Exhibit 99.1
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VIÑA CONCHA Y TORO ANNOUNCES ITS CONSOLIDATED
THIRD QUARTER 2016 RESULTS
Santiago, Chile, November 25th, 2016 - 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 third quarter 2016 ended September 30th, 2016.
Principal Figures for the 3Q2016
- | Stands out, the growth collected in commercialized volumes during the quarter, registering an increase of 6.5% as resultant of higher sales in main markets of the Company. The increase in volumes was mainly offset by FX fluctuations that impacted negatively the growth in Revenues, keeping them in line with the reported revenues in 3Q2015, totaling Ch$169,800 million during the quarter. The accumulated figure registered an increase of 7.5% in commercialized volumes, totaling Ch$475,247 million, representing higher sales of 7.0% as compared to 9M2015. |
- | Sales of Casillero de Diablo, core brand among premium portfolio, registered higher sales of 8% during the quarter, highlighting the performance in United Kingdom, Japan, Germany, Ireland and Denmark. Accumulated sales represented an increase of 12%, highlighting the performance of Casillero del Diablo in United Kingdom, Holland, Ireland, Chile, Canada, Japan and China. |
- | The Operating Income plus Depreciation and Amortization registered a margin of 14.1% over sales, representing a drop of 189 bp in comparison to 3Q2015, as resultant of a negative impact derived from FX fluctuations during the quarter and a higher cost of the wine affected by a weak 2016 harvest where volumes dropped 21%. The accumulative figure registered an increase of 7.3%, reaching a margin of 14.2% over sales, compared to the 14.1% in 9M2015. |
- | The Net Income decreased a 14.6% totaling Ch$13,512 million during the quarter, impacted by a negative impact derived from FX fluctuations and a higher cost of the wine. The figure accumulated as of September 30th, 2016, totaled Ch$34,057, representing an increase of 7.4%, in comparison to the Ch$31,714 million registered in 2015. |
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
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Summary
In an uncertain and volatile scenario for the FX after the Brexit, the Company’s results are showing a positive trend in volume growth in main markets. The increase in volumes has been mainly offset by the FX impact due to the depreciation of principal currencies in which the Company is carrying its sales, affecting margins during the quarter.
As a resultant of the mentioned scenario, in order to keep the profitability in the medium term and considering the impact of the FX is similar among the main exporter countries; the Company started a price adjustment process in its main markets. Additionally, in line with the complexities generated by this volatile FX scenario, the Company has been assessing several initiatives in order to obtain efficiencies in its processes and brand´s investments that will allow it to reduce the impact that a volatile FX scenario could be causing.
In the United Kingdom, the main export market, the Company implemented an increase in prices in order to mitigate the impact of the Pound’s devaluation, initiative that could set a scenario affected by deceleration in volume sales in next quarters. Nevertheless higher sales (+7.4%) were registered during the quarter in terms of volume. It is important to remark the strong perception and consumer’s preferences that our brands have in the UK market. The Company’s core brands stand out for their leading position, capable to reach a strong positioning as Casillero del Diablo which is one of the Top 5 selling brands in the off-trade and the top selling cabernet sauvignon in UK. In same line, Cono Sur is the top selling pinot noir, while Trivento Reserve is the top selling malbec in the UK market.
In Asian markets, stand out the performance and dynamism shown by Japan (+24%), South Korea (+29%) and to a lesser extent in China (+4%), in terms of volumes. It is important to highlight the performance of the Company’s premium brands in hands of Concha y Toro, Cono Sur and Maycas del Limarí. The Canadian market grew 13% in volumes, driven by higher sales of Cono Sur’s brands, Palo Alto and Frontera. In UK, sales increased 7.4% in cases based on the performance of core brands: Casillero del Diablo (+14%), Trivento Reserve (+34%) and Frontera (90%). While the growth in Latin American markets, were led by Mexico, Costa Rica and Ecuador.
In Chile, sales increased 5.4% in volume, highlighting the performance of the premium category with a growth of 7%. Higher sales were exhibited in Concha y Toro’s premium portfolio: Casillero del Diablo Leyenda and Reserva Privada, Cono Sur 20 Barrels and Cono Sur Reserva.
