Vina Concha Y Toro S.a. · BCS:CONCHATORO
Vina Concha Y Toro — Q1 2021 Earnings Presentation
46 slides from Vina Concha Y Toro's earnings presentation, May 4, 2021
Slide 1: 1Q21 Results
1Q21 Results IN VESTO R PR ESEN TAT ION May 4, 2021
Slide 2: Forward Looking Statements
I N V E S T O R R E L AT I O N S · 1 Q 2 1 2 Forward This presentation contains forward-looking statements, that Looking 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 Stateme
Slide 3: Agenda
Agenda 1Q21 RESULTS 01. Overview– Eduardo Guilisasti, CEO 02. Commercial strategy – Blanca Bustamante, Director of IR 03. Financial results – Osvaldo Solar, CFO 04. Sustainability – Valentina Lira, Sustainability Director
Slide 4: Overview
1 Q 2 1 R E S U LT S 4 01. Overview Eduardo Guilisasti, CEO
Slide 5: In 1Q21, Viña Concha y Toro achieved the best historical results for a first quarter
1 Q 2 1 R E S U LT S 5 In 1Q21, Viña Concha y Toro achieved the best historical results for a first quarter 1Q17 1Q18 1Q19 1Q20 1Q21 Operating margin 6,4% 7,8% 7,2% 10,9% 14,1%
Slide 6: Factors that negatively impacted 1Q21
1 Q 2 1 R E S U LT S 6 Factors that Exchange rate fluctuations, with a negatively 6.8% drop in our sales basket. impacted 1Q21 Difficulties in the global shipping industry have impacted supply chains. In our case, we have seen delays in some of our shipments and in the receipt of raw materials.
Slide 7: Strong volume growth in 1Q21
1 Q 2 1 R E S U LT S 7 Strong volume growth in 1Q21 Volume (thousands of 9-lt cases) +10.8% 7,929 7,158 1Q20 1Q21
Slide 8: Growth is driven by Principal & Invest brands
1 Q 2 1 R E S U LT S 8 Growth is driven by Principal & Invest brands Share of total volume Principal & Invest 28.5% 32.9% growth +27.9% 71.5% 67.1% Mix improvement in volume +440bp 1Q20 1Q21 Principal+Invest Others
Slide 9: Sales value grows in 1Q21
1 Q 2 1 R E S U LT S 9 Sales value grows in 1Q21 Net sales value (Ch$ billion) +8.2% 163.5 151.1 1Q20 1Q21
Slide 10: Growth is driven by Principal & Invest brands
1 Q 2 1 R E S U LT S 10 Growth is driven by Principal & Invest brands Share of total sales value Principal & Invest 43.1% growth 48.9% +22.7% Mix improvement in 56.9% 51.1% value +580bp 1Q20 1Q21 Principal+Invest Others
Slide 11: Strict Costs and Expenses control
1 Q 2 1 R E S U LT S 11 Strict Costs and Expenses control (Ch$ million) 1Q20 1Q21 % YoY Revenue 151,113 163,503 +8.2% Cost of Sales 92,743 100,833 +8.7% SG&A 41,633 39,885 -4.2% Operating Profit 16,455 23,050 +40.1% 10.9% 14.1% Operating Margin % 320bp of margin expansion
Slide 12: Higher operating margin, to 14.1% in 1Q21
1 Q 2 1 R E S U LT S 12 Higher operating margin, to 14.1% in 1Q21 +3.2 p.p. from 1Q20 Change in bp. 1Q20 – 1Q21 38.6% 38.3% Gross Profit -30 27.6% 24.4% SG&A/Sales -320 14.1% 10.9% Operating Profit +320 1Q20 1Q21 Gross margin SG&A/sales Operating margin
Slide 13: Increase in EBITDA and Net Profit
1RQE2S1U R L TEASDUO LTS S1 T 2 1 · I N V E S T O R R E L A T I O N S 13 Increase in (Ch$ millions) 1Q21 1Q20 Chg (%) EBITDA and Net profit 14,731 7,863 +87.3% Net Profit Net margin 9.0% 5.2% EBITDA 29,229 22,327 30.9% EBITDA margin 17.9% 14.8%
Slide 14: Growth in most of the well-performing markets in 2020
1 Q 2 1 R E S U LT S 14 Growth in most of the well-performing markets 2020 • Markets that performed positively in 2020 (offices and local markets): grew 10.5% again Sales recovery in most of the markets most affected in the context of the pandemic • Markets that had a negative performance in 2020 (d
Slide 15: Launch of distribution office and Concha y Toro brand in China
1 Q 2 1 R E S U LT S 15 Launch of distribution office and Concha y Toro brand in China
Slide 16: Harvest in the Northern hemisphere expected to be lower than in 2020
1 Q 2 1 R E S U LT S 16 Harvest in the Northern hemisphere expected to be lower than in 2020 • In Europe, frosts have impacted severely the wine regions, especially in France. • In USA, the situation of drought is also expected to have a negative impact on production.
