Purcari Wineries Public Co., Ltd. · BVB:WINE
Purcari Wineries Public — Purcari Wineries — FY2018 Earnings Presentation
33 slides from Purcari Wineries Public's earnings presentation, Feb 15, 2019
Slide 1: Purcari Wineries Plc Preliminary annual results 2018
Purcari Wineries Plc Preliminary annual results 2018 February 15, 2019 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 Victor Arapan Diana Durnescu Vasile Tofan CEO, Founder CFO IR Manager Chairman ▪ Founded the Group ▪ 20 years of experience ▪ Over 5 years of ▪ Over 10 years in 2002 in banking, audit, experience in experience in FMCG ▪ Over 35 years of corporate finance business dev
Slide 4: Agenda
AGENDA Rose de Purcari, 1 Message to Investors and 2018 Operational Highlights 90 points by Wine Enthusiast, #1 premium Rosé in Romania 2 Our Group 3 Detailed Operational Performance 2018 4 2019 outlook 5 Q&A Page 4
Slide 5: Message to shareholders
1 Message to shareholders Dear Shareholders, 2018 has been a truly historical year for Purcari. Exactly 12 months ago, on February 15, we were listed on Bucharest Stock Exchange, excitingly ringing the bourse bell. Indeed, we stepped boldly outside our comfort zone, but this only made us stronger an
Slide 6: Key operational highlights of Q4 and full year 2018
1 Key operational highlights of Q4 and full year 2018 • Sales up 19% yoy, to RON 169m Strong revenue • Romania remains largest growth driver, growth staying high, at +30%; Poland +22% growth • Investments in new categories paying off, with Bardar brandy showing fastest growth • Gross margin improved
Slide 7: Agenda
AGENDA Negru de Purcari 2013, 4.4 score on 1 Message to Investors and 2018 Operational Highlights Vivino, top 1% wine globally 2 Our Group 3 Detailed Operational Performance 2018 4 2019 outlook 5 Q&A Page 7
Slide 8: Our Group: Competitive advantage in a great market
2 Our Group: Competitive advantage in a great market Attractive Secular shift from Competitive #1 premium wine beer, spirits to brand in market wine, especially advantage Romania in CEE Wine growth ’16- Plenty to catch up: #1 fastest growing #1 most awarded ’20F in Romania wine consumption large win
Slide 9: Our business model: Affordable Luxury
2 Our business model: Affordable Luxury Modern, cost-competitive Purcari is positioned at the winemaking 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 10: Our mission, vision and values
2 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 11: Consumption trends favour wine vs. alternative drinks, pushing demand up
2 Consumption trends favour wine vs. alternative drinks, pushing demand up Shifting consumer preferences: wine up, beer down US Gallup survey: Do you most drink liquor, wine or beer? % “Rosé Is Seeing Explosive Growth as Its Summer 47 47 Rival, Beer, Goes Flat” ‒ 3 August, 2017 46 45 44 42 42 41 41
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: 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 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 As wine market moves from terroir- to brand-centric and leaders build scale / sophistica
Slide 14: Fastest growing among large Romanian wineries
2 Fastest growing among large Romanian wineries Purcari Group – #1 fastest growing and #1 most profitable among large Romanian wineries Revenue CAGR’15-17 in RON vs. profit margin in 2017 of top 10 wineries in Romania in terms of revenue in 2017 Profit margin in 2017, % 30 Purcari Group 25 Recas 20
Slide 15: Quality highly commended, remain the most awarded winery in CEE
2 Quality highly commended, remain the most awarded winery in CEE Leading medal-winning winery in CEE at Decanter, Increasing number of medals won from year to year the Wine ”Olympics” # of Decanter medals in 2015 - 18(1) # of medals #1 43 Concours Mondial de Bruxelles 50 Challenge International du
Slide 16: Topping competition at engagement, quality
2 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, by key Romanian brands X axis – number of Vivino ratings; Y axis – average Vivino score 8,955 4.1 4.0 3.9 3.8
Slide 17: Agenda
AGENDA Freedom Blend, indigenous grapes 1 Message to Investors and 2018 Operational Highlights from Moldova, Georgia, Ukraine; 91 points by Wine Enthusiast 2 Our Group 3 Detailed Operational Performance 2018 4 2019 outlook 5 Q&A Page 17
Slide 18: Robust revenue growth, up 19%, with EBITDA growing ahead of sales
3 Robust revenue growth, up 19%, with EBITDA growing ahead of sales Revenues EBITDA1 Net Income2 RON m RON m RON m Un-adjusted, IFRS EBITDA +30% Un-adjusted, IFRS NI +32% = RON 63m, +48% yoy = RON 46m, +58% yoy +19% 169 57 40 +30% 142 44 30 107 37 23 71 60 18 9 neg 0 2014 2015 2016 2017 2018 2014 20
Slide 19: Markets: Romania remains key driver, record quarter in Poland
