Campari announces 2011 Full Year Results
- Sales +9.6% (organic growth +8.8%) with positive growth across key product and market combinations and an improved mix by region and by segment
- international business at 68.4% of consolidated net sales (increasing from 65.8%)
- spirit segment at 76.6% of consolidated net sales (increasing from 75.4%)
Strong growth in operating profit indicators (EBITDA +10.3%), notwithstanding higher investments in marketing (+50 bps on net sales)
Group net profit: € 159.2 million (Group net profit Adjusted(1): € 167.5 million)
Overall Group performance benefits from increased investments in marketing, innovation and strengthened route-to-market
Proposed dividend +16.7% (increasing to € 0.07 per share)
Bob Kunze-Concewitz, Chief Executive Officer: ‘Full year 2011 results confirm the solid underlying trends of Gruppo Campari. The significant investments in marketing and in route-to-market, coupled with product innovation and acquisitions, further strengthened our business, broadening our development opportunities in terms of product and market combinations.
Whilst the traditionally small first quarter will be soft in 2012 due to a very tough comparison base and some isolated events, which are expected to be recovered throughout the remainder of the year, our expectations for the full year 2012 remain cautiously optimistic. Notably, we expect our strong business fundamentals to continue supporting our positive overall momentum and help overcome the challenges created by the weak macroeconomic environment, strained credit situation and business transitions. Moreover, we remain confident of the medium to long term potential of our key growth engines.’.
Milan, March 12, 2012 - The Board of Directors of Davide Campari-Milano S.p.A. (Reuters CPRI.MI - Bloomberg CPR IM) approved the consolidated full year results for the year ending 31 December 2011.
- Sales: € 1,274.2 million (+9.6%, organic growth +8.8%)
- Contribution after A&P: € 505.5 million (+9.0%, organic growth +6.5%, 39.7% of sales)
- EBITDA before one-offs: € 329.0 million (+10.2%, organic growth +8.2%, 25.8% of sales)
- EBIT before one-offs:298.7 million (+9.5%, organic growth +7.1%, 23.4% of sales)
- Group net profit: € 159.2 million (Group net profit Adjusted(1): € 167.5 million)
- Net financial debt at € 636.6 million (€ 677.0 million as of 31 December 2010), after acquisitions for a total value of € 31.5 million
- Proposed dividend: € 0.07 per share, an increase of +16.7%
In 2011 Gruppo Campari achieved very positive results, with strong growth across all business performance indicators, driven by sustained organic growth and a positive contribution of perimeter, offsetting a slightly negative exchange rate impact. In particular, in the fourth quarter the Group achieved continued positive trend in organic sales growth (+5.2%), notwithstanding an unfavourable comparison base (+12.0%).
2011 Group sales totalled € 1,274.2 million showing a reported growth of +9.6%, and organic growth of +8.8%. Perimeter effect was positive by +1.4%, mainly due to the acquisition of Frangelico, Carolans and Irish Mist. The exchange rates effect was negative by -0.7%.
Gross margin increased to € 734.6 million, up 10.2%, or 57.7% of sales, mainly thanks to a favourable sales mix driven by spirits’ double-digit growth.
Advertising and promotion (A&P) was up by +12.8% to € 229.1 million, or 18.0% of sales (17.5% of sales in 2010).
Contribution after A&P (gross margin after A&P) was up by +9.0% to € 505.5 million (+6.5% organic growth), or 39.7% of sales.
Structure costs, i.e. selling, general and administrative costs, increased by +8.4%, resulting in a lower share on sales, from 16.4% in 2010 to 16.2% in 2011.
EBITDA before one-offs was up by +10.2% to € 329.0 million (+8.2% organic growth), or 25.8% of sales.
EBITDA reached € 325.8 million, an increase of +10.3%.
EBIT before one-offs rose by +9.5% to € 298.7 million (+7.1% organic growth), or 23.4% of sales.
EBIT reached € 295.5 million, an increase of +9.7%.
Net financing costs for 2011 stood at € 43.2 million, a rise of € 5.7 million in 2010. The rise in interest payments is mainly due to the Group's higher average debt level as a result of acquisitions.
Profit before tax reached € 250.6 million (+7.6%; +7.2% at constant exchange rates).
Group net profit reached € 159.2 million, up +1.9% (+1.4% at constant exchange rates) after taking into higher interest and tax charges as well as negative fiscal one-offs of € 4.7 million. Rectified for all operating, financial and fiscal one-off’s, the Group net income reached € 167.5 million, or 13.1% of sales.
As of 31 December 2011, net financial debt stood at € 636.6 million (€ 677.0 million as of 31 December 2010), after acquisitions (in particular the Russian distribution company Vasco and the Brazilian brand Sagatiba) for a total value of € 31.5 million (including estimated value of put option and earn out’s).
