EX-99.1 2 ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

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CONSOLIDATED FOURTH QUARTER 2017

AND 2017 FULL YEAR RESULTS

Santiago, Chile, March 27^th , 2018 - Viña Concha y Toro S.A. (“The Company” or “Concha y Toro”) (NYSE: VCO, IPSA: Conchatoro), global leading winery and the main producer and exporter of Chilean wine, announced today consolidated financial results, stated under IFRS, for the fourth quarter 2017 ended December 31^st, 2017.

Consolidated figures of the following analysis are expressed in Chilean Pesos, and according to the rules and instructions of the Chilean Commission for the Financial Market or CMF (former SVS), which are in accordance with IFRS. For a better understanding of results, we also disclose some variations on a constant currency basis, i.e. figures for the fourth quarter and twelve months of 2016 translated into Chilean pesos, using the exchange rate recorded in our results as of the same period of 2017.

In 2016 and 2017, the Company recorded several expenses and costs related to the Company´s internal restructuring process, as well as extraordinary income and gains. For these reasons, we also present, in comparative form, the information of the results excluding or isolating - just for the purposes of a better analysis, the aforementioned items (Non-recurring items or NRI). Thus, throughout this press release every reference to “Adjusted” information, should be understood that it does not correspond to the reported one, but to the one in which the referred costs, expenses and extraordinary income have been isolated.

4Q17 Highlights

Net profit up 41.2% to Ch$19,592 million. Excluding non-recurring items (NRI), net profit up 29.6%.

Consolidated revenue up 3.6% on a reported basis, and 5.6%, on a constant currency basis.

Operating profit up 18.8% to Ch$22,371 million. Operating margin increased 150 basis points (bp). Excluding NRI, Adjusted operating profit increased 10.9% to Ch$21,608 million.

VCT Chile and Fetzer Vineyards showed a recovery in their operating profit, increasing their contribution to the consolidated operating profit.

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CEO Comments

We are very pleased to report results for the fourth quarter with growth and margin accretion for operating profit, EBITDA and net profit. These results present the evolution to what is our vision and strategic program for the next five years. A strategy that seeks sustained growth in value and a recovery in the profitability of our business.

This quarter, we highlight the operating profit improvement and margin accretion of VCT Chile (domestic market in Chile) and that attained by the US subsidiary, Fetzer Vineyards. This is a trend change in the progress towards the profitability objectives set for these businesses to 2022. Enabling factors of this result in Chile were bottled wine sales growth of 7.9% in value, driven by an increase in prices and volume growth of Premium wine, mainly Casillero del Diablo Reserva and its higher price labels, such as Reserva Privada. And in the US, Fetzer’s drivers were a 7.9% volume increase in domestic wine and higher prices with a strong performance of its key brands Bonterra and 1000 Stories.

The restructuring process we have carried out in 2017 has already begun to generate efficiencies. In the quarter efficiencies at the operational level and cost savings, turned into lower costs of sales and SG&A as a percentage of sales (down 100 bp and 90 bp, respectively). Excluding incremental extraordinary expenses related to the restructuring process, COGS and SG&A to sales decreased 120 and 130 basis points, respectively. These first results are positive and according to our estimates, the restructuring process is expected to drive permanent savings of around Ch$18,000 million per year.

Fourth quarter consolidated sales increased 3.6% to Ch$189,837 million and operating margin was 11.8%, 150 bp above the figure in 4Q16, amid a scenario of higher wine costs. Adjusting for NRI, the operating margin increased 70 bp, reaching 11.4%. These results were achieved through price increases and a better mix, as the company has sought a positioning aligned with a new cost scenario. It is important to note that this is consistent with our medium term goals, where the focus of the new commercial vision is on the growth of Premium categories, prioritizing brands and repositioning of our products towards higher price points.

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Fourth Quarter 2017 Results

Revenue

Revenue totaled Ch$189,837 million, increasing 3.6% YoY on a reported basis and increasing 5.6% on a constant currency basis. Revenue growth is the result of a higher average price and mix improvement, in line with the new commercial strategy in place, with a higher focus on Premium category. Furthermore, sales grew in the domestic Chilean market, in export markets, in Fetzer Vineyards and in the New Business category.