Regarding Fetzer Vineyards, stands out the increase of 20% in cases sold in exports markets. About the domestic market, after two quarters registering high-single digit growth, the third quarter collected flat bottled volumes in line with the third quarter of 2015. Bottled sales accumulated to September of 2016 registered an increase of 5.7%, in line with the estimates for this year. After a consolidation and positioning process, Fetzer is presenting an attractive portfolio conformed by brands like Fetzer, the organic brand Bonterra and the new and innovative Zinfandel 1000 Stories.
In Argentina, sales of Trivento Bodegas y Viñedos – the Argentinean subsidiary – increased 17.7% in volume. Higher sales are explained by higher commercialized volume in export markets (10.3%) and the domestic market (34.4%). In addition, export sales were positively impacted by the removal of the exchange rate control in December of 2015, giving them the competitiveness lost in the past.
The Operating Income plus Depreciation and Amortization decreased 16.7% totaling Ch$23,889 million during the quarter, representing a margin of 14.1% over sales. The lower result is explained by a combined effect of higher commercialized volumes, a premiumization of sales offset by a negative contribution from FX fluctuations registered during the third quarter and a higher cost of the wine (derived by a weak harvest that dropper 21% during 2016).
Finally, the Net Income attributable to owners of the company totaled Ch$13,512 million, registering a decrease of 14.6% in the quarter.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
2 |
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Third Quarter 2016 Results
1. | Consolidated Sales |
Consolidated sales practically remained flat registering a slight drop of 0.2% and totaling Ch$169,800 million during the quarter. Higher commercialized volumes in main markets were mainly offset by a negative impact derived from exchange rate fluctuations. Refer to Table N°1.
Table 1
Total Sales
Change | Change | |||||||||||||||||||||||||||
Total Sales(*) (in Ch$ million) | 3Q16 | 3Q15 | (%) | 9M 2016 | 9M 2015 | (%) | ||||||||||||||||||||||
Chile Domestic Market - wine | 20,182 | 18,844 | 7.1 | % | 52,359 | 47,655 | 9.9 | % | ||||||||||||||||||||
Export markets(1) | 111,215 | 113,726 | -2.2 | % | 312,033 | 295,053 | 5.8 | % | ||||||||||||||||||||
Argentina Domestic | 2,168 | 1,991 | 8.9 | % | 5,127 | 4,497 | 14.0 | % | ||||||||||||||||||||
Argentina Exports(2) | 5,678 | 5,342 | 6.3 | % | 15,958 | 13,892 | 14.9 | % | ||||||||||||||||||||
U.S.A. Domestic | 15,649 | 15,582 | 0.4 | % | 43,084 | 40,294 | 6.9 | % | ||||||||||||||||||||
U.S.A. Exports(2) | 1,473 | 1,315 | 12.0 | % | 4,260 | 3,717 | 14.6 | % | ||||||||||||||||||||
Total Wine Operating Segment | 156,365 | 156,801 | -0.3 | % | 432,821 | 405,107 | 6.8 | % | ||||||||||||||||||||
Chile Domestic Market - new business | 11,447 | 11,320 | 1.1 | % | 37,338 | 33,419 | 11.7 | % | ||||||||||||||||||||
Other Revenues | 1,988 | 2,086 | -4.7 | % | 5,089 | 5,602 | -9.2 | % | ||||||||||||||||||||
Total Other Operating Segment | 13,435 | 13,406 | 0.2 | % | 42,427 | 39,021 | 8.7 | % | ||||||||||||||||||||
Consolidated Sales | 169,800 | 170,206 | -0.2 | % | 475,247 | 444,128 | 7.0 | % | ||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||
Total Volume(*) (thousand liters) | 3Q16 | 3Q15 | (%) | 9M 2016 | 9M 2015 | (%) | ||||||||||||||||||||||
Chile Domestic Market - wine | 20,006 | 18,985 | 5.4 | % | 52,709 | 49,515 | 6.4 | % | ||||||||||||||||||||
Export markets(1) | 58,276 | 54,209 | 7.5 | % | 156,983 | 146,951 | 6.8 | % | ||||||||||||||||||||
Argentina Domestic | 1,634 | 1,215 | 34.4 | % | 5,122 | 3,444 | 48.7 | % | ||||||||||||||||||||
Argentina Exports(2) | 3,075 | 2,787 | 10.3 | % | 8,038 | 7,239 | 11.0 | % | ||||||||||||||||||||