Consolidated sales of 2011
Looking at sales by region in 2011, the Americas (the largest region, accounting for 33.5% of total Group sales) posted overall growth of +5.4%, with an organic increase of +9.4%, a negative perimeter effect of
-0.4%, and a negative exchange rate effect of -3.6%. In the Americas, sales in the US market (19.8% of total Group sales), registered an organic increase of +3.3%, thanks to the Wild Turkey franchise and SKYY Infusions; as a result of a negative perimeter effect of -1.9% (due to termination of Tullamore Dew and Cutty Sark agencies) and a negative exchange rate effect of -4.2%, the overall change was -2.8%. Sales in Brazil (8.3% of total Group sales) grew overall by +9.2%, due to an organic growth of +8.9%, driven by Campari, Dreher, SKYY Vodka and Cynar, and an exchange rate effect of +0.4%. Sales in the other Americas grew by +40.8%, with an organic growth of +42.9%, mainly driven by Argentina (driven by Cinzano, Campari e Old Smuggler), Canada (driven by SKYY Vodka and Wild Turkey) and Mexico (driven by a very positive performance of SKYY ready-to-drink’s), a perimeter effect of +7.1% and an exchange rate effect of -9.2%.
The Italian market (31.6% of total Group sales) recorded a total growth of +1.3%, attributable to organic growth (+1.4%), and a negative perimeter effect of -0.1%. The organic growth was driven by the strong momentum in Aperol and Campari, both brands achieving record sales in Italy in 2011, and the launch of Aperol Spritz single serve home edition which more than offset a soft performance of the other single serve Campari Soda and Crodino brands.
Sales in the rest of Europe (25.7% of total Group sales) increased by +18.6%, driven by organic growth of +12.6%, a positive perimeter effect of +5.3% and a positive exchange rate effect of +0.7%. Notably, organic performance was driven by Germany (+23.0%), mainly thanks to the continued growth of Aperol. Positive results were also achieved in other key European markets, particularly Russia, Austria and Benelux.
Sales in the rest of the world (including GTR), which accounted for 9.2% of total Group sales, grew by +39.2% overall, with a positive organic change of +28.3%, mainly driven by very good consumption trends in the whole brand portfolio of the newly established Australian subsidiary, a positive perimeter effect of +4.4%, and a positive exchange rate effect of +6.5%. South Africa and GTR contributed to the positive performance in this region.
Looking at sales by business segment, spirits (76.6% of total sales, up from 75.4% in 2010) grew +11.3%, the combined result of strong organic growth of +10.5%, a positive perimeter effect of +1.5% and a negative exchange rate effect of -0.8%.
Aperol, now the Group’s largest brand by sales value, of which more than half is achieved outside Italy, continued its very strong momentum (+38.9% at constant exchange rates) thanks to a sustained progression in Germany and Austria and other European markets where it was recently launched and continued double digit growth in Italy. Moreover, it is worth mentioning the successful launch of Aperol Spritz single serve home edition (not included in the Aperol brand performance above), the new single serve product introduced in Italy and Austria at the beginning of 2011 and exclusively distributed in the off premise channel with the objective to strengthen the home consumption of aperitifs. Campari brand sales increased by +5.6% at constant exchange rates (+5.8% at actual exchange rates), thanks to positive performances in Italy and Brazil, plus a good progression in Argentina and the US. SKYY sales grew by +2.2% at constant exchange rates (-1.7% at actual exchange rates), driven by the strong growth of Infusions in the US, a still highly competitive vodka market. Moreover, SKYY achieved a good performance in key international markets, particularly Brazil. The Wild Turkey franchise sales grew by +25.4% overall at constant exchange rates (+26.8% at actual exchange rates), driven by the positive performance of all the brands in key markets. Notably, Wild Turkey bourbon grew by +7.0% with positive results in the US, Australia and Japan; American Honey grew by +33.5% in US and Australia, whilst Wild Turkey ready-to-drink achieved excellent growth in Australia and New Zealand. Brazilian brands were up by +4.8% at constant exchange rates (+5.2% at actual exchange rates), mainly driven by Dreher. GlenGrant was up by +0.9% at constant exchange rates (+1.2% at actual exchange rates) and the tequilas were up by +3.7% at constant exchange rates (-0.7% at actual exchange rates), driven by the good performance of Espolón. Frangelico, Carolans and Irish Mist registered a good performance and overall sales of € 56.2 million in 2011. Campari Soda recorded a decrease of -2.1% at constant exchange rates, as a consequence of continued weakness in the Italian day bars channel.