Sales⁽¹⁾ (Ch$ million)		4Q17		4Q16		Chg (%)			12M17		12M16		Chg (%)
Export Markets⁽²⁾			124,314		120,920		2.8	%		418,303		432,953		-3.4	%
Chile Domestic Market - Wine			19,905		18,974		4.9	%		75,696		71,334		6.1	%
Argentina Domestic Market			2,291		2,435		-5.9	%		9,477		7,562		25.3	%
Argentina Exports⁽³⁾			2,962		4,099		-27.7	%		15,387		20,057		-23.3	%
USA Domestic Market			20,220		19,080		6.0	%		62,035		62,321		-0.5	%
USA Exports⁽³⁾			1,719		1,536		11.9	%		6,194		5,638		9.9	%
Wine Operating Segment			171,411		167,043		2.6	%		587,092		599,865		-2.1	%
New Business⁽⁴⁾			14,404		13,732		4.9	%		45,608		51,070		-10.7	%
Other Revenues			4,021		2,426		65.8	%		11,084		7,513		47.5	%
Other Operating Segment			18,425		16,158		14.0	%		56,692		58,583		-3.2	%
Total Sales			189,837		183,200		3.6	%		643,785		658,448		-2.2	%

Volume⁽¹⁾ (thousand liters)		4Q17		4Q16		Chg (%)			12M17		12M16		Chg (%)
Export Markets⁽²⁾			64,447		62,124		3.7	%		214,810		219,106		-2.0	%
Chile Domestic Market - Wine			15,443		18,000		-14.2	%		65,713		70,711		-7.1	%
Argentina Domestic Market			1,674		2,101		-20.3	%		6,808		7,223		-5.7	%
Argentina Exports⁽³⁾			1,353		2,009		-32.7	%		6,777		10,065		-32.7	%
USA Domestic Market			5,568		5,162		7.9	%		17,439		17,007		2.5	%
USA Exports⁽³⁾			603		525		14.8	%		2,055		1,868		10.0	%
Wine Operating Segment			89,087		89,920		-0.9	%		313,603		325,980		-3.8	%
New Business⁽⁴⁾			6,344		6,216		2.1	%		20,602		25,086		-17.9	%
Other Operating Segment			6,344		6,216		2.1	%		20,602		25,086		-17.9	%
Total Volume			95,431		96,136		-0.7	%		334,205		351,066		-4.8	%

Average Price⁽⁵⁾(per liter)		4Q17		4Q16		Chg (%)			12M17		12M16		Chg (%)
Export Markets⁽²⁾	(US$)		3.12		2.97		5.1	%		3.08		2.99		3.1	%
Chile Domestic Market - Wine	(Ch$)		1,289		1,125		14.6	%		1,152		1,025		12.4	%
Argentina Domestic Market	(US$)		2.38		2.15		10.8	%		2.45		1.90		29.0	%
Argentina Exports⁽³⁾	(US$)		3.56		3.19		11.6	%		3.61		3.12		15.7	%
USA Domestic Market - Wine	(US$)		5.82		5.56		4.8	%		5.58		5.46		2.2	%
USA Exports⁽³⁾	(US$)		4.51		4.39		2.5	%		4.65		4.49		3.8	%

(1) Includes bulk wine sales.

(2) Includes exports to third parties from Chile, and sales through the Company’s distribution subsidiaries (UK, Nordics, Brazil, Singapore, Mexico) from Chile, Argentina, and USA.

(3) Excludes sales through the Company’s distribution subsidiaries.

(4) Includes sales of beer and distributed products.

(5) Excludes bulk wine sales.

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1.1.

Wine Operating Segment

1.1.1.

Export Markets

Export sales from Chile and distribution subsidiaries totaled Ch$124,314 million, increasing 2.8% on a reported basis and 4.4% on a constant currency basis. This reflects higher average prices (+5.1% in US dollar terms) and higher sales volume (+3.7%).

Export sales in Chilean pesos terms recorded an increase of 32.3% in Asia, boosted by Japan (35.6%) and China (+52.0%). Europe grew 6.4%, driven by United Kingdom (+6.3%), Ireland (+89.1%), and Russia (106.2%). Nordics (Sweden, Norwey, and Finland) recorded increase of 5.3%. Exports declined in USA (-22.1%) and South America (-24.5%), respectively.

Regarding bottled volume, exports increased in Asia (+38.8%), Europe (+1.2%), and Africa and others (+1.0%). Export volume declined in South America (-22.1%), United States (-10.8%), Canada (-6.4%), and Central America and Caribbean (-4.6%).