U.S.A. Domestic | 4,068 | 4,430 | -8.2 | % | 11,801 | 12,072 | -2.2 | % | ||||||||||||||||||||
U.S.A. Exports(2) | 495 | 412 | 20.0 | % | 1,388 | 1,115 | 24.5 | % | ||||||||||||||||||||
Total Wine Operating Segment | 87,553 | 82,039 | 6.7 | % | 236,041 | 220,336 | 7.1 | % | ||||||||||||||||||||
Chile Domestic Market - New Business | 5,763 | 5,562 | 3.6 | % | 18,870 | 16,774 | 12.5 | % | ||||||||||||||||||||
Total Other Operating Segment | 5,763 | 5,562 | 3.6 | % | 18,870 | 16,774 | 12.5 | % | ||||||||||||||||||||
Consolidated Volume | 93,316 | 87,601 | 6.5 | % | 254,911 | 237,110 | 7.5 | % | ||||||||||||||||||||
Average Price (per liter) | Currency | |||||||||||||||||||||||||||
Chile Domestic Market - wine | Ch$ | 1,008.8 | 992.5 | 1.6 | % | 993.4 | 962.4 | 3.2 | % | |||||||||||||||||||
Export Markets | US$ | 2.93 | 3.13 | -6.4 | % | 2.99 | 3.19 | -6.1 | % | |||||||||||||||||||
Argentina Domestic | US$ | 2.01 | 2.50 | -19.8 | % | 1.80 | 2.16 | -16.7 | % | |||||||||||||||||||
Argentina Exports | US$ | 3.09 | 3.11 | -0.5 | % | 3.11 | 3.20 | -2.7 | % | |||||||||||||||||||
U.S.A. Domestic | US$ | 5.84 | 5.50 | 6.3 | % | 5.42 | 5.44 | -0.4 | % | |||||||||||||||||||
U.S.A. Exports | US$ | 4.50 | 4.77 | -5.7 | % | 4.54 | 5.22 | -13.1 | % |
(1) | Export Volumes include exports to third parties and sales volumes of the company’s distribution |
subsidiaries (UK, Nordics, Brazil, Singapore, Mexico). | |
(2) | This figure excludes shipments to the company’s distribution subsidiaries. |
(*) | This figure includes bulk wine sales. |
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
3 |
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1.1. Consolidated Sales in Wine Operating Segment
Consolidated Sales that come fromWine sales dropped slightly 0.3% during the third quarter of 2016 driven by higher commercialized volumes, a premiumization of sales, and a negative effect derived from exchange rate fluctuations.
1.1.1. Export Sales
Export sales from Chile and distribution subsidiaries decreased 2.2% to Ch$111,215 million as compared to Ch$113,726 million in 3Q2015. The drop is explained by higher commercialized volumes (+7.5%) which were offset by a negative contribution due to the FX movements during the quarter (highly influenced by the Brexit).
According to the Chilean Central Bank, the Chilean peso appreciated against the pund (17.2%), U.S. dollar (2.3%), Euro (1.9%), Swedish crown (2.7%), Norwegian crown (3.5%), Canadian dollar (2.0%), Mexican peso (14.4%) and Argentinean peso (39.5%). In the opposite, the Chilean peso just depreciated against the Brazilian Real (6.6%), depreciation that was not enough to offset the negative impact of the other currencies.
Graph 1
Total Export Bottled Volume by Region
(Considers Exports from Chile, Argentina, Fetzer and Distribution Subsidiaries)
Third Quarter 2016
In the third quarter, most markets showed increasing, highlighting the growth of bottled wine in Canada (+8.2%), driven by the performance of Cono Sur’s brands, Palo Alto Reserva and Frontera. In Asia, volumes grew 16.8%, highlighting the sales collected by the premium portfolio fo Concha y Toro (+12%), Cono Sur (+100%) and Maycas del Limarí (+370%). In Europe, volumes increased 5.5% boosted by sales of Casillero del Diablo (+16%), Trivento Reserve (+31%), Frontera (+9%) and Cono Sur Bicicleta (+11%). South America (+6.5%), Central America & the Caribbean (+8.4%) and Africa (+60%) registered higher commercialized volumes as well. In the opposite, exports to U.S. dropped 5.0% during the quarter.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
4 |
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1.1.2. Domestic Sales, Chile
Domestic wine sales increased 7.1% in value totaling Ch$20,182 million. Commercialized volumes grew 5.4% adding 2.2 million cases, while the average sales price rose 1.6% in the quarter.
