Purcari Wineries (WINE) H1 2024 earnings summary

Executive summary

• Group revenue grew 3% year-over-year to RON 165.9 million in H1 2024, with core wine and brandy sales up 12% YoY, led by premium brands and strong performance in Romania and Bulgaria; Ecosmart operations were discontinued.

• Net profit increased by 15% YoY to RON 29.3 million, with Q2 net profit up 70% sequentially due to improved gross margin and lower packaging costs.

• The company strengthened its management team with new hires from leading firms, launched Vintech Innovations to advance digitalization, and expanded its digital capabilities.

• Acquisition of a 51-hectare vineyard in Dealu Mare and expansion of Romanian operations, plus new subsidiaries in Moldova and Turkey, signal ongoing investment in growth.

• Dividend of RON 0.65/share (RON 26.2 million total) paid, with share capital increased via stock options.

Financial highlights

• Gross margin reached 51% in Q2 2024, the highest since IPO, driven by pricing, premiumization, and favorable cost structure.

• EBITDA for H1 2024 was RON 55.3 million (33% margin), and net profit was RON 29.3 million (18% margin); Q2 EBITDA margin reached 38%.

• Marketing and selling expenses increased by 24% YoY, mainly due to investments in people, new projects, and SGR recycling system implementation.

• Net finance costs surged 339% YoY due to higher interest expenses and lower FX gains.

• Total assets grew 7% from 2023 year-end, mainly from capital expenditures and higher cash balances.

Outlook and guidance

• 2024 revenue growth guidance revised to 5-10% (from 12-15%), with core wine segment expected to grow 15-20%; focus remains on sustainable, profitable growth.

• EBITDA margin guidance remains at 26-28%, and net income margin at 14-16%.

• COGS expected to decrease in H2 as older, costlier inventory is phased out, supporting margin improvement.

• Management highlights risks from climate-related grape shortages in Moldova and Bulgaria, which may increase input costs and affect margins in 2025.

• Ecosmart deconsolidation expected in November 2024; moderate global recovery anticipated in 2025.