Regarding the exchange rate effect, in the fourth quarter the average Chilean peso appreciated against the US dollar (5.2%), Brazilian Real (3.8%), Norwegian krone (2.3%), Mexican peso (0.6%), and Canadian dollar (0.2%). The Chilean peso depreciated against the Sterling pound (1.5%), Euro (3.9%), and Swedish krona (3.4%).

Sales volume of bottled wine, by Region

Export Markets

4Q17

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1.1.2.

Chile Domestic Market – Wine

Sales of bottled wine increased 7.9%, totaling Ch$19,905 million, driven by a higher average price of bottled wine (+14.6%). Sales increased in both, the Premium and Non-Premium segments. Bottled volume declined 5.9% mainly reflecting the contraction of Non-Premium wine as Premium volume showed a slightly growth.

In the quarter, Premium sales increased 10.4%, reflecting a 0.5% higher volume and a 9.8% higher average price. Non-Premium-wine sales increased 6.5% in value, resulting from a 14.1% higher average price, partly offset by a decrease of 6.6% in volume. This has resulted in a mix improvement, with the premium category increasing its share to 11.0% of the volume portfolio (+70bp), and 34.7% in value terms (+80bp).

The Chile Domestic Market- Wine segment recorded an increase of 4.9% in sales and a decline of 14.2% in volume given the effect of bulk wine sales, which declined 100% in the quarter.

1.1.3.

Argentina

Sales from the Argentine operation (excluding shipments to distribution subsidiaries) totaled Ch$5,253 million, down 19.6% on a reported basis. On a constant currency basis Argentina sales decreased 11.7%, on lower volume in a scenario of lower availability of wine and the Company’s strategy of exiting lower-end, less-profitable products.

In line with the company’s strategy and facing a scenario of higher wine costs due to challenging harvests, the company has increased prices and remains focused on more- profitable products. In the domestic market, average per-liter price was US$2.38, up 10.8% in US dollar, and up 41.4% in local currency. Exports price was US$3.56, up 11.6%.

1.1.4.

USA (Fetzer)

During the quarter, Fetzer’s sales (excluding shipments to distribution subsidiaries) totaled Ch$21,939 million, increasing 6.4% on a reported basis, and 11.6% on a constant currency basis.

Domestic market sales increased 7.9% in volume, which combined with higher prices led to an increase in sales of 11.5% in US dollar, and +6.0% in Chilean peso. Exports sales from the US increased 14.8% in volume, 17.7% in US dollar, and 11.9% in Chilean peso.

Our premium priority brands, Bonterra and 1000 Stories, increased 27.3% and 48.6% in volume, respectively.

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1.2.

Other Operating Segment

Other operating segment increased 14.0% in the quarter, primarily driven by higher revenues related to non-core, non-wine products and services. The New business segment, related to the distribution of spirits and beverages, increased 4.9%, led by premium beer (+10.4%).

Other Income and Expense

Other income net of Other expense totaled Ch$4,484 million ,compared with Ch$5,004 million in 4Q16. This line comprises net sales related to the Real Estate Business ($1,961 million), which in 4Q17 recorded the divestment of a property in Punta Arenas, and 2.5 hectares of land in Casablanca. Also, in the context of the purchase of incremental ownership in Kross beer, in 4Q17 the Company recorded a gain of Ch$2.485 million from the revaluation of its previous investment in Kross. In the 4Q16, Other income includes the sale of the Paso Robles cellar in the USA.

Cost of Sales

Cost of sales increased 2.0% to Ch$120,947 million, mainly led by a higher cost of wine in Chile, and partly offset by a positive exchange rate impact related to costs, which are denominated in US dollars. The cost of sales as a percentage of sales reached 63.7%, declining 100bp as compared to the same quarter in 2016, also reflecting operating efficiencies.

In the quarter, the Company recognized extraordinary costs of Ch$297 million related to the ongoing restructuring process¹.

Selling, General and Administrative Expenses (SG&A)

Selling, general and administrative expenses (distribution costs and administrative expenses) were Ch$51,004 million in the quarter, up 0.3% when compared to Ch$50,838 million in the previous year. As a percentage of sales, SG&A reached 26.9% in the quarter, 90bp below the figure of 4Q16.

