Santiago, Chile, May 17th, 2017 - Viña Concha y Toro S.A. ("The Company" or "Concha y Toro") (NYSE: VCO, IPSA: Conchatoro), global leading winery and the principal wine producer and exporter of Chile, announced today its consolidated financial results, stated under IFRS, for the first quarter 2017 ended March 31st, 2017. US dollar figures (US$), except export figures, are based on the exchange rate effective March 31st, 2017 (US$1.00 = Ch$ 664.0).
Highlights 1Q2017 vs 1Q2016Total volumes of wine increased 4.6%, reaching 64.7 million liters, driven by the increase of 5.9% in Export Markets totaling 43.5 million liters.
Average price of wine increased in domestic markets of Chile, USA, and Argentina, as well as across most export markets, measured in local currency.
Consolidated sales decreased 3.5%, totaling $127,474 million, due to significant fluctuations in foreign exchange rates. On a constant currency basis, net sales increased 8.4%.
Fetzer operation posted a solid top line, growing 12.9% in volume and 5.6% in value, in Chilean pesos terms.
Operating Income plus depreciation and amortization was down 24.1% to Ch$12,766 million, on significant currency fluctuations and higher cost of wine. Its margin on sales reached 10.0%, representing a contraction of 271 basis points.
Net income attributable to owners of the company totaled Ch$3,805 million, down 47.9% when compared to the corresponding period of the prior year.
During the first quarter of 2017, Concha y Toro faced a challenging external scenario, where the depreciation of key currencies of exports against the Chilean peso weighed down the top line. Also, a higher cost of wine, following a weaker harvest in 2016, reduced our margins. This was partially offset by the steady growth of our volumes and an improved portfolio mix, reflected in higher prices in the domestic market of Chile, Argentina, and USA, as well as in most of our export markets, measured in local currencies.
Net sales totaled Ch$127,474 million, decreasing 3.5% when compared to the Ch$132,155 million reported in the same quarter of the previous year. The decline in sales was primarily attributable to currency depreciation in our export markets, as well as the end of the distribution of Monster products in Chile, from September 1st, 2016.
In the Wine operating segment, sales volume increased 4.6%, due to: i) higher sales volume in Export Markets (+5.9%); ii) higher volume in Argentina Domestic Market (+53.8%); iii) higher volume in Fetzer operation (+12.9%); and iv) higher volume in Chile Domestic Market (+0.5%). This was partially offset by a lower volume in Argentina Exports (-31.5%).
In the Chile domestic market of wine, our focus on premiumization was reflected in higher average prices (+3.7%). This, combined with a slight increase in volume resulted in a growth of 4.2% in sales.
Fetzer operation reported an increase of 5.6% in wine sales to third parties (excluding shipments to distribution subsidiaries), totaling Ch$14,182 million. Volume of bottled sales in the Domestic and Exports Market surged 11.1% and 30.9%, respectively. On the other hand, the appreciation of US dollar relative to currencies of exports resulted in a 7.0% decline in the average price of exports, measured in US dollar, and a drop of 12.1% measured in Chilean pesos.
In Argentina, total wine sales to third parties (excluding shipments to distribution subsidiaries) was Ch$5,614 million, similar to the previous year (-0.3%). Behind this figure, however, there were significant price increases in exports (+14.4% in US dollar terms) and in the domestic market (+77.8% in US dollar terms). These higher prices and a strong domestic volume (+53.8%) were offset by a weaker volume of exports (-31.5%) and by a 13.7% depreciation of the Argentine peso against the Chilean peso.
In the quarter, the operating income plus depreciation and amortization totaled Ch$12,766 million, representing a decrease of 24.1% in comparison to the same period of 2016. This reflects the impact of a higher cost of wine (+12.3% regarding the same quarter of the previous year) and the aforementioned currency fluctuations. As a result, the figure of the operating income plus depreciation and amortization over sales reached 10.0% during the first quarter of 2017, a contraction of 272bp in margin over sales.
