Purcari Wineries Public Co., Ltd. · BVB:WINE
Purcari Wineries Public — WOOD's Winter Wonderland EME Conference 2022
48 slides from Purcari Wineries Public's conference presentation, December 2022
Slide 1: Purcari Wineries
Purcari Wineries Public Company Limited BVB: WINE WOOD’s Winter Wonderland EME Conference 6th – 9th of December 2022, Prague
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 agenda
Today’s agenda Negru de Purcari 2019 Nominated by Caroline Gilby, Master of Wine, for the Decanter Magazine, Wines of the 1 Purcari Wineries Group Key Info Year 2021: The Top Classic Wines, with a score of 93 pts. 4.4 score on Vivino, 2 Vision and Strategy ranked among the top 1% wines globally 3 9M
Slide 4: Purcari Wineries Group at a glance
1 Purcari Wineries Group at a glance Leading wine player in Central and Eastern Europe... … with a strong & expanding regional footprint Founded in 1827 by French colonists, Purcari group is now... Geographical breakdown of sales in value terms, 9M 2022, % RO MD PL UA CN Other #1 World’s most awarde
Slide 5: Strong track record of growth year to year
1 Strong track record of growth year to year Sustainable profitability accompanying strong growth Comments ▪ IPO’d on Bucharest Stock Exchange in February 2018 ▪ 75% increase in revenues since pre-IPO ▪ Strong operating results and cost-efficient production ▪ SG&A stable over time at 22% of revenue
Slide 6: Continuous growth in 2021
1 Continuous growth in 2021 Revenues EBITDA Net Income RON m RON m RON m +22% +24% 1 248 75 59 1 65 51 199 204 60 54 41 169 38 142 42 29 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 (1) Includes the following one-off effects • Income on settlement of assigned receivable
Slide 7: Strong balance sheet, providing a solid footing for current macro environment
1 Strong balance sheet, providing a solid footing for current macro environment Cash Position Net Debt RON m RON m 50.8 98 97 Cash and 81 32.1 66 Receivables 23.8 22.5 46 12.6 31-Dec-19 31-Dec-20 31-Dec-21 30-Jun-22 30-Sep-22 31-Dec-19 31-Dec-20 31-Dec-21 30-Jun-22 30-Sep-22 Current Ratio Cash Ratio
Slide 8: Today's agenda
Today’s agenda Freedom Blend 2020 A fascinating, distinctive blend of indigenous grapes from Moldova, Ukraine and Georgia, 1 Purcari Wineries Group Key Info launched back in 2014. Declared Wine of the week by Jancis Robinson in UK on the 2 Vision and Strategy 4th of November 2022 with a 16.5 score.
Slide 9: Our business model: Affordable Luxury
2 Our business model: Affordable Luxury Modern cost-competitive winemaking Purcari is positioned at the intersections of three themes: ▪ Modern winemaking: the company is a brand, as opposed to appellation-centric and runs a cost-efficient business. ▪ Affordable luxury: as an aspirational brand, Pur
Slide 10: Our mission, vision and values
2 Our mission, vision and values Our mission Our values To bring joy in people’s lives by offering Hungry them high quality, inspiring, ethical wines We win in the marketplace because we want it more. and excellent value for money. Ethical Always do the right thing and the money will follow. Thrifty
Slide 11: Purcari formula: operational excellence meets sound marketing
2 Purcari formula: operational excellence meets sound marketing Operational excellence Clever marketing ▪ Location: low-cost production platform in Romania, ▪ Philosophy: be genuine, talk to the consumer, don’t sell to Moldova; very competitive vs. other EU, New world them ▪ Scale: large and growing
Slide 12: CEE consumption especially strong, on shifting drinking patterns
2 CEE consumption especially strong, on shifting drinking patterns Plenty of catch up for CEE countries Wine steals share from beer Wine consumption, litres per capita, selected countries Forecast growth by category, by country 2016-2020F, % 43 9.0 Wine Beer 33 25 5.1 20 16 15 3.2 2.9 1.9 6 1.1 1.1
Slide 13: Wine markets evolve, as wine moves from novelty to masses
