07/05/2024 Transcripción Presentación de Resultados 1Q24 Descargar

Speakers

→ Osvaldo Solar - CFO

→ Daniela Lama - Head of Investor Relations

Moderator

Ma. Jose Undurraga Speaker: Osvaldo Solar

→ Good morning, everyone. My name is Maria Jose → Good morning and good afternoon for some of

Undurraga, a moderator in the presentation of Viña you. We are pleased to present the results for the

Concha y Toro. I thank you for joining us for this first quarter. I say 'pleased' because this is a quarter presentation of results corresponding to the first that has shown very good performance, very positive quarter of 2024. Before we begin, please note that evolution, which clearly has to do, as we will soon on the right side of your screen you may choose explain, with what we discussed a month ago when the language in which you want to listen to this we talked about the fourth quarter. The first part of presentation. The information we will review today is what we will see will consist of some highlighted already available on our website, vinacyt.com, both in elements and then delving into their context, to then

Spanish and English. proceed with the sales and results.

Let us begin with a brief disclaimer. This presentation Regarding the elements that we have highlighted, the contains forward-looking statements with information first item is the issue of sales. Sales, as you may have available up to the present time, which must be seen, went up 26.4% in terms of revenue, behind a considered in good faith. Such statements are subject volume of 8.9% that Daniela will later explain in detail. to risks and uncertainties beyond the company's control that could cause Viña Concha y Toro's actual Another element that we have highlighted, that in results to materially differ from those set forth in those this sense is now poorer than what we had towards statements. the fourth quarter of last year, is the mix. We have been monitoring this mix between categories 1

Today, we will review the period's context with the and 2, or premium and non-premium, which is company's CFO, Osvaldo Solar. Then we will move part of the company's strategy in this path towards on to review sales analysis with Daniela Lama, Head premiumization. And in this quarter, we had a 49.9% of Investor Relations, and will return once again to principal and invest mix. In that sense, it is interesting

Osvaldo Solar, who will discuss the results obtained by to highlight that within the annual plan, the budget the company during the first quarter. for the year considers reaching a number that should be close to 54%. On the other hand, we had a

We will conclude today's presentation with a Q&A gross profit, which grew by 31.5%, positioning us at session, where we will address any questions you may CLP$78,618 million. In terms of the margin itself, a send us through the platform chat. Now, I will leave 38.1% which showcases this improvement regarding you with Osvaldo Solar, CFO of Viña Concha y Toro. the 36.6% that we had last year during this same

(The presentation begins)

42Q1 noitatneserp rotsevni period. This sets it on track towards what it should be And lastly, we have innovation. A topic that we will by the end of the year. But it is still not there yet, as keep on discussing over the months and over the we will discuss. quarters, because it is a topic that the company has positioned as a central theme for the future. And I

The EBITDA presented a growth of 118%, placing believe that the company is prepared, both in product it in CLP$28,371 million, while the EBITDA margin generation and in the concern or in the pursuit of is 13.8%. Also, as we will see throughout this efficiency to achieve that the company, both in its presentation, we must always analyze this first product generation and in terms of way of working, quarter in the context of it being the smallest quarter, may always be at the forefront, capturing the best the due to the nature of the season within the company's markets have to offer. results. Therefore, the indexes and the percentage margins tend to be poorer, so to speak, than what What did this mean in terms of EBIT and EBITDA? the whole year presents, due to the smaller size of That the results of the EBIT were CLP$21,512 million the quarter. That is why this 13.8% of EBITDA margin with a margin of 10.4%. I want to emphasize once should be considered within a framework that should again that we are in the smallest quarter and that aim to reach levels of 18% or 19% by the end of the 10.4% should reach, towards the end of the year, a year. And finally, the net profit increases by 304%, figure closer to 14%. In terms of the EBITDA, as we placing it at CLP$12,740 million. have already discussed, that 13.8% aims to be 18% or

19% toward the end of the year. Albeit all of this, the

These are the elements that we have considered signs of growth of a 224% regarding the year 2023; the most prominent during this quarter in numerical and of an 118% in terms of EBITDA, put us at ease terms and reflect the good performance of the and are a sign that we are clearly on track to progress company during the period that we are commenting throughout a year that we see as very favorable for on. the results of the vineyard.