Wines, which accounted for 14.5% of total sales, increased by +5.8%, due to the combination of an organic performance of +5.6%, a perimeter effect of +0.7% and an exchange rate effect of -0.5%.
Cinzano vermouths grew by +23.9% at constant exchange rates (+20.5% at actual exchange rates) driven largely by Russia and Argentina. Cinzano sparkling wines sales increased by +3.4% at constant exchange rates (+3.7% at actual exchange rates), thanks to a good performance in the key German market and other international markets, more than compensating softer performance in Italy and Russia. The Other sparkling wines declined by -2.1%, as a result of flat performance of Riccadonna, positive trend of Mondoro in Russia and a slowdown of Odessa, ahead of overall brand re-positioning in domestic market (Ukraine). Still wines (including Sella&Mosca, Enrico Serafino, Teruzzi&Puthod) declined by -2.1% at constant exchange due to the weakness in the Italian on premise channel. The perimeter effect was determined by the new still wines agency brands.
Soft drinks (7.7% of total sales) decreased by -0.3%, as a result of positive growth in carbonated drinks (+9.9%) and a decline of -3.3% registered in Crodino sales, as a consequence of continued weakness in the Italian day bar channel.
Conclusion and outlook 2011
Full year 2011 results confirm the solid underlying trends of Gruppo Campari, thanks to the good performance of the key product and market combinations. The significant investments in marketing and in route-to-market, coupled with product innovation and acquisitions, further strengthened Gruppo Campari’s business, broadening its development opportunities.
Whilst the traditionally small first quarter is expected to be soft in 2012 due to a very tough comparison base and some isolated events (a slow start in Brazil, following a price increase introduced in January 2012, and the potential effects of a commercial dispute in Germany), which are expected to be recovered in the remaining and more significant part of the year, the Group’s expectations for the full year 2012 remain cautiously optimistic. Notably, strong business fundamentals are expected to continue supporting the Group positive overall momentum and help overcome the challenges created by the weak macroeconomic environment, strained credit situation and business transitions (particularly Russia). Moreover, the Group remains confident of the medium to long term potential of its key growth engines.
Dividend. The Board of Directors has voted to propose to the Shareholders' meeting a full year dividend per share of € 0.07 (with an increase of 16.7% vs. the 2010 dividend of € 0.06). The dividend will be paid on 24 May 2012 with the prior detachment of coupon no. 9 on 21 May 2012.
Own shares. The Board of Directors has approved a resolution to be presented to the Shareholders’ meeting authorising the purchase and/or sale of own shares, mainly to be used to service the stock option plans. The authorisation concerns the purchase and/or sale of shares, which, including existing own shares, shall not exceed a maximum of 10% of the share capital. The authorisation will remain valid until 30 June 2013. The unit price for the purchase and/or sale of own shares will not differ by more than 25% (whether upwards or downwards) from the weighted average price in the three stock market trading sessions prior to each transaction.
Stock options. The Board of Directors has approved a resolution to be presented to the Shareholders’ meeting approving a stock option plan pursuant to Art. 114-bis of the Consolidated Law on Financial Intermediation and in accordance with the stock option master plan approved by the Board of Directors of 18 March 2009 and by the Shareholders’ meeting of 30 April 2009. The company will in due course and pursuant to applicable law (article 84-bis, Consob Regulation no. 11971/99) disclose an information document regarding the new stock option plan.
Report on Corporate Governance and Ownership Structure and Code of Ethics. The Board of Directors by adopting the Report on Corporate Governance and Ownership Structure resolved the acknowledgement of the amendments to the Code of Conduct for Listed Companies introduced in December 2011. Moreover, the Board of Directors approved some amendments to the Code of Ethics in force since 2004.
The Executive responsible for preparing Davide Campari-Milano S.p.A.’s financial reports, Paolo Marchesini, certifies - pursuant to article 154 bis, paragraph 2 of the Legislative Decree 58/1998 - that the accounting disclosures in this statement correspond to the accounting documents, ledgers and entries.
The consolidated results and the draft financial statements of Davide Campari-Milano S.p.A. as of 31 December 2011 are currently under audit, to date not yet completed.
Analyst conference call
At 1:00 pm (CET) today, Monday, March 12, 2012, Campari’s management will hold a conference call to present the Group’s 2011 results. To participate, please dial one of the following numbers:
· from Italy: 02 8058 811
from abroad: +44 1212 818003
The presentation slides can be downloaded before the conference call from the main Investor Relations page on Gruppo Campari’s website.
A recording of the conference call will be available from Monday, March 12 until Monday, March 19, 2012.
To listen to it, please call the following number:
- from Italy: 02 72495
- from abroad: +44 1212 818005
(access code: 717#).(1)Adjusted for all operating, financial and fiscal one-off’s and relating fiscal effects.