2 Wine markets evolve, as wine moves from novelty to masses Stage 3: “Mass appeal” Stage 2: “Beyond early adopters” ▪ Customer taste highly developed, abundance of offers ▪ Wine treaded as as day-to-day item ▪ Local brands highly developed, Stage 1: high export activity, domination ▪ Customer taste
Slide 14: Vision: be the consolidator of a fragmented market
2 Vision: be the consolidator of a fragmented market Volume share top-3 players by country, % 79 82 74 #3 68 63 #2 41 39 18 #1 10 Beer Spirits Wine Beer Spirits Wine Beer Spirits Wine Unlike beer or spirits, wine market remains very fragmented; players who have the scale and sophistication needed –
Slide 15: Moldova has the largest vineyard area per capita globally
2 Moldova has the largest vineyard area per capita globally Per Capita vineyard area worldwide, 2018 Hectares per capita Europe Rest of the World 4.1 2.0 1.8 1.5 1.2 1.2 1.0 0.9 0.9 0.8 0.8 0.7 0.6 0.5 0.5 0.5 0.5 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Japan
Slide 16: Global wine belt does leave ample space for pushing New Frontier ahead
2 Global wine belt does leave ample space for pushing New Frontier ahead (5) Napa (US); (6) Bordeaux (FR); (7) Mendoza (AR); Marlborough (NZ). Source: Vinepair – The World’s Coffee & Wine Belts Page 16
Slide 17: Quality highly commended; most awarded winery in the World in 2021
2 Quality highly commended; most awarded winery in the World in 2021 Leading medal-winning winery in CEE at Decanter, Increasing number of medals won from year to year, the Wine ”Olympics” In 2021 the most awarded winery in the World # of Decanter medals in 2015 − 2022 # of medals #1 Mundus Vini 129
Slide 18: Topping competition at engagement and quality
2 Topping competition at engagement and 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 13.9 4.2
Slide 19: Vivino feedback remains very strong, essential for online sales
2 Vivino feedback remains very strong, essential for online sales #1 presence in the crucial RON 30-60 segment, holding 13 out of TOP-25 positions #1 ▪ We remain obsessed with the quality of our wines, which pays off in excellent consumer feedback. ▪ In our core premium segment, 30-60 RON per bottle
Slide 20: Growth in Vivino usage, key for consumer engagement, ecommerce
2 Growth in Vivino usage, key for consumer engagement, ecommerce 4.21 78% Top 1% Average score out of Scores equal or Global ranking based on 5.0 in 9M 2022 above 4.0 avg. score received 33,254 +10% 89 Vivino scans in 9M 2022 YoY scans # of countries where Purcari 9M 2022 has been scanned Page 20
Slide 21: Today's agenda
Today’s agenda 1 Purcari Wineries Group Key Info Limited Edition Saperavi 2020 A wine with strong personality and authentic, 2 Vision and Strategy opulent taste. Gold at Mundus Vini Summer Tasting 2022 3 9M 2022 Operational Results 4 Purcari Wineries Stock 5 Guidance 2022 Page 21
Slide 22: Strong growth amid inflationary pressure and economic uncertainty
3 Strong growth amid inflationary pressure and economic uncertainty Revenues EBITDA Adjusted Net Income1 RON m RON m RON m +4% +1% 199.8 60.7 35.4 +20% 58.2 34.9 +44% 166.4 138.3 44.2 25.6 9M20 9M21 9M22 9M20 9M21 9M22 9M20 9M21 9M22 Core business growth vs. 9M21, 32% 35% 30% 19% 21% 18% +13% EBITDA
Slide 23: WINE1 segment strong growth and margins resilience
3 WINE1 segment strong growth and margins resilience Revenues EBITDA Adjusted Net Income2 RON m RON m RON m +6% +7% +13% 186.6 60.7 36.3 +35% 34.1 57.3 165.4 138.3 44.2 25.6 9M20 9M21 9M22 9M20 9M21 9M22 9M20 9M21 9M22 32% 35% 33% 19% 21% 19% EBITDA margin Net Income margin Notes: (1) core wine segm
Slide 24: Key operational highlights for 9M 2022
3 Key operational highlights for 9M 2022 ▪ Revenue up 20% YoY to RON 199.8m in line with the guidance, with Core Wine revenues +13% YoY and Ongoing organic Ecosmart contributing additionally with 7% YoY. revenue growth, ▪ +27% in 3Q22 YoY, also incorporating the effects of price increases pushed thr
Slide 25: Maintaining healthy margins, despite inflationary pressures, geopolitics