Slide 17: Harvest in the Southern hemisphere in the final stage
1 Q 2 1 R E S U LT S 17 Harvest in the Southern hemisphere in the final stage • In Chile, our inhouse production is highly advanced. Our projections were increased, expecting a figure close to 25% over 2020. • In Argentina, harvest 100% finished with a reception 25% higher than the previous year and
Slide 18: Commercial Strategy
1 Q 2 1 R E S U LT S 18 02. Commercial Strategy Blanca Bustamante, Director of IR
Slide 19: 1Q21 Sales: Volume growth in all business units
1 Q 2 1 R E S U LT S 19 1Q21 Sales: Volume growth in all business units Volume (thousand liters) 1Q21 1Q20 Chg (%) Export Markets 43,545 40,058 8.7% Chile 12,769 12,197 4.7% USA 7,931 7,228 9.7% Argentina 1,582 1,216 30.1% Total Wine Volume 65,827 60,700 8.4% Non-Wine Volume 5,534 3,725 48.6% Total
Slide 20: 1Q21 Sales: sales in value increased 8.2%
1 Q 2 1 R E S U LT S 20 1Q21 Sales: sales in value increased 8.2% Sales (Ch$ million) 1Q21 1Q20 Chg (%) Export Markets 106,129 98,359 7.9% Chile 18,263 15,155 20.5% USA 27,467 28,524 (3.7%) Argentina 788 636 23.8% Total Wine Sales 152,648 142,674 7.0% Non-Wine Sales 10,855 8,440 28.6% Total Sales 16
Slide 21: Focus on premium brands with high growth potential
1 Q 2 1 R E S U LT S 21 Focus on premium brands with high growth potential • Brand Matrix is the reference framework for defining sales targets and marketing investment. • In 2020, 25 brands accounted for 80.5% of sales. • Continuous revision seeking greater focus. HIGH INVEST PRINCIPAL • Don Melcho
Slide 22: 1Q21 Results: Strong growth of premium brands
1 Q 2 1 R E S U LT S 22 1Q21 Results: Strong growth of premium brands W I N E S A L E S G R O W T H B Y B R A N D C AT E G O RY VA L U E Yo Y V O L U M E Yo Y Principal Invest 31.3% 14.1% 34.7% 19.2% 27.9% Protect 1.7% 5.0% Growth in volume for Watch (19.2%) (18.6%) Principal & Invest Other brands w
Slide 23: Brands in the matrix contributing to volume growth
1 Q 2 1 R E S U LT S 23 Brands in the matrix contributing to volume growth Volume growth breakdown: Premium and commercial brands (Thousands of 9-liter cases) 16 16 16 65 55 46 51 6,968 59 29 20 16 13 119 360 6,449 Brands with challenges in Brands of the Matrix with a relevant share and recognition
Slide 24: Casillero del Diablo: World's most powerful wine brand
1RQE2S1UR LE SD TA UO L TSS 1 T 2 1 · I N V E S T O R R E L A T I O N S 24 Casillero del Diablo Strong growth from a diversified number of markets #2 (Th. 9-l cases) 6,336 5,299 WORLD'S MOST POWERFUL WINE BRAND 1,441 FOR THE THIRD CONSECUTIVE YEAR 1,080 2019 2020 1Q20 1Q21
Slide 25: Fine wines begin to show recovery
1 Q 2 1 R E S U LT S 25 Fine wines begin to show recovery Main Volume growth breakdown: Super Premium and Ultra Premium brands (Thousands of 9-liter cases) 346 2 1 1 1 6 6 5 2 2 5 7 8 8 295 13 1Q20 Bonterra Gran Late Marca Trivento Single Terrunyo Bonterra Don Winemakers Econic 1000 Trivento Others
Slide 26: Volume is driven by markets with integrated distribution