Premium categories registered an increase of 6.8% in cases, while Non-Premium categories increased 5.3%. Premium (and above) categories represented 8.0% of the domestic volume and 29.1% of domestic sales in Chilean pesos.
In terms of market share, the Company reached a 27.7%, being one of the three main wineries in the domestic market (accumulative figure as of September 2016 according to Nielsen)
1.1.3. Argentinean Operations
Total sales from the Argentine operation (excluding shipments to distribution subsidiaries) registered an increase of 7.0% to Ch$7,846 million as a resultant of higher sales in Export Markets (+6.3%) and domestic market (+8.9%).
In terms of volume, sales in Export Markets grew 10.3% while the Domestic Market increased 34.4%. In the quarter, export sales totaled 342 thousand of cases. Regarding the domestic market, the 3Q2016 totaled sales of 182 thousand of cases.
The average sales price, in U.S. dollars, registered in the domestic market dropped 19.8% reaching US$2.01 per liter during the quarter, impacted by the depreciation of the Argentinean peso. In export markets, the average sales price decreased 0.5% reaching US$3.09 per liter.
1.1.4. U.S.A (Fetzer)
During the third quarter of 2016, Fetzer’s total sales (excluding shipments to distribution subsidiaries) increased 1.3% totaling Ch$17,122 million, driven by higher sales in export markets as well in domestic market, both in terms of value.
In terms of volume, bottled sales rose 1.6% totaling 503 thousand of nine liter cases in the third quarter. Stands out the growth collected in Export Markets, where commercialized volumes increased 20.0% during the quarter, based on a good performance of Anthony’s Hill, Little Black Dress and 1000 Stories. Regarding the domestic market, bottled sales registered a slight drop (-0.3%). In a different trend, the average sale price in the domestic market registered an increase of 6.3% during the quarter, positively influenced by the strong performance of 1000 Stories.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
5 |
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1.2. Consolidated Sales in Others Operating Segment
Consolidated Sales that come from theOtherssalesslightly increased 0.2% during the third quarter of 2016.
1.2.1. Chilean Domestic Sales - New Business
Domestic sales of new business, carried out by the domestic distribution subsidiary “VCT Chile” (former “Comercial Peumo”), including premium beer and spirits increased 1.1% totaling Ch$11,447 million. In terms of volume, sales rose 3.6%, totaling 5.8 million liters. Since September 1st, 2016, VCT Chile is not distributing Monster energy drink anymore, due to the closure of the distribution agreement.
1.2.2. Other Revenues
Other revenues, comprising fees for bottling services, sales of fruit, among others, decreased 4.7% to Ch$1,988 million, in comparison to the 3Q2015.
2. Cost of Sales
In the quarter, the total cost of sales increased 3.4% to Ch$105,870 million from Ch$102,362 million in 3Q2015. The cost of sales as a percentage of total sales reached 62.3%, representing a drop of 221bp in comparison to 3Q2015. The higher cost is explained by a higher cost of the wine, as resultant of a weak Chilean harvest in 2016, highly impacted by rains faced in April of 2016. The mentioned situation negatively impacted the Gross Margin, which reached a 37.7% over sales, in comparison to the 39.9% registered in 3Q2015.
3. Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (Distribution costs and Administrative expenses) increased 4.4% to Ch$48,128 million in 3Q2016 compared to Ch$46,111 million in 3Q2015. As a percentage of sales, SG&A reached 28.3%, representing an increase of 125bp over the figure registered in 2015. Higher expenses in the distribution, as a resultant of marketing investments and promotions during the quarter explain the increase on the SG&A.
4. Operating Income
In the third quarter, the Operating Income dropped 16.7% totaling Ch$17,667 million in comparison to Ch$21,216 million in 3Q2015. The operating margin as a percentage of sales reached 10.4% over total sales, as compared to the 12.5% registered in 3Q2015. The Operating Income was impacted by FX fluctuations, a higher cost of the wine and higher expenses.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
6 |
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5. Operating Income plus Depreciation and Amortization
In the quarter, the Operating Income plus Depreciation and Amortization decreased 12.1% totaling Ch$23,889 million in comparison to Ch$27,169 million in 3Q2015. The operating income plus depreciation and amortization margin as a percentage of sales reached 14.1%. A lower margin is a resultant of a negative contribution derived from exchange rate fluctuations, a higher cost of the wine and higher expenses.
