Purcari Wineries Public Company Limited (WINE) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining Purcari Wineries Group's results call for Q4 and preliminary unaudited results for 2025. I'm Eugeniu Baltag, Head of Investor Relations at Purcari. And with me today are Mr. Victor Bostan, the CEO and Founder of the Group; Mr. Anatol Belibov, the CFO; and Victoria Moldovan, Senior IR. We will start with a brief overview of the key highlights for the period, then walk you through the financials and main operational developments across our markets. And of course, we will close with our guidance for 2026. And after that, we will open the line for Q&A. Before we begin, a quick note that some of today's comments may include forward-looking statements, which are subject to risks and uncertainties, and actual results may differ. With that, let's start. Okay. So in 12 months 2025, core revenue grew by almost 15% year-on-year to RON 425 million, with other revenues adding additional RON 12 million, including HORECA, which was up 6% year-on-year. Romania, Moldova and Bulgaria represented 82% of the group sales, with Romania at 60% and Bulgaria moving into third place by sales ahead of Poland. On brands, Purcari remained by anchor at 60% of group sales and delivered growth across all markets. Bostavan and Crama Ceptura contributed 14% and 13%, respectively, while Angel's Estate grew by 25% year-on-year and reached a 5% sales share. Financially, EBITDA reached RON 114 million and a net profit of RON 51 million, with margins of 26% and 12%. Gross margin was almost 46%, above the 5-year average, and the reported earnings were impacted by RON 9 million in ForEx loss and around RON 4 million higher depreciation versus last year. And of course, the cherry on the top on Investor Relations, we can mention that following the July voluntary takeover bid, MASPEX became the majority shareholder, with 73% as of 31st of December 2025. We have 3 new directors from their side who joined the Board, and our dividend policy was updated to retain profit for investments with no dividends expected, unless the Board decides otherwise. Moving forward, again, on the commercial side, we continue to strengthen our core brands through targeted activations and campaigns across key markets while also bringing innovation to our portfolio. We launched new products like Motiv sparkling and introduced a new bottle for Bardar to reach new occasions and attract new consumers. With that said, I will hand over to Anatol to go into details.

