SANTIAGO May 17 Chile's Concha y Toro, one of
the world's biggest wine makers, said on Wednesday its profit
fell more than 20 percent in the first quarter, hit by a poor
harvest and a slide in sterling after the UK's Brexit vote.
Concha y Toro reported earnings of 12.8 billion
Chilean pesos ($19 million) before interest, taxes, depreciation
and amortization, down 24 percent from a year ago.
Net profit tumbled nearly in half to $3.8 billion pesos.
"Concha y Toro faced a challenging external scenario, marked
by the depreciation of key currencies for exports," the company
said in a statement.
"This affected sales and was combined with a jump in wine
costs, a product of a weaker harvest in 2016."
Britain is a key export market for the producer of such
brands as Casillero del Diablo, Don Melchor and U.S. affiliate
Fetzer-Bonterra. The vote to leave the European Union in June
2016 has led to a steep drop in the value of the pound, making
imports into the country more expensive.
At the same time, wine production in Chile fell an estimated
21 percent last year due to adverse weather conditions.
A growing trend in Concha y Toro's portfolio toward
higher-margin premium wines partly offset the difficulties, it
It is not yet clear whether the 2017 harvest has been a good
one in South America, with high summer temperatures, late
frosts, and wildfires raising concerns.
Santiago-listed shares in the company fell 1.4 percent to
1,080 pesos apiece on Wednesday.
"We are maintaining a long-term positive view on the
company, although we highlight the persistency of cost
pressures, and the risk over the 2017 harvest that could raise
costs and margin pressure," said analysts at BCI.
($1 = 669.1500 Chilean pesos)
(Reporting by Rosalba O'Brien; Editing by Jeffrey Benkoe)