1 Q 2 1 R E S U LT S 26 Volume is driven by markets with integrated distribution Sales by Market % of Sales Value YoY Volume YoY A MARKETS UK 26.4% 10.2% 8.5% Chile 17.5% 22.4% 14.8% USA 17.3% (1.3%) 10.6% Nordics 6.2% 8.7% 5.5% Brazil 4.5% 3.7% 17.5% Mexico 4.0% 15.4% 20.1% China 3.1% 198.7% 127.6%
Slide 27: Financial Results
1 Q 2 1 R E S U LT S 27 03. Financial Results Osvaldo Solar, CFO
Slide 28: In 1Q21, EBIT increased 40% and its margin expanded 320bp
1 Q 2 1 R E S U LT S 28 In 1Q21, EBIT increased 40% and its margin expanded 320bp (Ch$ million) 1Q21 1Q20 Chg (%) Sales 163,503 151,113 8.2% • Results and margins were driven by higher sales, Gross profit 62,669 58,370 7.4% mix improvement, contention of cost and Gross margin 38.3% 38.6% (30 bp) exp
Slide 29: In 1Q21, EBITDA increased 31% and margin expanded 310bp
1 Q 2 1 R E S U LT S 29 In 1Q21, EBITDA increased 31% and margin expanded 310bp Sequential improvement of margins show the advances in our strategy EBITDA 160,000 148,487 25.0% 140,000 20.0% 120,000 104,557 19.3% 100,000 86,267 85,486 17.9% 15.0% 15.9% 14.8% 80,000 14.0% 13.9% 10.0% 60,000 40,000 29
Slide 30: Non-operating profit (loss)
1 Q 2 1 R E S U LT S 30 Non-operating profit (loss) (Ch$ millions) 1Q21 1Q20 Chg (%) Chg $ Net financial expenses -2,794 -3,548 -21.3% 754 Exchange rate differences -301 -1.214 -75.2% 913 Associates -290 -343 -15.5% 53 Non-operating profit -3,385 -5,105 -33.7% 1,720 A lower loss in 1Q21 vs. 1Q20 was
Slide 31: Financial expenses and exchange differences
1 Q 2 1 R E S U LT S 31 Financial expences and exchenge differences Financial costs decline in hand with debt decline Non-operating profit improves by Ch$1,660 million due to: - Lower net financial expense of Ch$754 million. - Lower Loss from Exchange difference of Ch$913 millon. Factors to highligh
Slide 32: Currency diversification of sales
1 Q 2 1 R E S U LT S 32 Currency diversification of sales Diversificación Monedas de Facturación SEK NOK ARG CNY CAD 2.6% 1.5% 0.5% 0.3% MXN 3.1% • Currency diversification cushions the 4.1% fluctuation of US Dollar. BRL USD 6.2% 31.3% • In 2021: USD: -9.8%, EUR 9.3% CyT currency mix: -6.8% CLP 15.7
Slide 33: Result of associated companies
1 Q 2 1 R E S U LT S 33 Result of associated companies Ch$ MM ALMAVIVA INDUSTRIA CORCHERA 3,139 626 2,804 2,107 2,142 344 269 Break 231 148 42 2017 2018 2019 2020 mar-20 mar-21 (467) (305) 2017 2018 2019 2020 mar-20 mar-21
Slide 34: In 1Q21, Net profit increased 87.3% and margin expanded 380bp
1 Q 2 1 R E S U LT S 34 In 1Q21, Net profit increased 87.3% and margin expanded 380bp Ch$ MM Net profit 100,000 10.1% 90,000 10.0% 77,994 80,000 9.0% 8.0% 70,000 8.1% 8.0% 7.8% 60,000 52,500 6.0% 49,575Break 50,000 47,569 5.2% 40,000 4.0% 30,000 20,000 14,731 2.0% 10,000 7,863 0 0.0% 2017 2018 2019
Slide 35: Return on invested capital
1 Q 2 1 R E S U LT S 35 Return on invested capital 12.0% 11.0% 10.4% 10.0% 8.0% 7.3% 7.2% 6.9% 7.0% 6.0% Break 4.0% 2.0% 0.0% 2017 2018 2019 2020 mar-20 mar-21 ROIC: (Operating Margin - Taxes + Exchange Difference) / (Equity - Other Financial Liabilities - Cash) * Income statement corresponds to the