Now, the reality of these results exists within the Now we will move on to the sales analysis that

2024 context, which we do want to review because Daniela will present and then we will return to the final we still have elements that are affecting the results in results of the exercise. general, or consumption in particular, at a worldwide level. And one element that remains relevant is still the high interest rates that have not yet loosen up Speaker: Daniela Lama completely. They have been loosening up somewhat, in the particular case of Chile, but at a global scale, → Good morning, everyone. Now we are going to they are still at a high level, which is expected to look at the sales analysis for the quarter. Well, this is decrease towards the end of the year. The precise a new breakdown that we want to show you, where moment has been delayed a bit, particularly due to we are separating what is wine from what is non- the United States. So, in this context of high interest wine. In terms of sales revenue, we have included an rates, the way in which businesses are managed I 'others' item, which includes sales from our souvenir consider speaking from a different reality than the stores, tourism, merchandising, etc. But basically, we one we have had in the past, but that allows, on wanted here to showcase the wine sales in particular, the other hand, to have healthier inventories and because the increase we have both in revenue and distribution chains that seek to adapt to a reality in volume is much more positive than the consolidated which more efficiency is demanded from them. figure. The consolidated figure is growing by 26.4% in revenues, whereas if we only consider wine, it is

In our case, as we have seen in this first screenshot up 30.6%. This is mainly driven by growths in both about the results and as we will soon see about sales the premium and superior segments, but also in the in particular, I believe that the results we expected varietal and lower segments. And here, in particular, due to the changes that the company has been the Frontera brand stands out above the others. explaining are being reflected. We explained that we began this process around August, September of On the other hand, the new businesses in Chile,

2022, and today we have a company that allows us to which basically are the premium beer segment, face a new reality. experienced a double-digit decline here, of 15%,

42Q1 noitatneserp rotsevni which is better than what we saw in the previous Next, if we look at the evolution of EBIT, we may see two quarters, but still showing a decline. And that the 2023 performance represented in this dashed is due to an industry issue in Chile where the entire line, which reflects the effect from the judicial premium beer segment is declining. And, also, settlement in the United States that we mentioned clearly, as we had mentioned before, there are last year, which we opted to keep displaying because climatic effects that also influence sales. the company has set the goal of surpassing the amounts from last year, but doing it also considering

In terms of volume, following the same breakdown this extraordinary expense contingency that we had. between wine and non-wine, we see that the And here we may see our growth during the first increase was of 8.9%, but if we only consider wine, quarter compared to last year with this increase of the growth was of 12.4%. 224%. So, without that eventuality during the fourth quarter, we would have reached these CLP$34,780

As Osvaldo mentioned, all the measures million, and the idea is this year to also surpass the implemented by the company in recent periods may values of last year in each quarter. be seen already reflected here. Once again, in the lower and varietal segments, growth is particularly The same applies to the margin. We also opted to attributed to Frontera. show how 2023, represented by this dashed line,

If we look at it by market, we are growing in each of would have been without this judicial settlement, in our main markets. In particular in Chile, we may see order to review, quarter by quarter, how it evolved a negative trend with a decline of 2.5%, but this is in comparison to how it would have been if that mainly due to the non-wine segment, basically beer, extraordinary expense had taken place. Here, we may as I mentioned before. If we take these five countries, see that in this quarter we are 600 basis points above they represent almost 75% of our total sales, so we what we had during the first quarter of last year. will continue to take this structure into account.

Now we return to Osvaldo with the results of the

If we look only at Chile, without the beer segment, is quarter. Thank you very much. growing by 5.8% compared to the first quarter of last year. The United States, which had a strong impact and helped us achieve a growth of 36.7%, this was Speaker: Osvaldo Solar basically due to the replenishment of the inventories in the distribution chain, and the strategies that began → Well, continuing with the results, a first element to be implemented in both marketing and in the that we have highlighted, quarter by quarter, and is a structure, that are already yielding results. topic that we need to be always monitoring, because we believe it is relevant and a strength of company,

At the level of our main brands, these seven which is the currency diversification that the company brands, which represent the 59.3% of revenue, has. In this particular case, during this period, we had have high double-digit growth, except for Bonterra, a significant increase in the exchange rates compared that presents a single digit growth. Frontera, as I to the first quarter of last year. On the right side of the mentioned, had the highest increased in percentage slide, you may see the growth of the basket that we terms, but Casillero del Diablo was the one that defined of the vineyard's currencies by 19.8%, against grew the most in absolute terms. We may also see the dollar at 17.4%, the euro at 19.7%, and the pound at that Trivento Reserve and Diablo continue with their 23.1%. If we look at the left side, the pound represents double-digit growth, just as we saw last year. 30% of the company's revenue, as a result of the growth that has taken place in the United Kingdom.