Regarding the restructuring process in 4Q17 and 4Q16, the Company recognized extraordinary expenses (consultancy fees and severance payments) of Ch$1,425 million and Ch$660 million, respectively. Excluding these expenses, adjusted SG&A totaled Ch$49,579 million, a decrease of 1.2%. SG&A/sales was 26.1%, down 130 bp.¹

Operating Profit

Profit from operating activities increased 18.8% to Ch$22,371 million in the quarter, resulting from higher sales, mix improvement, and cost and expenses containment through operational efficiencies. These are encouraging results and reflect initial results from the restructuring program that the Company has carried out throughout the year 2017. In addition, these results show an improvement in the operating results of Chile domestic market, with an operating profit increasing to 3.8% in 4Q17 from -2.7% in 4Q16, and the US subsidiary Fetzer, with an operating profit increasing to 5.2% in 4Q17 from 2.4% in 4Q16. In general, results show a higher contribution of the distribution subsidiaries that have increased prices and are focused on priority premium brands. The Operating margin was 11.8%, 150bp above the figure in 4Q16.

Excluding NRI, 4Q17 adjusted profit from operating activities reached Ch$21,608 million as compared to Ch$19,487 million in 4Q16, representing a 10.9% increase. Adjusted operating margin rose 70bp to 11.4% in 4Q17, from 10.6% in 4Q16.

¹In order to facilitate analysis, in page 14 an Adjusted Income Statement is provided. Adjustments comprise restructuring costs and expenses, revaluation of assets in the context of the purchase of incremental ownership in Kross beer, and extraordinary income in 2016 related to compensations (NRI).

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EBITDA

EBITDA (profit from operating activities plus depreciation and amortization expenses) increased 7.7% to Ch$27,316 million, in comparison to Ch$25,374 million in 4Q16. EBITDA margin reached 14.4%, 50bp above the figure in 4Q16.

Excluding NRI, adjusted EBITDA reached Ch$29.038 million, increasing 11.5% from the adjusted figure of Ch$26.034 million in 4Q16. Adjusted EBITDA margin rose to 15.3% in 4Q17, from 14.2% in 4Q16 (+110 bp).

Non-Operating Profit

The Non-operating profit was Ch$1,464 million, 40.9% above the figure in 4Q16. This is mainly explained by higher exchange differences of Ch$3,523 million in the quarter, as compared with $1,683 million in 4Q16. The company uses derivatives contracts as part of its hedging policy in order to mitigate the effects of currency fluctuations.

Net financial expenses totaled Ch$2,582 million in the quarter, increasing 2.0% in comparison to Ch$2,531 million registered in 4T16.

Income Tax Expense

For the period, Income tax expense was Ch$3,861 million, as showing a decline from the figure of Ch$5,665 million in 2016. Lower tax expense reflects a one-off benefit of Ch$2,309 million arising from to the restatement of the company’s US net deferred tax liability following the enactment of the US Tax Reform (lowering corporate taxes from 35% to 25%).

Profit and Earnings per Share (EPS)

Profit attributable to owners of parent increased 41.2%, totaling Ch$19,592 million. Net margin rose to 10.3% in 4Q17, from 7.6% in 4Q16 (+270 bp).

Before non-recurring items, adjusted profit attributable to owners of parent reached Ch$18,829 million, as compared to Ch$14,534 million in 4Q16, and representing a 29.6% increase. Adjusted net margin rose to 9.9% in 4Q17, from 7.9% in 4Q16 (+200 bp).

Based on 747,005,982 weighted average shares, Viña Concha y Toro’s earnings per share totaled Ch$26.23, above the Ch$18.57 per share recorded in the same period of the previous year.

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2017 Full-Year Results

Revenue

Consolidated revenue totaled Ch$643,785 million in 2017, which was down 2.2% YoY on a reported basis, and up 1.2% on a constant currency basis. This mainly reflects lower sales volume in line with a new commercial strategy that seeks value growth and higher profitability in all business areas. Throughout the year, the Company has carried out across-the-board price increases with a higher focus on Premium category, and reduced promotional activities.

1.1.

Wine Operating Segment

1.1.1.

Export Markets

Export sales from Chile and distribution subsidiaries totaled Ch$418,303 million, declining 3.4% on a reported basis and increasing 0.8% on a constant currency basis. Higher average prices, measured in local currencies of our markets: +8.5% in sterling pound, +2.0% in US dollar, and +2.1% in euro were offset by lower volume and a negative exchange rate impact.

In the period, the average Chilean peso appreciated against the US dollar (4.2%), Sterling pound (10.0%), Euro (2.2%), Swedish krona (4.1%), Norwegian krone (2.6%), Canadian dollar (2.2%), and Mexican peso (0.6%). The Chilean peso depreciated only against one of our relevant foreign currencies, the Brazilian Real (4.3%).