6. Non-Operating Income
The Non-Operating Income registered an improvement of Ch$478 million, reducing the loss of Ch$934 million registered in 3Q2015 to Ch$456 million in 3Q2016.
Financial expenses registered an increase of 8.6% totaling Ch$2,663 million in the quarter, in comparison to the Ch$2,452 million obtained during the same period of 2015.
As of September 30th, 2016, Net Financial Debt1 amounted to Ch$193,841 million, representing a decrease of Ch$36,430 million as compared to the Net Financial Debt as of September 30th, 2015.
7. Net Income and Earnings per Share (EPS)
Finally, the Net Income totaled Ch$13,512 million, registering a decrease of 14.6% in the quarter. The figure over sales reached 8.0%. Based on 747,005,982 weighted average shares, Concha y Toro’s earnings totaled Ch$18.1 per share in comparison to Ch$21.2 registered during the 3Q2015.
1Net Financial Debt: Other current financial liabilities + Other non-current financial liabilities - Cash and cash equivalents - Derivatives.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
7 |
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Accumulated Results as of September 30th, 2016
1. Consolidated Sales
Consolidated sales increased 7.0% totaling Ch$475,247 million in the first nine months of 2016. Higher commercialized volumes in main markets and a premiumization in sales explain the growth. Regarding the premiumization of sales, it is important to highlight the role of Trivento and Fetzer, which were fundamental in the consecution of this achievement due to the dynamism and contribution of their sales.
1.1. Consolidated Sales in Wine Operating Segment
Consolidated Sales that come fromWine sales increased 6.8% in the first nine months of 2016 driven by higher commercialized volumes, a premiumization of sales, highlighting the growth in export market from Chile, Argentina and U.S., as well as the growth in domestic markets in Chile and Argentina.
1.1.1. Export Sales
Export sales from Chile and distribution subsidiaries increased 5.8% to Ch$312,033 million as compared to Ch$295,053 million in 2015. Higher commercialized volumes (+6.8%) drove the increase in sales during the 2016.
According to the Chilean Central Bank, the Chilean peso depreciated against U.S. dollar (6.2%), Euro (6.4%), Swedish crown (6.4%), Norwegian crown (0.1%) and Canadian dollar (1.3%). In the opposite, the Chilean peso appreciated against the Brazilian Real (5.3%), Sterling pound (3.6%), Mexican peso (9.6%) and Argentinean peso (34.5%).
Graph 2
Total Export Bottled Volume by Region
(Considers Exports from Chile, Argentina, Fetzer and Distribution Subsidiaries)
Nine Month 2016
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
8 |
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In the first nine months of 2016, most markets showed increasing, highlighting the growth of bottled wine in Asia (22%), boosted by the performance in China (+70%), Japan (+12%), South Korea (+14%) and Singapore (+31%), as a resultant of higher sales of Casillero del Diablo. In Canada, volumes grew 11.6%, driven by the performance of Casillero del Diablo, Frontera, Cono Sur Bicicleta, Palo Alto Reserva and Bonterra. In Europe, volumes increased 6.6% highlighting sales of Casillero del Diablo (+20%), Frontera (+18%), Cono Sur Bicicleta (+16%), Trivento Reserve (+52%) and Bonterra (+6%). South America (6.1%), Central America & the Caribbean (8.8%) and Africa (+25%) registered higher commercialized volumes as well. In the opposite, U.S. dropped 6.7%.
1.1.2. Domestic Sales, Chile
Domestic wine sales increased 9.9% in value totaling Ch$52,359 million. The commercialized volume grew 6.4% adding 5.9 million cases, while the average sales price rise 3.2% during 2016.
Premium categories registered an increase of 12.8% in cases, keeping the trend that this market has shown in last years, while the Non-Premium categories increased 6.0%. Premium (and above) categories represented 7.8% of the domestic volume and 28.5% of the domestic sales in Chilean pesos.
In terms of market share, the Company reached a 27.7%, being one of the three main wineries in the domestic market (accumulative figure as of September 2016 according to Nielsen)
1.1.3. Argentinean Operations
Total sales from the Argentine operation (excluding shipments to distribution subsidiaries) registered an increase of 14.7% to Ch$21,086 million as a resultant of higher sales in Export Markets (14.9%) and domestic market (14.0%).