If we now look at the mix, as Osvaldo also mentioned, we may see a decline of 60 basis points, but this is Now there is an element that is interesting to consider, basically due to the growth we had from Frontera, that within the positive effect of the exchange rate particularly in the United States. We also see that the issue, this effect became diminished during the first wine segment was also declining by 200 basis points. quarter, something that looking ahead is not perceived

Last year, we had 56.2%, and this quarter, we ended in the same way, by the wine stocks we have abroad, up with 53.7%. particularly in England, Mexico, and Brazil. We are talking about our first, fourth, and fifth markets. And

42Q1 noitatneserp rotsevni what happened there was quite atypical. You have quarter, to even out, or even to decrease, this due to probably analyzed it numerically, but we highlight it the decreases in debt that the company will have as a anyway, to show that the exchange rate had a very consequence of the results that we are expecting to strong variation in a very short period. We are talking have. about a comparison between this first quarter and the first quarter of last year, but if we compare it with In terms of net profitability, we have this chart that

December of last year, which was when we sent the helps to visualize the 2023 results in particular, this stocks abroad, in this case, to England, Mexico, Brazil; drop that we have been explaining; we can also see the the currency fluctuated a 9.2% in the case of England, result that we have perceived during the first quarter a 9.4% in the case of Mexico, and a 7.4% in the case of of this year, with this CLP$12,740 million versus

Brazil. CLP$3,100 million of the previous year. This is always in the context that we are in the weakest quarter of all.

What did this mean? That the costs, which originated Here, we wanted to showcase how net profit evolves from Chile and are in Chilean pesos, were increased over time through the quarters because, I insist, we by the exchange rate variation in these markets. So, need to have much clarity regarding the seasonality

I highlight this point because, for the analyses and that the company goes through. So, the result we are models you have, it is interesting to see that the presenting today has considerably better and superior positive effect that it had was significantly diminished characteristics, even compared to what we were due to this reality of the types of exchange that took showing, because this is the smallest quarter of the place in a very short period of time, generating, of year. course, a positive factor, as we have seen in the results, but not to the extent that we should expect In comparison, here we kept the year 2022, as an looking forward as long as the exchange rates remain additional reference to 2023. If you notice, it is a stable. bit lower than 2022. But the results for the first quarter of 2022 were completely atypical. In terms

When we look at the non-operational results, what of seasonality, it was 20.3% of the profit for the year, we want to highlight is a general view. Regarding the which is completely abnormal. Typically, the results of affiliated companies, an item that, as you well know, the first quarter fluctuate between 12% and 13% of the is not relevant now due to the season. Let us keep in annual profit. mind that the main results of the affiliates companies correspond to Almaviva, whose complete results are One element that we are also tracking, which is of seen in September, therefore during the third quarter interest to you and us, is the return on invested capital. of the year. As a consequence, we only display this We should bear in mind that it is measured during item to maintain consistency throughout the quarters, 12 rolling months. In March 2024 it is at 5.7%, which but it is not relevant. is an improvement against the 5.3% that we had accumulated in 2023, up to December, considering

What is relevant here? The item of financial expenses the 12 rolling months, it is lower than what we had where we had an increase of CLP$1,426 million that in March 2023, because March 2023 collected 12 you are seeing right now on your screens, of which rolling months, of which a large part corresponded to practically half of it, 52.6%, we could say, corresponds the year 2022. This is a number that concerns us and to an increase in capital and a 47% to interest rates, that is clearly moving in the direction we want. I am which, as we were saying a while ago, have not referring to the return on invested capital. loosened up and therefore are still having an effect on the company's financial expenses. Let us keep in mind Regarding net financial debt, it has increased by that the effect of financial expenses is diminished or CLP$91,383 million compared to the previous controlled, as we have more than 60% with a fixed rate quarter. We have to look at that CLP$397,738 in the long term, but there is a 40% in rather short- million compared to the CLP$389,255 million at term conditions. the end of December last year. This is an item that is fully in line with the need for capital or the growth

In terms of financial expenses, we will continue to see of working capital that the company had due to the during the coming quarters a higher financial expense inventory increases that we were discussing earlier. than the last year, to have a tendency, in the fourth This is expected to decrease throughout the year as

