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CHILE: Concha Y Toro revenues up but so are costs

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Vina Concha y Toro has reported that consolidated revenues increased by 8.6% to CLP51.816bn (US$89.5m) in the second quarter of 2005, as a result of higher domestic wine sales, strong sales from its subsidiary in the UK and higher exports to third parties.

However, rising costs hit operating income, which decreased 6.6% to CLP8,956m in the second quarter 2005. Operating margin decreased to 17.3% from 20.1% as a result of higher wine costs and the impact of the appreciation of the Chilean peso.

Net income for the quarter decreased 14.2% to CLP6,417m (US$11.1m). Earnings per ADR decreased 3.1% to US$0.77 for the second quarter of 2005.

"Recent results show the solid position of Concha y Toro across all markets, exports and domestic markets," said the company's CEO Eduardo Guilisasti.

The Chilean wine company's domestic market sales saw growth of 13.5% in the second quarter and 20.3% for the first half of 2005. The company said the results follow a strategy focused on repositioning and boosting profitability, without compromising market share, which climbed to 27.3% as of July from 24.8% a year ago.

Export returns, in US dollars, increased 17.3% in the second quarter and 19.6% in the first half of the year, led by solid gains in Asia, South America, Canada and Europe.

However, the second quarter results also reflected a higher wine cost scenario as a result of higher prices for grapes during the 2005 vintage. Concha also said that operating and bottom line results were impacted by the strong appreciation of the Chilean peso over our export returns in foreign currency.

For the first half of this year, operating income rose by 3.9% to CLP14,758m. Net income for the first half increased 2.4% to CLP11,065m.


Sectors: Wine

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