Finally, the net income attributable to owners of the company declined 47.9% to Ch$3,805 million, and net margin was 3.0% over sales.
First Quarter 2017 ResultsConsolidated Sales
Consolidated sales decreased 3.5% totaling Ch$127,474 million in the first quarter. The decline reflects the appreciation of the Chilean peso against most currencies of exports.
Table 1 Total SalesTotal Sales⁽*⁾ (in Ch$ million)
1Q17
1Q16
Change (%)
Chile Domestic Market - wine
14,281
13,711
4.2%
Export markets⁽¹⁾
81,049
84,355
-3.9%
Argentina Domestic
1,982
782
153.6%
Argentina Exports⁽²⁾
3,632
4,849
-25.1%
U.S.A. Domestic
12,810
12,242
4.6%
U.S.A. Exports⁽²⁾
1,373
1,195
14.9%
Total Wine Operating Segment
115,126
117,133
-1.7%
Chile Domestic Market - new business
9,891
13,688
-27.7%
Other Revenues
2,457
1,334
84.2%
Total Other Operating Segment
12,348
15,022
-17.8%
Consolidated Sales
127,474
132,155
-3.5%
Total Volume⁽*⁾ (thousand liters)
1Q17
1Q16
Change (%)
Chile Domestic Market - wine
13,698
13,634
0.5%
Export markets⁽¹⁾
43,523
41,085
5.9%
Argentina Domestic
1,732
1,126
53.8%
Argentina Exports⁽²⁾
1,630
2,380
-31.5%
U.S.A. Domestic
3,655
3,290
11.1%
U.S.A. Exports⁽²⁾
435
332
30.9%
Total Wine Operating Segment
64,673
61,848
4.6%
Chile Domestic Market - New Business
5,500
7,843
-29.9%
Total Other Operating Segment
5,500
7,843
-29.9%
Consolidated Volume
70,173
69,691
0.7%
A verage Price (per liter)
Currency
1,042.6
1,005.6
3.7%
Chile Domestic Market - wine
Ch$
Export Markets
US$
2.93
3.00
-2.4%
Argentina Domestic
US$
2.43
1.37
77.8%
Argentina Exports
US$
3.48
3.04
14.4%
U.S.A. Domestic
US$
5.37
5.34
0.5%
U.S.A. Exports
US$
4.83
5.19
-7.0%
Export Volumes include exports to third parties and sales volumes of the company's distribution subsidiaries (UK, Nordics, Brazil, Singapore, Mexico).
This figure excludes shipments to the company's distribution subsidiaries. (*) This figure includes bulk wine sales.
Sales in the Wine Operating Segment
Total sales of wine declined 1.7% in the quarter, primarily due to the depreciation of key export currencies against the Chilean peso. On a constant currency basis, total sales of wine increased 9.3%.
- Export Sales
Export sales from Chile and distribution subsidiaries totaled Ch$81,049 million, declining 3.9% when compared to the same period last year. Higher commercialized volumes (+5.9%) and average price in local currencies (+1.9%) were offset by the negative effect of currency fluctuations. In fact, relative to the average rate in the same quarter of the previous year, the Chilean peso appreciated against U.S. dollar (7.0%), Sterling pound (23.6%), Euro (10.8%), Mexican peso (20.4%), Swedish crown (12.9%), and Argentine peso (15.9%). The Brazilian Real was the only currency that appreciated against the Chilean peso (13.9%).
Graph 1 Total Export Bottled Volume by Region (Considers Exports from Chile, Argentina, Fetzer and Distribution Subsidiaries) 1st Quarter 2017Regarding the commercialized volume in export regions, growth were registered in South America (+42.6%), Canada (+36.6%), and Africa and others (+139.7%), and Asia (+2.9%). On the other hand, volume declined in United States (-5.8%), Europe (-3.9%), and in Central America and Caribbean (-9.5%).
Viña Concha y Toro SA published this content on 17 May 2017 and is solely responsible for the information contained herein.
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