In terms of volume, sales in Export Markets grew 11.0% while the Domestic Market increased 48.7%. During 2016, export sales totaled 893 thousand of cases. Regarding the domestic market, sales totaled 569 thousand of cases.
The average sales price, in U.S. dollar terms, registered in the domestic market dropped 16.7% reaching US$1.8 per liter during 2016, impacted by the depreciation of the Argentinean peso. In export markets, the average sales price decreased 2.7% reaching US$3.11 per liter.
1.1.4. U.S.A (Fetzer)
In the first nine months of 2016, Fetzer’s total sales (excluding shipments to distribution subsidiaries) increased 7.6% totaling Ch$47,343 million, driven by higher sales in export markets as well in domestic market, both in terms of value.
In terms of volume, bottled sales rise 7.4% totaling 1.5 thousand of cases in 2016. It is important to remark the increase in bottled wine sales in the Domestic Market (+5.7%), boosted by increase in sales of several brands: Bonterra (+4%), Anthony’s Hill (+16%) and the Zinfandel 1000 Stories (+407%). Regarding Export Markets, commercialized volumes collected an increase of 24.5% during 2016, keeping the trend saw in last quarters based on the performance of Fetzer’s brands and Bonterra.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
9 |
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1.2. Consolidated Sales in Others Operating Segment
Consolidated Sales that come from theOtherssalesincreased 8.7% during 2016, derived from the growth of the distribution of spirits, beers, energy drinks and mineral water.
1.2.1. Chilean Domestic Sales - New Business
Domestic sales of new business, carried out by the domestic distribution subsidiary ‘VCT Chile’ (former ‘Comercial Peumo’), including premium beer; spirits; and energy drinks increased 11.7% totaling Ch$37,338 million. In terms of volume, sales grew 12.5% totaling 18.9 million liters. Since September 1st, 2016, VCT Chile is not distributing Monster energy drink anymore, due to the anticipated closure of the distribution agreement.
1.2.2. Other Revenues
Other revenues, comprising fees for bottling services, sales of fruit, among others, decreased 9.2% to Ch$5,089 million, in comparison to 2015.
2. Cost of Sales
During the first nine months of 2016, total costs increased 6.6% to Ch$293,841 million from Ch$275,683 million in 2015. The cost of sales as a percentage of total sales reached 61.8%, representing an improvement of 24bp in comparison to last year. The mentioned improvement influenced positively the gross margin reaching 38.2% as percentage over total sales in comparison to the 37.9% registered in 2015. The lower cost as percentage over sales is explained by a lower cost of the wine coming from 2015 harvest, which since the 3Q2016 has been offset by the new cost of the wine coming from 2016 harvest, which registered a drop of 21% on the grape production.
3. Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (Distribution costs and Administrative expenses) increased 8.8% to Ch$131,637 million in 2016 compared to Ch$120,942 million in 2015. As a percentage of sales, SG&A reached 27.7%.
4. Operating Income
During 2016, the Operating Income increased 9.7% totaling Ch$51,359 million in comparison to Ch$46,813 million in 2015. The operating margin as a percentage of sales increased 27bp from 10.5% registered in 2015, reaching a 10.8% over total sales. The increase was driven by higher sales and a positive impact from FX fluctuations, being offset by the recognition of the new harvest (2016) in the results during the third quarter.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
10 |
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5. Operating Income plus Depreciation and Amortization
In the first nine months of 2016, the Operating Income plus Depreciation and Amortization increased 7.3% totaling Ch$67,328 million in comparison to Ch$62,750 million in 2015. The operating income plus depreciation and amortization margin as a percentage of sales reached 14.2%, as compared to the 14.1% registered in 2015.
6. Non-Operating Income
The Non-Operating Income registered a loss of Ch$5,152 million in comparison to the loss of Ch$3,870 million registered in 2015.
Financial expenses remained in line with the 2015 totaling Ch$7,435 million in 2016, in comparison to the Ch$7,408 million obtained during the same period of 2015.
As of September 30th, 2016, Net Financial Debt2 amounted to Ch$193,841 million, representing a decrease of Ch$36,430 million as compared to the Net Financial Debt as of September 30th, 2015.
7. Net Income and Earnings per Share (EPS)
Finally, the Net Income totaled Ch$34,057 million, registering an increase of 7.4% in 2016. The figure over sales reached 7.2%. Based on 747,005,982 weighted average shares, Concha y Toro’s earnings totaled Ch$45.6 per share in comparison to Ch$42.5 registered during 2015.