Yes. Thank you, Eugeniu. So good afternoon, dear investors, dear analysts. So for sure, here is the main dashboard of our financial KPI. As already Eugeniu mentioned, in terms of top line, we delivered strong performance, plus 14%. I would like to share that all these, let's say, sales performance have been delivered via a strong growth equation. We delivered good performance in terms of volume, more than 10%, and also, we delivered very strong pricing and mix. For sure, prior year, it was mostly about pricing, and because we face high increase in our cost of raw materials, especially packaging and also grapes, we managed to implement several waves of price increase across all the regions. I think another important point to share is that in 2025, we managed to deliver 3 from 4 quarters more than RON 100 million. This is first time in the Purcari up to now, it was maximum Q4 which is, let's say, Christmas end of the year. But now, we delivered Q2, Q3 and Q4 more than RON 100 million, which I believe is a strong achievement. Also looking at the Q4 2025, you can see that it's also plus 15. 5%. So -- and in Q4, we delivered double than Q1 2023. So yes, I think Q4, it is the highest level in our company, and this proves once again that we are in the, let's say, strong growth way. Going to the profitability KPI for gross margin, we delivered plus 8% versus prior year, achieving RON 200 million. You can see that in gross margin percentage, it slightly decreased from 48.4% to 45.8%. Here, it's an important point, if you go to our financial statement, you can see that here, we have also this IFRS requirement to adjust fair value of grapes, which may impact gross profit. In a like-for-like situation, our gross profit margin is similar year-on-year, approximately 47.5%. So once again, this strong growth has been delivered without the, let's say, decrease in our profitability. The same trend is in our EBITDA. So we are increasing by 7% to RON 114 million. But percentage-wise, it's 26.1% decreasing by 1.7 percentage points. But once again, it's very important to highlight that this is a very good, let's say, EBITDA margin compared to our benchmark. And net profit, for sure, you can see that we registered a decrease of 13.5%. We are achieving 11.6% net profit margin. But I believe it is better to go in the [indiscernible] once again to highlight ForEx impact and also other one-off which may impact our P&L. So I propose to move to the next slide. Still, I think it's very important to mention our good performance. So we achieved this high -- historical high level of sales in Q4, RON 130 million, which is approximately 1/4 of total revenue for the year. Romania remains our, let's say, main market, with 61% share in total revenue. Romania, despite delivering very strong growth over the last year, achieved 16.6% growth, which I believe for domestic and, let's say, more stable market, it's a good achievement. Here, we are trying to push or reinforce our, let's say, penetration. For sure, the main driver remains to be Purcari, but also in current year and other brands like Ceptura, like Bostavan delivered strong performance. I think it's good to mention also Bulgaria, which continued to deliver strong growth because it's a small market. We started operation in 2022. But it's important to highlight that Bulgaria became higher versus [ Poland ], which, for a long time was the third biggest market. So I think it's important also to highlight this performance for the Bulgaria team. Moldova plus 9%. Moldova, it's, let's say, count with, let's say, high share of Purcari products. Here, the growth -- to deliver higher double-digit growth became more complicated. Despite of this, 9%, we believe, it's very good achievement for our team. Here, we present Rest of World and CEE, but total export, yes, because it's good to look like this, we delivered also plus 10%. So after several years with export having, let's say, not a good trend, at least negative or below 10% growth, current year, we delivered plus 10, for sure, CEE market, which registered a decline of minus 7% because of lower performance in Poland, in Czechoslovakia, which partially has been offset by Ukraine and Baltic country, but rest of the world, including Africa, Asia and also Turkey managed to compensate the other performance in CEE. So overall, we delivered very strong results, let's say, in all our channels. And in the same situation, you can see in our brand portfolio. Just one second, Eugeniu. Here, once again, it's important to mention that Bostavan, after several years with, let's say, single-digit growth or negative trend, we managed to achieve plus 8%, which we believe that is very good for our, let's say, mainstream brand. So now I can go to our financial -- our trend. So here, you can see that we are in line with, let's say, prior year's trend with revenue -- with a CAGR of 15%. For sure, we more than doubled our revenue in 5 years. We doubled our gross profit in 5 years and also we doubled our EBITDA in 5 years. So we can say that we are in line and we are trying to accelerate our main KPI. But going in more details in our P&L, so once again about revenue, just to highlight that we are in the -- we are delivering strong growth once again to ensure that this growth are not affecting our initial focus to deliver profitable and focus in premium. So we are continuing to deliver premium and at Purcari, our premium brands have the highest growth rate. Also from gross profit margin, once again, we have decreased by 3 percentage point for 12 months. Once again, this is mostly driven by IFRS change in line with fair value grapes valuation. Without this, gross profit margin, more or less, is similar. Because I mentioned in the previous slide that net profits have been decreased, our OpEx -- increase in our OpEx have a big impact. So we can see that both marketing and sales, but also general and administrative expense grew by 23% or 25%, and this has a big impact on our profitability. But once again, this is in line with what we communicated in our previous call with investors. We are now setting the new team in order to deliver sustainable growth. So that's why, at the moment, we have, let's say, this increase in OpEx. But I would like to ensure that all these numbers are in line with budgeted one. So we did not spend more than we budget for current year for 2025, sorry. So marketing and sales, it is past [ 23% ]. Here, the main driver is our cost with [ RetuRO ] Romania. You know that for the second year, it is implemented and have a big impact, including