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, Bulgaria, and Asia.

• Ecosmart operations were discontinued after a RON 22.2 million penalty and bankruptcy proceedings, with activity treated as discontinued in financials.

• Significant team expansion and management changes, including new hires and the launch of Vintech Innovations to drive digitalization.

• Acquisition of a 51-hectare vineyard in Romania and new subsidiaries in Moldova and Turkey to expand production capacity.

• Dividend of RON 0.65/share (RON 26.2 million total) paid in August 2024; share capital increased via stock options.

Financial highlights

• Gross margin reached 51% in Q2 2024, a record high, with H1 gross margin at 47%; gross profit margin improved 12pp YoY.

• EBITDA for H1 2024 was RON 55.3 million (33% margin), and Q2 EBITDA margin was 38%.

• Net profit for H1 2024 was RON 29.3 million (18% margin), up 15% YoY.

• Marketing and selling expenses increased by 24% YoY, mainly due to team expansion, SGR system rollout, and marketing investments.

• Net debt stood at RON 50.8 million as of June 2024; net debt/LTM EBITDA at 0.76x, debt-to-equity at 41%.

Outlook and guidance

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

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

• Margin improvement expected as inflationary pressures ease and COGS decrease in H2.

• M&A remains a growth engine, with active exploration of targets in Central Europe.

• Risks from climate-related grape shortages in Moldova and Bulgaria may impact 2025 margins.