2Net Financial Debt: Other current financial liabilities + Other non-current financial liabilities - Cash and cash equivalents - Derivatives.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
11 |
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Balance Sheet
Assets
As of September 30th, 2016, Viña Concha y Toro consolidated assets totaled Ch$999,557 million, representing an increase of 1.8% in comparison to September 30th, 2015, mainly due to a higher level of Inventories and Account Receivables.
Liabilities
As of September 30th, 2016, Net Financial Debt3 amounted to Ch$193,841 million, representing a decrease of Ch$36,430 million as compared to the Net Financial Debt as of September 30th, 2015.
* * * * *
About Viña Concha y Toro
Viña Concha y Toro is South America’s leading wine producer whose products are distributed in 147 countries. Founded in 1883 by Don Melchor Concha y Toro, the Company produces and markets fine wines under the labels: Don Melchor, Amelia, Terrunyo, Marqués de Casa Concha, Trio, Casillero del Diablo, Sunrise and Frontera. The Company cultivates around 9,337 hectares of vineyards in Chile; 1,140 hectares in Argentina and 469 in the U.S (As of September 30th, 2016).
Viña Concha y Toro has been listed on the Santiago Stock Exchange since 1933 under the ticker symbol “Conchatoro”. In 1994, it became the first winery in the world to be listed on the New York Stock Exchange, under the ticker symbol “VCO”. The Company has 3,507 employees and is headquartered in Santiago, Chile (As of September 30th, 2016).
Forward Looking Statements
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations and business of the Company and certain plans and objectives of the Company with respect to these items. Forward-looking statements may be identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “intend”, “may”, “believe” and similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that occur in the future. There are a number of factors that could cause results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include: levels of consumer spending in major economies, changes in consumer tastes and preferences, the levels of marketing and promotional expenditures by the Company and its competitors, raw materials costs, future exchange and interest rates, as well as other risk factors referred in the Company’s filings with the Securities and Exchange Commission.
3Net Financial Debt: Other current financial liabilities + Other non-current financial liabilities - Cash and cash equivalents - Derivatives.
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
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Viña Concha y Toro S.A.
Consolidated Income Statement
In thousand Chilean pesos
3Q2016 | 3Q2015 | Change | 9M 2016 | 9M 2015 | Change | |||||||||||||||||||
STATEMENT OF INCOME BY FUNCTION | Th. Ch$ | Th. Ch$ | % | Th. Ch$ | Th. Ch$ | % | ||||||||||||||||||
Income from ordinary activities | 169,800,467 | 170,206,249 | -0.2 | % | 475,247,227 | 444,128,241 | 7.0 | % | ||||||||||||||||
Cost of sales | (105,870,472 | ) | (102,362,361 | ) | 3.4 | % | (293,841,231 | ) | (275,683,001 | ) | 6.6 | % | ||||||||||||
Gross Profit | 63,929,995 | 67,843,888 | -5.8 | % | 181,405,996 | 168,445,240 | 7.7 | % | ||||||||||||||||
Other income by function | 2,319,062 | 380,668 | 509.2 | % | 2,925,367 | 1,152,299 | 153.9 | % | ||||||||||||||||
Distribution costs | (37,638,673 | ) | (37,525,794 | ) | 0.3 | % | (103,852,517 | ) | (95,365,618 | ) | 8.9 | % | ||||||||||||
Administrative expenses | (10,489,421 | ) | (8,585,510 | ) | 22.2 | % | (27,784,935 | ) | (25,576,758 | ) | 8.6 | % | ||||||||||||
Other expenses by function | (454,074 | ) | (896,835 | ) | -49.4 | % | (1,334,967 | ) | (1,841,850 | ) | -27.5 | % | ||||||||||||
Operating Income | 17,666,889 | 21,216,417 | -16.7 | % | 51,358,944 | 46,813,313 | 9.7 | % | ||||||||||||||||