for Purcari Group. The second impact represents investment in our brands, it's marketing and, let's say, trade marketing. And the third one is sales -- sorry, salary, which also increased year-on-year. If you speak about general and administrative expense, this 25% increase is mainly driven by increase in salary-related costs. And we already informed you about the impact coming from a new incentive plan, which have a big impact in increase year-on-year. But also, some selective change in number of FTE and also salary review. So EBITDA margin (sic) EBITDA reached RON 114 million, not to mention, also again, what I say in previous slide, and 26% margin, we believe it's very strong margin in line with average for the last year. But before to go to the next quarter, I think it's good to go to the next slide. And I will try to reexplain once again, impact on gross margin, change in [indiscernible] profitability. So this slide, which we're using like a bridge from prior year to current year, we are showing that we started with approximately RON 59 million. We delivered in terms of gross profit, approximately plus RON 15 million more. But from a financial statement, you can see in the note that the difference in fair value of grapes, and we explained very clearly the reason behind. So we can see that additional RON 10 million, it's part of this fair value adjustment. So in gross profit like-for-like, we increased for more than RON 25 million. And these have been partially offset by OpEx, which I already mentioned that increased by 22% and here mostly [ RetuRO ] and salary. Other operating expense, also, I believe it's very important to mention, despite of increasing by more than 40% in our loans exposure, we see this number in financial statement, we managed to be flat in terms of interest, and this is because we managed -- we start and we are, at the moment, under change of financial structure in order to decrease pressure of interest. And it was marked as like-for-like, so no impact in 2025, but we have some historical adjustments from 2024. So a normalized profit, it is not IFRS, it's normalized profit up at level [ RON 62.5 million ]. So we should register at least RON 4 million increase. But because of ForEx, and current year, it was a perfect storm, Moldovan leu, Romanian leu and also Turkish lira being highly impacted by depreciation versus euro. And I would like to remind you that our biggest impact is coming from loans. Or in order to decrease interest, we tried to contract loans in euro, and this big impact for all the county, Romania and Moldova, and also in Turkey. In Turkey, it's more than 45% depreciation year-on-year for the currency. So because of this also management one-off because of change in the structure, so we finished at RON 50.8 million net profit. For sure, if some additional questions, we can -- Eugeniu, we can talk during the Q&A. So now moving to the next slide. For sure, this is another important slide for our investors. So let's start with cash position. So more or less in line. So no big fluctuation. I would like to remind you that we are trying to manage all the available cash or to pay in advance credit or to put on our deposits. Net debt increased significantly to [ RON 270 million ]. So once again, I would like to remind you that 2025, we invested more than EUR 50 million in CapEx. And as we present in our previous call, we plan to have -- meeting the sale level in 2026 or more. I would like to remind that we have significant CapEx investment in extension of Purcari production line. Prior year, it was in all the bottling, the maximum, let's say, we use 100% of bottling capacity. So that's why now we invest in the next cycle to -- in order to cover the growth. So here, this is the reason for increase in net debt. Once again, for sure, net debt to EBITDA, it's 2.37. And you remember, when we speak about our previous -- our strategy is we are looking to be at level of 2 in terms of net debt to EBITDA. But in the case of Purcari revenue and CapEx cycle, it's slightly different. So that's why now it's peak of the CapEx investment, but approximately up to 2028, it should be more or less at the level of 2. And no big change in case of current ratios and cash ratio. So once again, for sure now it's 2025, 2026 is the year of investment in order to ensure production capacity to fuel the growth. And just to make a recap about our achievement. So we shared a guidance in February 2025 in terms of revenue, between 12% and 17% and now we are at 14% in the middle. So we delivered our promise. Our EBITDA margin plus -- put like a benchmark or target for -- between 26% and 28% and we achieved 26% which despite of all the inflation and especially in inflation -- big inflation here in Moldova where it's a big part of our production capacity. And Moldova have been highly impacted by a change in -- especially in energy price. So I think it's good achievement. And net income or net profit at approximately 12% with explanation, which we shared in the previous slide. So 2 from 3, let's say, our guidance have been achieved, and net profit, 1% below guidance. And now I think it's good to move to our vision for 2026. So this is the guidance which have been discussed by me and approved with our Board of Directors. So for sure, we know the situation in our main market, meaning here, Romania and Moldova. So we are trying to be optimistic but realistic. That's why for next year, already for current year, our ambition is to deliver double-digit growth, but in a range from 10% to 15%. For sure, we have a lot of change, especially in Romania. In Romania, we see the news about decrease in consumption also about the inflation trend. So this is our view, and we are looking to, let's say, deliver what we promise and not over promise. In terms of EBITDA margin, we are trying to keep the same trend like prior year. But considering the pressure in, let's say, production cost, we consider to decrease slightly to 24%, 26%. And net income margin, we consider also the actuals for 2025 and our expectation, we decreased it to 11.14%. Once again, current year still has a big impact here in Moldova [indiscernible] production impacted by high cost in energy, which did not make correction. And also still we part of the wine -- bulk wine from 2024, which was high, which will impact our profitability KPI. This being said, so this is all about our financials. I think now we can move to the Q&A session. And also, maybe we can cover any part of the uncovered question about profitability or commercial performance.

