SANTIAGO, Chile, Aug. 11 /PRNewswire-FirstCall/ -- Vina Concha y Toro S.A. , Chile's largest producer and exporter of premium wines, reports results for the second quarter 2006, ended June 30.
Net income for the quarter decreased 24.8% to Ch$ 5,002 million (US$ 9.3 million), compared with Ch$ 6,655 million (US$ 12.3 million) in the second quarter of 2005. This result reflects mainly the impact of the sharp appreciation of the Chilean peso for the period. Earnings per ADR decreased 16.3% to US$ 0.26 for the quarter.
For the quarter, total revenues increased 0.9% to Ch$ 54,213 million (US$ 100 million). Sales increased as a result of a strong quarter for exports, led by solid sales of Concha y Toro UK. The Argentine subsidiary, Trivento, also contributed a positive performance. The result was overshadowed by the sharp fall in the exchange rate and its effect on the Company's foreign currency revenues.
"The double-digit growth in exports of 15.8% in value (US$) and 12.4% by volume shows the firm, competitive position and strength of our broad portfolio. This, together with our growth strategy focused on the premium segment, has led to a better product mix and higher average price. Key to this has been the contribution of the Casillero del Diablo line," said Eduardo Guilisasti, Company CEO.
"Trivento, the subsidiary in Argentina, has provided additional growth potential with wines and varieties characteristic of that country, which are favorably accepted in Europe, North America and Latin American markets. Continuing their strong uptrend, export shipments from Argentina soared 34% in the quarter," added Eduardo Guilisasti.
Sales on the Chilean domestic market grew by only 1.5% in volume during the quarter. This reflects the strong competition in the mass-volume wine segment. The Company's performance has been superior to that of the main competition, resulting in an increased market share.
However, the Company's results for the quarter and its margins were affected by the sharp fall in the dollar exchange rate. Operating income decreased 23.6% to Ch$ 7,088 million (US$ 13.1 million) in the second quarter 2006. Operating margin decreased to 13.1% from 17.3%, impacted by the strong appreciation of the Chilean peso over our export returns in foreign currency, and also due to higher wine costs as a result of higher prices for grapes during the 2005 vintage. In this respect, the recently ended 2006 harvest showed a substantial fall in costs compared to 2005, which should have a positive impact on margins in the second half of the year.
Financial Highlights
(in millions of Chilean pesos as of June 30, 2006,
except percentages and per share amounts)
Financial Highlights
2Q2006 2Q2005 Change 1H2006 1H2005 Change
Revenue from sales 54,213 53,733 0.9% 93,684 95,843 -2.3%
Gross Profit 19,395 20,658 -6.1% 30,716 36,519 -15.9%
% sales 35.8% 38.4% -- 32.8% 38.1% --
Selling &
Administrative
Expenses -12,307 -11,379 8.2% -21,465 -21,215 1.2%
% sales -22.7% -21.2% -- -22.9% -22.1% --
Operating Income 7,088 9,279 -23.6% 9,251 15,304 -39.6%
% sales 13.1% 17.3% -- 9.9% 16.0% --
Non operating result -779 -1,196 -34.8% -1,242 -1,410 -12.0%
Net Income 5,002 6,655 -24.8% 6,394 11,475 -44.3%
Earnings per share
(Ch$) 6.95 9.25 -24.8% 8.89 15.96 -44.3%
Earnings per ADR (US$) 0.26 0.31 -16.3% 0.33 0.53 -38.0%
EBITDA 9,016 11,609 -22.3% 14,058 20,272 -30.7%
% sales 16.6% 21.6% -- 15.0% 21.2% --
A longer version of this press release with detailed information is available on the web site: http://www.conchaytoro.com/ .