Financial income | 84,692 | 84,524 | 0.2 | % | 631,829 | 505,195 | 25.1 | % | ||||||||||||||||
Financial expenses | (2,663,352 | ) | (2,452,382 | ) | 8.6 | % | (7,435,237 | ) | (7,408,035 | ) | 0.4 | % | ||||||||||||
Participation in income (loss) of associates and joint-ventures recorded using the equity method | 2,377,806 | 3,287,365 | -27.7 | % | 2,510,242 | 4,245,365 | -40.9 | % | ||||||||||||||||
Exchange differences | (265,892 | ) | (1,512,802 | ) | -82.4 | % | (932,688 | ) | (449,742 | ) | 107.4 | % | ||||||||||||
Income/expense by adjustment units | 10,171 | (340,474 | ) | -103.0 | % | 73,525 | (762,968 | ) | -109.6 | % | ||||||||||||||
Income before tax | 17,210,314 | 20,282,648 | -15.1 | % | 46,206,615 | 42,943,128 | 7.6 | % | ||||||||||||||||
Income tax expense | (3,680,331 | ) | (4,485,442 | ) | -17.9 | % | (11,877,770 | ) | (11,028,192 | ) | 7.7 | % | ||||||||||||
Net Income | 13,529,983 | 15,797,206 | -14.4 | % | 34,328,845 | 31,914,936 | 7.6 | % | ||||||||||||||||
Net income attributable to owners of the company | 13,512,239 | 15,826,333 | -14.6 | % | 34,057,391 | 31,714,482 | 7.4 | % | ||||||||||||||||
Net income attributable to non-controling interests | 17,744 | (29,127 | ) | -160.9 | % | 271,454 | 200,454 | 35.4 | % | |||||||||||||||
Operating Income plus Depreciation and Amortization | 23,889,005 | 27,169,373 | -12.1 | % | 67,327,648 | 62,750,444 | 7.3 | % | ||||||||||||||||
Operating Income | 17,666,889 | 21,216,417 | -16.7 | % | 51,358,944 | 46,813,313 | 9.7 | % | ||||||||||||||||
Depreciation | 5,894,097 | 5,675,675 | 3.8 | % | 15,220,853 | 15,127,750 | 0.6 | % | ||||||||||||||||
Amortization | 328,019 | 277,281 | 18.3 | % | 747,851 | 809,381 | -7.6 | % |
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
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Viña Concha y Toro S.A.
Consolidated Balance Sheet
In thousand Chilean pesos
As of | As of | |||||||
September 30, 2016 | September 30, 2015 | |||||||
Assets | ||||||||
Cash and cash equivalents | 25,393,040 | 22,930,475 | ||||||
Inventories | 265,359,683 | 266,131,823 | ||||||
Accounts receivable | 175,905,794 | 172,428,932 | ||||||
Biological current assets | 13,753,679 | 13,095,216 | ||||||
Other current assets | 30,343,687 | 39,912,609 | ||||||
Total current assets | 510,755,883 | 514,499,055 | ||||||
Property, plant & equipment, net | 355,525,410 | 348,029,560 | ||||||
Investments accounted for using the equity method | 21,898,929 | 22,394,617 | ||||||
Other non current assets | 111,376,422 | 97,102,233 | ||||||
Total non current assets | 488,800,761 | 467,526,410 | ||||||
Total assets | 999,556,644 | 982,025,465 | ||||||
Liabilities | ||||||||
Other current financial liabilities | 126,913,161 | 87,401,838 | ||||||
Other current liabilities | 197,858,125 | 178,313,668 | ||||||
Total current liabilities | 324,771,286 | 265,715,506 | ||||||
Other non-current financial liabilities | 115,501,770 | 229,911,835 | ||||||
Other non current liabilities | 52,196,452 | 49,139,118 | ||||||
Total non current liabilities | 167,698,222 | 279,050,953 | ||||||
Total Liabilities | 492,469,508 | 544,766,459 | ||||||
Equity | ||||||||
Issued capital | 84,178,790 | 84,178,790 | ||||||
Accumulated Profits/(losses) | 419,183,370 | 384,822,261 | ||||||
Other reserves | 2,357,031 | -33,019,601 | ||||||
Net equity attributable to parent comp. shareholders | 505,719,191 | 435,981,450 | ||||||
Non-controlling interest | 1,367,945 | 1,277,556 | ||||||
Total Equity | 507,087,136 | 437,259,006 | ||||||
Total liabilities and Equity | 999,556,644 | 982,025,465 |
Osvaldo Solar – Chief Financial Officer
Patricio Garreton - Head of Investor Relations
Tel: (56 2) 2476 5768
conchaytoro-ir@conchaytoro.cl
www.conchaytoro.com
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