Sales volume of bottled wine, by Region

Export Markets

12M17

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During the year, the Company carried out price adjustments across its markets, and deliberately exited unprofitable segments seeking a sustainable profitable growth for its entire sales portfolio. However, towards the end of the year the Asian markets showed important recovery (+38.8% in 4Q17), closing 2017 with an increase of +4.0% in bottled volume. Recovery was also seen in Canada (+0.5%), while volume decreased in South America (-4.5%), Africa and Others (-15.9%), Central America and Caribbean (-7.8%), USA (-8.0%), and Europe (-1.6%)..

1.1.2.

Chile Domestic Market - Wine

Domestic bottled wine sales increased 6.9% totaling Ch$75,696 million, driven by a higher average price (+12.4%). Sales increased in both, the Premium and Non-Premium segments. Bottled volume declined 4.9% mainly reflecting the contraction of Non-Premium wine as Premium volume remained growing.

In 2017, Premium-sales increased 11.6% in value, reflecting a 5.6% higher volume and a 5.7% higher average price. Non-Premium wine sales grew 5.0% in value, resulting from a 11.5% higher average price, partly offset by a decrease of 5.8% in volume. This has resulted in a mix improvement with the premium category increasing its share to 8.9% in volume terms (+90bp), and 30.4% in value terms (+130bp).

The reported Chile Domestic Market- Wine segment recorded an increase of 6.1% in sales and a decline of 7.1% in volume on the decline of 100% in bulk wine sales.

1.1.3.

Argentina

Sales from the Argentine operation (excluding shipments to distribution subsidiaries) totaled Ch$24,865 million, down 10.0% on a reported basis. On a constant currency basis Argentina sales decreased 4.0% on lower exports in the Non-Premium category, as the company has exited lower-end, less-profitable products in a scenario of lower availability of wine.

In line with the company’s strategy and facing a scenario of higher wine costs due to challenging harvests, the company has increased prices and remains focused on more- profitable products. In the domestic market, the average per-liter price was US$2.45, up 29.0% in USD, and up 53.5% in local currency. Exports price was US$3.56, up 11.6%.

1.1.4.

USA (Fetzer)

In the period, Fetzer’s sales (excluding shipments to distribution subsidiaries) totaled Ch$68,229 million, with an increase of 0.4% from the previous year, and of 4.5% on a constant currency basis.

Domestic market sales grew 2.5% in volume, grew 3.8% in US dollars, and declined 0.5% in Chilean pesos. Export sales increased 10.0% in volume, +14.1% in US dollars, and +9.9% in Chilean pesos. Our priority brands, Bonterra and 1000 Stories increased 15.0% and 34.4% in volume, respectively.

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1.2.

Other Operating Segment

Other operating segment decreased 3.2% in the period. This result mainly reflects the end of the distribution agreement of Monster energy drink, as of October 2016. Adjusting for Monster’s sales figure, sales increased 12.7% from the previous year, driven by dynamic categories of premium beer (+12.2%) and pisco (+8.8%).

Other Income and Expense

Other income, net of Other expense totaled Ch$4,594 million, compared to Ch$6,595 million in 2016. In 2016, the line comprises the sale of the Paso Robles cellar in the US and compensations received, mainly for the early termination of the Monster distribution contract. In 2017, it comprises net sales from the Real Estate Business, and in the context of purchase of incremental ownership in Kross beer, it includes a gain of Ch$2.485 million from the revaluation of its previous investment in Kross. ^[2]

Cost of Sales

Cost of sales decreased 0.1% to Ch$412,079 million, from Ch$412,382 million reported in the previous year. The cost of sales as a percentage of total sales reached 64.0%, up 140bp, mainly reflecting a higher cost of wine, following a lower harvested volume in Chile and Argentina. In the period, the Company recognized extraordinary costs of Ch$1,430 million related to the restructuring process. Excluding these costs, the adjusted Cost of sales totaled Ch$410,648 million, a decrease of 0.4%.²

Selling, General and Administrative Expense

Selling, general and administrative expense (distribution costs and administrative expense) decreased 4.4% to Ch$174,387 million in the period, when compared to Ch$182,475 million in the prior year. As a percentage of sales, SG&A was 27.1%, 60bp below the figure of 2016 (27.7%).