42Q1 noitatneserp rotsevni sales grow in the way we have discussed, and also that measures us, because we have considered it depending on the exchange rate issue underlying that to be the more complete and comprehensive one debt. for the company, as it measures all three elements, not just the environmental aspect, which has been

Within that context, we show you here what we have fundamental and on which we have been making always considered as our financial leverage, the level progress in a truly spectacular way, but also in what of debt the company is at 0,68, with a convenant that happens with governance, what happens with the is at 1,2 times our equity. In terms of financial expense more social aspect. coverage, the convenant is 2,5 times, and we are

4,8, which is already starting to show this rebound in The index, as we see here, has two components. One comparison to the 4,6 times that we had in December, is these bars, which represent the percentile, and as you can see in the graph in the middle of the slide. which is the one that we monitor the most. Here, it

In this item, this is not a covenant, but rather just shows that Concha y Toro is in the 93rd percentile, an indication that we have given and is part of our with a score of 71. We have also included the average approach, which aims to determine what level of debt for the drinking industry both domestically and over the EBITDA that the company should have. We globally, which is 28 points. So, the 71 that Concha y are aiming for 2,5 times and we are already at 3,6, Toro has must be considered within that context. lower than the 4,1 that we had in December, and by the end of the year we expect the number to be close When we look at the score line, it looks rather flat. to two times the EBITDA. And that is because year after year, and this is part of our challenges, the Dow Jones index keeps adding

Finally, we wanted to touch on a concept that we new elements and new requirements, which we must defined as a non-financial result, but that has three incorporate. Therefore, the best element to measure aspects that are fundamental and that the company this, along with keeping a very good score, as we have is monitoring. One of them is the brand strength, as it done, is the percentile that indicates the position in is a very fundamental asset for the company's results which the company stands compared to its peers. And along with distribution, etc., where brands are a central I think that the reality we are presenting here shows item. Then, the ESG performance, because the truth that this is a central item for us, on which we work is that we see it as a relevant element when it comes to constantly, looking towards the future. how the company will be sustained in the future. And finally, some progress we have made on the topic of In May, you will receive an invitation to an exclusive the research and innovation center because we believe focus on this topic to delve into detail on what the that it is also a central source for the future of the company is doing regarding these three fundamental company, in how it is innovating. aspects for the future.

In terms of brands, we see the distinction from Drinks Finally, and this has to do with the progress we have

International, who are positioning Concha y Toro once made, here is a central theme, a new agreement to see again as the leading Chilean vineyard in their ranking. how we can apply artificial intelligence to winemaking.

Then, in terms of different products of the brand, we We believe that there is a very relevant space there have what we did this summer with fruity cocktails, that could be, let us say, a new quantum leap, in terms where the Melvin flavor, the green bottle at the middle, of what the company is doing with innovation in its was a huge hit, and that shows once again the ease core, which goes from the grapes, in a beginning, that the company has when generating products that which then will be transformed into these wines that accompany the needs of the consumer. And finally, we have given us this global prestige. have defined as the "Luxury Brand Division", a new concept that the company has been structuring at an And finally, in the outlook for 2024, we see a positive organizational level to face the world of luxury brands, year after how challenging last year was. And we and that is already taking its first steps. see three main aspects. First, we must continue this year with double-digit growth in our wines, as we

In terms of ESG, the environmental, social and saw in the first quarter. We will see a continuation of governance aspects, let us keep in mind that we this throughout the year. A second aspect is the cost have considered the Dow Jones index as the element efficiency improvements for this year, at CLP$16,000

42Q1 noitatneserp rotsevni million for this year, to reach a standard year of

CLP$20,000 million, as we discussed, for the year

2025. This CLP$16,000 are net, because there are also one-time expenses that need to be incorporated.

And finally, the margin improvements that are aimed for the year 2025 to reach an EBIT of 15% or 16%, but that right now this is rather around a 14%, to then reach that growing normality, which could be defined towards 2025, as a 15% or 16%.

That is why we are closing with the final message that we believe that the company is writing a new chapter, with a different company, prepared for growth. We think we have captured well what the consumer world wants, and the company is able to answer with great strength, with great clarity, and that is being reflected in the results.

Thank you very much.

(End of the presentation)

Moderator

Ma. Jose Undurraga

→ We have reached the end of this presentation. We thank you for your attendance and wish you a very good afternoon.