3 Markets: Romania remains key driver, record quarter in Poland Market Share of sales, 2018 Growth, 2018 yoy Comments RO 40% +30% • RO: Crama Ceptura demonstrates excellent growth, expanding beyond Bucharest, penetrating new price segments. The sell-off during Christmas season was MD 23% +19% very s
Slide 20: Clear #1 in premium in Romania, keep gaining share
3 Clear #1 in premium in Romania, keep gaining share Overall, Purcari has tripled MS in 4 years…. …while becoming a clear #1 in Premium Value share of TOTAL retail market, Romania, % Value share of Premium (RON 30+/liter) retail market, % 18 28 Purcari (Brand) Samburesti 26 16 26 25 16 16 Segarcea 1
Slide 21: Romania still offers plenty of headroom; regional push pays off
3 Romania still offers plenty of headroom; regional push pays off Focus on growth beyond Bucharest Big headroom for increasing distribution Global peer group Purcari Group market share by region, 2018 Crama Ceptura brand – weighted distribution vs. peers, 2018 Market share, % Jan-May 18 Supermarkets
Slide 22: Brands: growth driven by premium, Crama Ceptura gaining traction
3 Brands: growth driven by premium, Crama Ceptura gaining traction Brand Share of sales, 2018 Growth, 2018 yoy Comments • PURCARI: Romania remains key driver, up 31%, strengthening position as clear #1 in premium while 37% +19% focusing on regional expansion; Poland picked up in 4Q almost doubling y
Slide 23: Excellent feedback from digital natives, dominate premium segment
3 Excellent feedback from digital natives, dominate premium segment #1 presence in the RON <30 and RON 30-60 segment; Hold 5 out of TOP-10 positions in the crucial RON 30-60 segment, 9 in TOP-25 • We remain obsessed about the quality of our wines, which pays off in excellent consumer feedback • In o
Slide 24: Maintaining solid margins, despite negative FX impact
3 Maintaining solid margins, despite negative FX impact Comments ∆ RON m 2014 2015 2016 2017 2018 • Gross margin improved 2 pp, despite average ’18/’17 MDL/RON 7% higher during 2018 Revenue 60 71 107 142 169 19% ‒ Appreciation has adverse effect on cost of sales, Cost of Sales (39) (42) (53) (75) (8
Slide 25: MDL appreciated strongly, adversely impacting margins
3 MDL appreciated strongly, adversely impacting margins MDL vs RON: 2016 – 2018 FX evolution MDL vs EUR: 2016 – 2018 FX evolution MDL vs USD: 2016 – 2018 FX evolution 5.2 24.0 21.0 14.6% 10.8% 17.1% 5.6% 4.7% 1.5% 23.0 5.0 20.0 22.0 4.8 19.0 21.0 4.6 18.0 20.0 4.4 17.0 19.0 4.2 16.0 18.0 4.0 17.0 15
Slide 26: Keep leverage moderate, aim Net Debt/EBITDA below 1.5x
3 Keep leverage moderate, aim Net Debt/EBITDA below 1.5x 6.3x 3.3x 1.4x 1.2x 1.2x 2014 2015 2016 2017 2018 Page 26
Slide 27: Continued creating engaging, differentiated brand building campaigns
3 Continued creating engaging, differentiated brand building campaigns Bostavan Dor Sparkling (Mar) Initial Cork Offering (Apr) Crama Ceptura Summer (May) Taste the Life campaign April’s Fool prank Summer has Taste campaign Purcari - Summer in Rosé (Jul) Purcari Wine Run (Aug) Fireplace photo event
Slide 28: Agenda
AGENDA Cuvée de Purcari, 1 Message to Investors and 2018 Operational Highlights the extension to sparkling launched in 2017. Made according to 2 Our Group the traditional, Champenoise method, with in- 3 Detailed Operational Performance 2018 bottle fermentation 4 2019 outlook 5 Q&A Page 28
Slide 29: With global supplies constrained, 2018 a turning year for Eastern European wines
With global supplies constrained, 2018 has been a turning year for Eastern 4 European wines, to capitalize on in years to come Victoria Mason, Wine Buyer Paul Attwood-Philippe, Richard Siddle, wine journalist Waitrose regional director Harpers Wine & Spirit VINEX Marketplace “Romanian wine is a real
Slide 30: Strong 2018 harvest, positioning well for ambitious 2019
4 Strong 2018 harvest, positioning well for ambitious 2019 Strong 2018 harvest was complemented by aggressive sourcing of third party grapes from partner-farmers Comments Own harvest and 3rd party purchases of grapes, million kg • There are three generic option for securing wine inventories: (1) gro
Slide 31: Guidance 2019 – keeping growth and profitability up
4 Guidance 2019 – keeping growth and profitability up 2019 Target guidance Comments • Momentum in core CEE markets strong, clear drivers of growth, by entering new accounts, expanding in traditional trade and pushing newer launched categories – Organic brandy and sparkling +18-22% revenue growth • C
Slide 32: Agenda
AGENDA 1 Message to Investors and 2018 Operational Highlights 2 Our Group 3 Detailed Operational Performance 2018 4 2019 outlook 5 Q&A Purcari Ice Wine, Decanter Platinum, 95 points, Best CEE sweet Page 32
Slide 33: Thank you.
Thank you. PURCARI