In the period, the Company recognized extraordinary expenses of Ch$3.881 million related to the restructuring process. Excluding these expenses, adjusted SG&A totaled Ch$170,505 million, a decrease of 6.2% and SG&A/sales was 26.5%, down 110 basis points.²

Operating Profit

Profit from operating activities decreased 11.8% to Ch$61,912 million in comparison to Ch$70,185 million in 2016, and operating margin was 9.6%, down 100bp. These reflect higher wine costs, negative exchange rate impact, and extraordinary costs that are part of the restructuring process in place. During the year the company carried out several initiatives together with a new commercial strategy aimed to increase the profitability of the business. In fact, in the fourth quarter the company observed an improvement in the operating margin, even in a context of higher wine cost and unfavorable exchange rate.

For analysis purposes, we also present adjusted results excluding NRI: i) in 2016, the Company received a non-recurring income of Ch$2,150 million, related mainly to the compensation for the anticipated ending of the Monster distribution agreement; and ii) in 2017 and 2016, restructuring costs and expenses totaled Ch$5,313 million and Ch$660 million, respectively. These are primarily related to severance payments and consultancy fees, and iii) in 2017, in the context of purchase of incremental ownership in Kross beer, the Company recorded a gain of Ch$2.485 million from revaluation of assets.

Excluding NRI, 12M17 adjusted profit from operating activities reached Ch$64,740 million as compared to Ch$68,696 million in 12M16, representing a decrease of 5.8%. Adjusted operating margin was 10.1% in 12M17, from 10.4% in 12M16.

² In order to facilitate analysis, in page 14 an Adjusted Income Statement is provided. Adjustments comprise restructuring costs and expenses, revaluation of assets in the context of the purchase of incremental ownership in Kross beer, and extraordinary income in 2016 related to compensations (NRI).

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EBITDA

EBITDA (Profit from operating activities plus Depreciation and Amortization expenses) declined 6.9% to Ch$86,267 million. EBITDA margin reached 13.4%, 70bp below the figure of 12M16.

Excluding NRI, adjusted EBITDA reached Ch$89,095 million, 2.3% below the adjusted figure of Ch$91,211 million in 12M16. Adjusted EBITDA margin was 13.8% ,in line with the 13.9% of 2016.

Non-Operating Profit

The non-operating profit registered a profit of Ch$1,798 million, as compared to a loss of Ch$4,113 million in 2016. This is mainly explained by a positive exchange differences result of Ch$8,587 million. The company uses derivatives contracts as part of its hedging policy in order to mitigate the effects of currency fluctuations.

Net financial costs totaled Ch$9,415 million in 2017, increasing 0.9% in comparison to Ch$9,335 million registered in 2016.

Income Tax

Income tax expense was Ch$13,720 million, below the figure of Ch$17,542 million in 2016. Lower tax expense reflects a one-off benefit of $2,309 million arising due to the restatement of the company’s US net deferred tax liability following the enactment of the US Tax Reform (lowering corporate taxes from 35% to 25%).

Profit and Earnings per Share (EPS)

Profit attributable to owners of parent increased 3.4%, totaling Ch$49,575 million. Net margin was 7.7% in 12M17, 40bp above the figure in 12M16. Before NRI, adjusted profit attributable to owners of parent reached Ch$52,403 million, as compared to Ch$46,440 million, the adjusted figure in 12M16, and representing a 12.8% increase.

Based on 747,005,982 weighted average shares, Concha y Toro’s earnings totaled Ch$66.36 per share, 3.4% below the Ch$64.16 per share registered during the previous year.

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Statement of Financial Position as of December 31, 2017

Assets

As of December 31^st, 2017, Viña Concha y Toro’s assets totaled Ch$1,056,827 million, 4.0% above the figure as of December 31^st, 2016.

Liabilities

As of December 31^st, 2017, Net financial debt amounted to Ch$230,657 million, increasing Ch$38,799 million when compared to the figure as of December 31^st, 2016.

Net Financial Debt is calculated as: Other current financial liabilities + Other non-current financial liabilities - Cash and cash equivalents - Derivatives.

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About Viña Concha y Toro

Founded in 1883, Viña Concha y Toro is the leading Latin American wine maker, and a one of the world’s largest wine company. It holds around 11,000 hectares of vineyards in Chile, Argentina, and United States, and its wine portfolio includes iconic brands, such as Don Melchor and Almaviva, its flagship brand Casillero del Diablo, Trivento from Argentina, and Fetzer and Bonterra brands from California.

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 is 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.