Slide 36: Financial ratios
1 Q 2 1 R E S U LT S 36 Financial ratios 1. Net financial debt reduction 2. Debt level decrease relative to equity size 3. Substantial improvement in debt vs. cash generation
Slide 37: Net financial debt reduction: Financial Strength
1 Q 2 1 R E S U LT S 37 Net financial debt reduction: FINANCIAL STRENGTH Net financial debt in Ch$ million 278,715 266,898 250,413 Decreases in: 221,101 Ch$86,447 millions vs Mar-20 201,374 192,268 Ch$9,106 millions vs Dec-20 2017 2018 2019 2020 mar-20 mar-21 * Net Financial Debt corresponds to Debt
Slide 38: Decrease in level of indebtedness relative to the size of the Equity
1 Q 2 1 R E S U LT S 38 Decrease in level of indebtedness relative to the size of the Equity: FINANCIAL STRENGTH Net Debt Ratio (Net Financial Debt / Equity) Decreases in: 1.2 Ch$86,447 millions vs Mar-20 Ch$9,106 millions vs Dec-20 0.67 0.54 0.49 0.43 0.36 0.34 2017 2018 2019 2020 mar-20 mar-21 * N
Slide 39: Substantial improvement in debt vs cash generation
1 Q 2 1 R E S U LT S 39 Substantial improvement in debt vs cash generation: FINANCIAL STRENGTH EBITDA / Financial Expenses Net Financial Debt / EBITDA 10.3 9.7 3.4 3.3 8.6 8.5 3.1 8.4 2.7 7.4 2.5 1.6 1.4 Break 2.5 2017 2018 2019 2020 mar-20 mar-21 2017 2018 2019 2020 mar-20 mar-21 EBITDA/Gasto Finan
Slide 40: Sustainability
1 Q 2 1 R E S U LT S 40 04. Sustainability Valentina Lira, Director
Slide 41: Society changed
R E S U LTA D O S · 1 T 2 1 41 Society changed Consumers have moved from the paradigm of "good products" to the concept of "good companies". Initial Motivation - 2018 In 2018, Viña Concha y Toro began a transformative process in its business approach. In Sustainability, the winery sets itself the ch
Slide 42: B Corporations
R E S U LTA D O S · 1 T 2 1 42 B Corporations The certified B-Corporations are companies whose environmental and social performance has been verified and comply with the highest standards of sustainability management and transparency. ~4.000 150 74 Certified B-Corps Industries Countries in the world
Slide 43: 4 Characteristics of B-Corps
R E S U LTA D O S · 1 T 2 1 43 4 Characteristics of B-Corps Transparency Purpose Generate value for society, improving its environmental and 1 2 They operate with global standards of transparency in their management, through public access to their evaluation. social impact. Bylaws They adhere to a c
Slide 44: B Impact Assessment
R E S U LTA D O S · 1 T 2 1 44 B Impact Assessment Critical step to obtain the B Corp Certification. It evaluates the positive Minimum impact of the products (services) and the company in 5 areas: requirement 80 points Governace Results BIA Workers Viña Concha y Toro Clients Community Environment
Slide 45: With each bottle of wine that we put in your hands
R E S U LTA D O S · 1 T 2 1 45 With each bottle of wine that we put in your hands, we want to generate a positive impact and contribute to a sustainable future.
Slide 46: 1Q21 Results
1Q21 Results IN VESTO R PR ESEN TAT IO N • MARCH 2021