar : -1.4% • Apr – Jun : -2.2% •
Slide 9: 3Q18 non-operating profit
3Q18 non-operating profit ($ million) 3Q18 3Q17 Var % Net financial expenses (3,047) (2,584) 17.9% Exchange differences 2,182 3,791 (42.4%) Share of profit associates, JV 2,471 2,905 (14.9%) Non-operating profit 1,606 4,112 (60.9%) 9
Slide 10: 3Q18 results
3Q18 results (Ch$ million) 3Q18 3Q17 Var % Sales 155,021 153,728 0.8% Gross profit 50,946 51,193 (0.5%) Gross margin 32.9% 33.3% (40 bp) Operating profit 17,457 14,891 17.2% Operating margin 11.3% 9.7% 160 bp Non-operating profit 1,606 4,112 (60.9%) Net profit 17,582 14,642 20.1% Net margin 11.3% 9.
Slide 11: 9M18 Results
9M18 Results ($ million) 9M18 9M17 Var % Sales 430,754 434,125 (0.8%) Gross profit 139,798 142,992 (2.2%) Gross margin 32.5% 32.9% (50 pb) Operating profit 41,805 39,541 5.7% Operating margin 9.7% 9.1% 60 pb Non-operating profit 4,057 334 1114.6% Net profit 37,580 29,983 25.3% Net margin 8.7% 6.9% 1
Slide 12: Restructuring process – Support areas
Restructuring process – Support areas 1. Supply chain optimization in Chile local market - Closure of branches: from 13 in 2016 to 8 in 2018 - Estimated annual net savings (full year): $1,100 million 2. Wine making process optimization - Reduced number of owned cellars: from 13 to 11 in 2018 - Reduc
Slide 13: Restructuring process – Support areas
Restructuring process – Support areas 5. Important increase in productivity from higher share of clonal selections • Productivity of vineyards planted with clonal selections is 27% higher than in massal selections • 2017-18: Clonal selections share: 29% and massal selections share: 71% Clonal select
Slide 14: Restructuring process – Estimated savings
Restructuring process – Estimated savings ($ million) 2017 2018 2019 Full Year Efficiencies and synergies 4,383 10,466 17,656 18,802 from program Severance payments, (3,153) (6,141) (1,668) consultancies Net savings 1,230 4,325 15,989 18,802 14
Slide 15: Restructuring process – Previous estimates for savings
Restructuring process – Previous estimates for savings Differences in estimated net savings for 2018 and 2019 are explained by higher consultancies and severance expenses. ($ million) 2017 2018 2019 Full Year Efficiencies and synergies 4,383 10,466 17,656 18,802 from program Severance payments, (3,1
Slide 16: Fetzer-Excelsior merger
Fetzer-Excelsior merger 1. Further consolidation of distributors and retailers. After the last merger, RNDC / Breakthru, # 1 & #2 top distribuitors, will have 60% market share. 2. Low performance of Excelsior 3. The merger is a step taken after achieving a greater level of expertise by Fetzer commer
Slide 17: Fetzer-Excelsior merger - Sinergies
Fetzer-Excelsior merger - Sinergies • Cost savings from consolidation of sales force and SG&A absorption Investment US$ 40.5 million Annual savings US$ 9.0 million Higher marketing US$ 4.0 million expenses Net savings US$ 5.0 million • Consolidation of sales force as of July 1, 2018, a year of adjus