3 Maintaining healthy margins, despite inflationary pressures, geopolitics Comments 3Q 9M RON m 2022 2021 ∆ 3Q 2022 2021 ∆ 9M ▪ Gross margin at 45% 9M22. Premiumization strategy Revenue 75.9 59.9 27% 199.8 166.4 20% and better mix partly offset the adverse effects of Cost of Sales (44.0) (28.3) 56%
Slide 26: Segment reporting: growing strong in WINE, turning around Ecosmart
3 Segment reporting: growing strong in WINE, turning around Ecosmart Purcari Group Ecosmart WINE Business ▪ Waste Recycling segment RON m 9M22 9M21 ∆ 9M22 9M21 9M22 9M21 ∆ contributing to 7% of total 9M22 '22/'21 '22/'21 revenue. Revenue 199.8 166.4 20% 13.1 1.0 186.6 165.4 13% Cost of Sales (109.2)
Slide 27: Waste recycling segment – turnaround on track, expect profitability in 2023
3 Waste recycling segment – turnaround on track, expect profitability in 2023 Financials History and actions taken Short-term plan ▪ In 2017 Crama Ceptura contributed to the foundation of ▪ Recover the misappropriated Revenues, RON m Ecosmart Union SA with 108k RON for a 27% share, to funds (ongoing
Slide 28: COGS Breakdown of the Group, YTD 2022 vs 2021 YoY
3 COGS Breakdown of the Group, YTD1 2022 vs 2021 YoY COGS structure, % Wine Stock ▪ Wine inventory cost component +28% higher in 2022 vs 2021 (due to higher cost of 2020 and 2021 vintages)1. ▪ 3rd-party grape prices expected to be at 2019 levels (lower than 2020 and 2021). 45% ▪ 300ha of irrigated v
Slide 29: Sustainable sales growth, despite the economic turmoil
3 Sustainable sales growth, despite the economic turmoil Market Share of sales, 9M22 ∆ 9M22 YoY Comments ▪ RO: improved demand in 3Q amid weaker wine market dynamics. RO 52% +11% Double-digit growth for Purcari with strong traction for Nocturne series in HoReCa. Bardar fast growth YoY on increased d
Slide 30: Premium brands: Purcari and Bardar, lead the growth
3 Premium brands: Purcari and Bardar, lead the growth Brand Share of sales, 9M22 ∆ 9M22 YoY Comments ▪ PURCARI: Upward sales in all markets, except Ukraine and Baltics. Romania catching up in 3Q with low double-digit 51% +16% growth YoY. Moldova continues growing +34% YoY. The expansion in new marke
Slide 31: Implementing irrigation systems to secure yield and quality
3 Implementing irrigation systems to secure yield and quality ▪ Pioneering in irrigation of technical grapes vineyards in Moldova. ▪ Deployed an irrigation system for 300ha of vineyards at Chateau Purcari. ▪ Opted for an intelligent, fully automated sub-surface drip irrigation system. ▪ Two storage
Slide 32: Exceptional 2022 agricultural season: high quality vintage and good yield
3 Exceptional 2022 agricultural season: high quality vintage and good yield Good 2022 harvest Comments Own harvest and 3rd party purchases of grapes, million kg 35.1 34.1 ▪ Own vineyards fully recovered after an unprecedent draught in 2020. ▪ High attention in maintaining the vineyards has paid off,
Slide 33: Continuing investing in both: growth and sustainability
3 Continuing investing in both: growth and sustainability Solar panels and dedicated warehouse ▪ Solar Panels installed on the roof of the Purcari Winery, to provide 15% of annual electricity consumption for the winery. ▪ 1,025 m2 area covered by solar panels. ▪ Annual production 240 000 kw. ▪ Aimin
Slide 34: Portfolio development: continue creating inspired products
3 Portfolio development: continue creating inspired products PURCARI NOCTURNE ACADEMIA PROCIANO, NATIVE WINE CRIME, BARDAR HoReCa – focused edition ambitious oeno-project adapting to wine trends expanding the growth pillars in RO ▪ Launched in 2021, a bet on ▪ Launched in 2022, ▪ NATIVE – wine from
Slide 35: Outstanding results at most reputable wine competitions
3 Outstanding results at most reputable wine competitions Best Producer from Moldova 2022 Decanter Top Classic Wines 2021 TOP 10 BEST Sparkling Wines Mundus Vini among 50 much pricier wines Effervescents du Monde 2021 Grand Gold: Rosé de Purcari Wine of the week in UK: Freedom Blend #1 Worldwide: Co
Slide 36: Continue creating, engaging, inspiring