Indeed, Anatol, thank you for the insights. And as Anatol already said, with that, we conclude our prepared remarks, and we are now happy to take your questions. [Operator Instructions] And Anatol, I think we already have one question from [ Kaius ]. And [ Kaius ], good to hear you and see you at our conference call. So the question is related to fair value of the grapes.

Yes. So thank you for the question, [ Kaius ]. So yes, you can get much more details from our financial statement in the note for other income and expense. But I will try to do shortly. So in line with IFRS requirement, [indiscernible] we have to analyze, let's say, our performance versus market performance. That's why each year, we are looking for our cost per kilogram of grapes across all the group and compare specific for each, let's say, region with the price from the market. And in case our price per kilogram is better than the market, so in this case, we have a gain. And if the price per kilogram is lower, we have a loss. So that's why prior year, remember that we have a big impact from revaluation, meaning that because of weather conditions, we have lower, let's say, yield, and this because fixed cost -- agriculture costs more or less are fixed, we have a loss. Currently, we have good performance including in the area where we have expensive grapes like special grapes for Purcari, also Romania. And for this reason, we registered this, let's say, gain. And this has had impact on gross margin and other expense or income. Eugeniu, you can -- with [ Kaius ], we can have a separate call to go in more technical discussion about this.

Yes, [ Kaius ], we had a better yield of grapes in 2025. If you compare with 2024 when it was a drought -- an excessive drought in the entire region.

And here, one important point also is to ensure all our investors that we are looking to decrease or increase efficiency of agriculture and trying to challenge all the cost. And another point is that when you have bad weather condition, you have to invest more in agriculture in order to secure the grapes [indiscernible] in case like 2024 when we have not good weather condition.

Anatol, we have another question from [indiscernible]. Okay. Actually, there are 3 of them. I will start reading one by one. So for the new majority shareholders. When will our Purcari products be integrated into a CDC distribution network? The second one is considering that Purcari is a premium brand and a top product, what development plan do you have for the company? And the third one, what is the strategy for 2030 of a new majority shareholder for Purcari. So [ Eugene ], thank you for your questions. Indeed, there are 3 directions. So first of all, you already know that we are part of MASPEX group. And right now, we are in the middle of integration. It means that we are aligning, let's say, our teams. We have cross teams, which are working on different processes. Now to have a strategy for 2030 in an environment where everything is changing very, very fast, it's quite obsolete. So we are planning 1, 2 years ahead. So at this moment, we stick to our previous strategy to double our revenue and profits by 2027. Regarding Purcari brand, indeed, it is a premium brand. And what we are doing is just putting all our efforts towards this brand in order to distribute it more efficiently in our existing markets and new markets. And the fact that we are having large CapEx investments at Chateau Purcari proves that because imagine last investment cycle was in 2020 when we doubled the capacities. Now we are in 2026, and we are approaching the bottleneck in production. We're investing again in order to secure the future growth. Regarding CDC, so here, we have to cover, let's say, Poland. I think it's too early to give an answer on that. Of course, we are looking with -- together with MASPEX team and with our existing distributors in Poland and CIS countries, we are looking for the best formula of collaboration in order to increase the sales in a profitable manner. So at the moment, we will have an update on that. Definitely, we will report and we will make it public on Bucharest Stock Exchange.

Just allow me, Eugeniu, to add. So for sure, with CDC, we are in the discussion. And we are looking to find something not covered yet in this region and also for this product. So once again, here we are trying to find the best synergy and trying to find a place where we need to improve for sure. But this is still a discussion and we are looking. And for sure, when we will have, let's say, more or less final setup, we will inform you in proper way.

Any other questions, which we could address during this call? It seems we have been very efficient, Anatol. You have prepared a very good presentation and delivered a lot of details. So in case we don't have any other questions, we are going to close this call. And yes, on our side, we are going to deliver on the results, the entire team of Purcari are working towards that.

Okay. Thank you, Eugeniu. Thank you to all the investors and analysts. Have a good day. Bye-bye.

Thank you. Bye-bye.