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Income Statement


(Ch$ thousand)	4Q17			4Q16			Chg (%)			12M17			12M16			Chg (%)
Revenue		189,836,863			183,200,394			3.6	%		643,784,687			658,447,621			-2.2	%
Cost of sales		(120,946,652	)		(118,540,640	)		2.0	%		(412,079,217	)		(412,381,871	)		-0.1	%
Gross profit		68,890,211			64,659,754			6.5	%		231,705,470			246,065,750			-5.8	%
Gross margin		36.3	%		35.3	%		100 bp			36.0	%		37.4	%		-140 bp

Other income		6,605,672			5,736,536			15.2	%		7,631,410			8,661,903			-11.9	%
Distribution costs		(45,653,104	)		(46,389,072	)		-1.6	%		(143,276,955	)		(150,913,076	)		-5.1	%
Administrative expense		(5,350,408	)		(4,448,720	)		20.3	%		(31,110,407	)		(31,562,168	)		-1.4	%
Other expense by function		(2,121,419	)		(732,306	)		189.7	%		(3,037,270	)		(2,067,273	)		46.9	%

Profit (loss) from operating activities		22,370,952			18,826,192			18.8	%		61,912,248			70,185,136			-11.8	%
Operating margin		11.8	%		10.3	%		150 bp			9.6	%		10.7	%		-100 bp

Financial income		31,358			338,822			-90.7	%		570,531			970,651			-41.2	%
Financial costs		(2,612,866	)		(2,870,212	)		-9.0	%		(9,985,677	)		(10,305,449	)		-3.1	%

Share of profit (loss) of associates and joint ventures accounted for using equity method		560,595			2,000,830			-72.0	%		3,254,601			4,511,072			-27.9	%

Exchange differences		3,523,265			1,682,564			109.4	%		8,586,953			749,876			1045.1	%
Adjustment units		(38,428	)		(112,804	)		-65.9	%		(628,448	)		(39,279	)		1500.0	%
Non-operating income		1,463,924			1,039,200			40.9	%		1,797,960			(4,113,129	)		-143.7	%

Profit (loss) before tax		23,834,876			19,865,392			20.0	%		63,710,208			66,072,007			-3.6	%
Income tax expense continuing operations		(3,860,515	)		(5,664,649	)		-31.8	%		(13,719,788	)		(17,542,419	)		-21.8	%
Profit (loss)		19,974,361			14,200,743			40.7	%		49,990,420			48,529,588			3.0	%

Profit (loss) attributable to noncontrolling interests		382,262			327,041			16.9	%		415,750			598,495			-30.5	%
Profit (loss) attributable to owners of parent		19,592,099			13,873,702			41.2	%		49,574,670			47,931,093			3.4	%

Net margin		10.3	%		7.6	%		270 bp			7.7	%		7.3	%		40 bp

Depreciation expense		7,106,816			6,175,695			15.1	%		23,245,867			21,396,547			8.6	%
Amortization expense		322,966			371,804			-13.1	%		1,108,762			1,119,655			-1.0	%

EBITDA*		29,800,734			25,373,691			17.4	%		86,266,877			92,701,338			-6.9	%
EBITDA margin*		15.7	%		13.9	%		180 bp			13.4	%		14.1	%		-70 bp

* EBITDA = Profit (loss) from operating activities + Depreciation & Amortization expenses

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4Q17 Adjusted Results³


	4Q17			4Q16						4Q17			4Q16
(Ch$ thousand)	Reported			Reported			Change %			Adjusted			Adjusted			Change %
Revenue		189,837			183,200			3.6	%		189,837			183,200			3.6	%
Cost of sales		(120,947	)		(118,541	)		2.0	%		(120,650	)		(118,541	)		1.8	%
Gross profit		68,890			64,660			6.5	%		69,187			64,660			7.0	%
Gross margin		36.3	%		35.3	%		100 bp			36.4	%		35.3	%		120 bp

SG&A*		(51,004	)		(50,838	)		0.3	%		(49,579	)		(50,177	)		-1.2	%
Other op. income, expense		4,484			5,004			-10.4	%		1,999			5,004			-60.0	%
Profit (loss) from operating activities		22,371			18,826			18.8	%		21,608			19,487			10.9	%
Operating margin		11.8	%		10.3	%		150 bp			11.4	%		10.6	%		70 bp

Non-operating income		1,464			1,039			40.9	%		1,464			1,039			40.9	%
Profit (loss) before tax		23,835			19,865			20.0	%		23,072			20,526			12.4	%

Income tax expense continuing operations		(3,861	)		(5,665	)		-31.8	%		(3,861	)		(5,665	)		-31.8	%

Profit (loss) attributable to noncontrolling interests		382			327			16.9	%		382			327			16.9	%

Profit (loss) attributable to owners of parent		19,592			13,874			41.2	%		18,829			14,534			29.6	%

Net margin		10.3	%		7.6	%		270 bp			9.9	%		7.9	%		200 bp

EBITDA**		29,801			25,374			17.4	%		29,038			26,034			11.5	%
EBITDA margin		15.7	%		13.9	%		180 bp			15.3	%		14.2	%		110 bp

³Adjusted results are presented with the purpose of facilitating comparison, excluding non-recurring items, such as compensations received, restructuring costs and expenses, and gain from revaluation of assets.