3 Continue creating, engaging, inspiring Chisinau Big Hearts Marathon Winemakers’ Competition DOR: Independence Day of RM Purcari Wineries Team participated with the Ambassadors, businessmen and influencers Light show organized in Chisinau as an slogan: “With open hearts for Stefan - Voda” experienc
Slide 37: Acquisition of Angel's Estate in Bulgaria
3 Acquisition of Angel’s Estate in Bulgaria Key info on Angel’s Estate Revenues, EUR m ▪ 26/09/2022 – Signed SPA for 76% stake in Angel’s Estate. ▪ Full cycle winery CAGR +13% ▪ Located near Stara Zagora, Thracian 2.51 2.55 Lowlands Wine region. 2.31 1.90 ▪ 14,000 m² – production facilities in 2 1.5
Slide 38: Becoming the undisputable Wine Champion in CEE
3 Becoming the undisputable Wine Champion in CEE Formula of becoming wine champion in CEE M&A focus map ▪ Growth components both organic and through Purcari footprint and M&A directions M&A. Directions for M&A opportunities Existing Newly added ▪ Focus on fundamentals: top- and bottom-line line grow
Slide 39: Today's agenda
Today’s agenda Native Rosé de Purcari 2021 1 Purcari Wineries Group Key Info A delicate wine, created with care for the environment, applying friendly techniques to the 2 Vision and Strategy biodiversity and fertility of the soil in the vineyards. Gold at Mundus Vini Summer Tasting 2022 3 9M 2022 Op
Slide 40: Stock performance
4 Stock performance WINE (Purcari Wineries) DIGI (Digi Communications) BET (index) SFG (Sphera Franchise Group) 200 “Consumer” peers = relevant companies outside of financials, utility and energy sectors, dominating the BET index 180 160 144 | BET 140 120 100 93 | WINE 80 88 | DIGI 60 40 35 | SFG 20
Slide 41: Purcari stock liquidity
4 Purcari stock liquidity Rapid rise of stock’s liquidity after starting working with Relative to Market Cap, our stock is top-ranked among Market Makers for Purcari shares BET components Daily volume Ratio of daily trade value to Market Capitalisation, 2021-2022 YTD average, bps BRK 1 Teraplast 11.
Slide 42: One of the strongest EBITDA margins globally
4 One of the strongest EBITDA margins globally EBITDA margin, 2021 30% 29% 26% 24% 22% 22% 19% 18% 17% 16% 15% 14% 14% 13% 13% 10% 10% 9% 5% 5% 1 2 3 4 1) Foley Wines 2) Vina Concha y Toro 3) Australian Vintage 4) Italian Wine Brands Source: Capital IQ Page 42
Slide 43: Low valuation relative to wine peers
4 Low valuation relative to wine peers Purcari vs Selected wine public companies P/E LTM Multiples 35.7 26.6 20.9 19.7 18.5 16.0 15.3 Average P/E: 15.4x 14.8 11.8 9.7 9.7 9.1 8.4 8.0 7.4 1 Source: Net Income and Market Cap as per Capital IQ as of November 11th, 2022 Note: Diluted EPS excluding extra
Slide 44: Average valuation relative to Romanian listed peers
4 Average valuation relative to Romanian listed peers Purcari vs selected Romanian public companies P/E LTM Multiples 54.4 20.8 Average P/E: 14.3x 12.4 11.7 9.6 7.4 6.9 6.9 6.9 5.6 1 Source: Capital IQ, Company Data as per Capital IQ as of November 11th, 2022 Note: Diluted EPS excluding extra items
Slide 45: Today's agenda
Today’s agenda Academia Purcari 1 Purcari Wineries Group Key Info Saperavi 2019 Produced in a limited number – 6,000 bottles 2 Vision and Strategy Gold at Mundus Vini Summer Tasting 2022, Best in show 3 9M 2022 Operational Results Moldova Red 4 Purcari Wineries Stock 5 Guidance 2022 Page 45
Slide 46: Guidance 2022 – maintaining our guidance for the year
5 Guidance 2022 – maintaining our guidance for the year Target 2022 guidance 9M2022 fact Status Comments ▪ Growth in 3Q accelerated vs. 2Q, with value Revenue component advancing faster that the volumes. growth +15-20% +20% = ▪ Maintaining growth within the guidance, ahead of crucial 4Q quarter, mos
Slide 47: Learn more about our products
Learn more about our products Page 47
Slide 48: Investor Relations Contact
INVESTOR RELATIONS CONTACT: Eugeniu Baltag Investor Relations Manager Phone: +373 60 449 213 Email: investor.relations@purcari.wine PURCARI WINERIES PUBLIC COMPANY LIMITED 8 Calea Iesilor St., 5th floor Chisinau, MD-2069 Republic of Moldova www.purcari.wine
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