Purcari Wineries PCL, a leading wine producer in Central and Eastern Europe (CEE), announced its financial results for the first half of 2024, demonstrating resilience and strong performance despite challenging market conditions.
The Group's revenue increased by 3% to RON 165.9 million (EUR 33.18 million), driven by a 12% year-over-year (YoY) growth in the core wine segment. The discontinuation of the waste recycling segment, Ecosmart, marks a strategic shift, allowing Purcari to focus on its core strengths in the wine industry.
Financial Highlights
The first semester of 2024 was particularly fruitful for Purcari Wineries, with significant improvements in profitability. Sales growth, coupled with a more efficient cost structure for packaging components and bulk wine, propelled both EBITDA and Net Profit to reach RON 55.3 million (EUR 11.06 million) and RON 29.3 million (EUR 5.86 million), respectively. This resulted in an impressive EBITDA margin of 33% and a Net Profit margin of 18%, indicating strong operational efficiency.
The second quarter of 2024 saw even more accelerated growth, with EBITDA and Net Income surging by 38% and 44%, respectively. For the full first half of 2024, EBITDA and Net Income increased by 24% and 15%, respectively. When adjusted for the discontinued Ecosmart business, EBITDA saw a 20% rise, while Net Income grew by 8%, highlighting the underlying strength of the Group's core operations.
Victor Bostan, CEO of Purcari Wineries, expressed satisfaction with the company's performance, stating, “We delivered a robust quarter, with our core wine segment rising 12% in sales in the first half of the year. We are pleased to report improved profitability, with our Gross Profit margin reaching 51% in the second quarter. Despite the challenging consumer sentiment in our regions, we remain confident in the resilience of our business model and are committed to delivering value and growth to our stakeholders.”
Regional Performance Breakdown
Purcari Wineries' growth was driven by a diverse range of regional performances, with several key markets contributing to the overall success:
Update on Ecosmart and Strategic Shift
Ecosmart Union SA, the waste recycling management business in which Purcari Wineries held a 65.75% stake, was discontinued in the second quarter of 2024. The decision was driven by regulatory changes related to the Guarantee Return System (SGR), which affected the demand for glass bottle recycling, as well as ongoing litigation with the Environmental Fund Administration (EFM). Ecosmart's operations accounted for about 8% of the Group’s revenues and 4% of its EBITDA and Net Income in 2023. The Group plans to deconsolidate Ecosmart by the end of the year, pending the appointment of a new administrator by the Bucharest Court.
Updated Guidance for 2024
Given the discontinuation of the Ecosmart business and the challenging dynamics in the mass-market wine segment, Purcari Wineries has updated its guidance for 2024:
- Revenue Growth: +5-10%
- Revenue Growth in the Wine Segment: +15-20%
- EBITDA Margin: 26-28%
- Net Income Margin: 14-16%
Conclusion
Purcari Wineries PCL has demonstrated its ability to navigate a complex and evolving market landscape, delivering solid financial results in the first half of 2024. The Group's strategic focus on its core wine segment, combined with improved cost management and regional market strength, has positioned it well for continued growth. As the company moves forward, it remains committed to delivering value to its stakeholders while adapting to the changing dynamics of the global wine industry.