May 17, 2017 / 6:59 PM / 10 months ago

Winemaker Concha y Toro's earnings hit by Brexit, poor harvest

SANTIAGO, May 17 (Reuters) - 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 said.

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)

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