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12M17 Adjusted Results³


	12M17			12M16						12M17			12M16
(Ch$ million)	Reported			Reported			Change %			Adjusted			Adjusted			Change %
Revenue		643,785			658,448			-2.2	%		643,785			658,448			-2.2	%
Cost of sales		(412,079	)		(412,382	)		-0.1	%		(410,648	)		(412,382	)		-0.4	%
Gross profit		231,705			246,066			-5.8	%		233,136			246,066			-5.3	%
Gross margin		36.0	%		37.4	%		-140 bp			36.2	%		37.4	%		-120 bp

SG&A*		(174,387	)		(182,475	)		-4.4	%		(170,505	)		(181,815	)		-6.2	%
Other op. income, expense		4,594			6,595			-30.3	%		2,109			4,445			-52.5	%
Profit (loss) from operating activities		61,912			70,185			-11.8	%		64,740			68,695			-5.8	%
Operating margin		9.6	%		10.7	%		-100 bp			10.1	%		10.4	%		-40 bp

Non-operating income		1,798			(4,113	)		-143.7	%		1,798			(4,113	)		-143.7	%
Profit (loss) before tax		63,710			66,072			-3.6	%		66,538			64,581			3.0	%

Income tax expense continuing operations		(13,720	)		(17,542	)		-21.8	%		(13,720	)		(17,542	)		-21.8	%

Profit (loss) attributable to noncontrolling interests		416			598			-30.5	%		416			598			-30.5	%
Profit (loss) attributable to owners of parent		49,575			47,931			3.4	%		52,403			46,440			12.8	%
Net margin		7.7	%		7.3	%		40 bp			8.1	%		7.1	%		110 bp

EBITDA**		86,267			92,701			-6.9	%		89,095			91,211			-2.3	%
EBITDA margin		13.4	%		14.1	%		-70 bp			13.8	%		13.9	%		0 bp

* SG&A = Distribution costs + Administration expense

** EBITDA= Profit from operating activities + Depreciation + Amortization

(LOGO)

Statement of Financial Position


(Ch$ thousand)	Dec. 31, 2017		Dec. 31, 2016		Change (%)

Assets

Cash and cash equivalents		31,162,346		47,213,517		-34.0	%
Inventories		235,733,091		230,289,756		2.4	%
Trade and other current receivables		198,802,120		193,287,401		2.9	%
Current biological assets		18,949,252		19,186,291		-1.2	%
Other current assets		47,260,579		30,492,222		55.0	%
Current assets		531,907,388		520,469,187		2.2	%

Property, plant and equipment		381,736,948		361,938,676		5.5	%
Inv. accounted for using equity method		21,819,709		23,433,439		-6.9	%
Other non current assets		121,362,542		109,997,284		10.3	%
Noncurrent assets		524,919,199		495,369,399		6.0	%

Assets		1,056,826,587		1,015,838,586		4.0	%

Liabilities

Other current financial liabilities		140,452,483		101,999,046		37.7	%
Other current liabilities		180,239,657		192,870,916		-6.5	%
Current liabilities		320,692,140		294,869,962		8.8	%

Other noncurrent financial liabilities		127,810,125		148,992,036		-14.2	%
Other noncurrent liabilities		57,091,086		54,269,968		5.2	%
Noncurrent liabilities		184,901,211		203,262,004		-9.0	%

Liabilities		505,593,351		498,131,966		1.5	%

Equity

Issued capital		84,178,790		84,178,790		0.0	%
Retained earnings		455,924,169		426,521,298		6.9	%
Other reserves		8,263,848		5,509,389		50.0	%
Equity attributable to owners of parent		548,366,807		516,209,477		6.2	%
Non-controlling interests		2,866,429		1,497,143		91.5	%
Equity		551,233,236		517,706,620		6.5	%
Equity and liabilities		1,056,826,587		1,015,838,586		4.0	%