Campari announces 2012 first half results

Results Highlights

  • Sales: € 618.3 million (+5.0%, organic growth +3.2%)
  • Contribution after A&P: € 259.9 million (+8.0%, organic growth +5.2%, 42.0% of sales)
  • EBITDA pre one-offs: € 162.9 million (+5.7%, organic growth +4.0%, 26.3% of sales)
  • EBIT pre one-offs: € 147.4 million (+6.0%, organic growth +4.4%, 23.8% of sales)
  • Group net profit: € 77.9 million (+3.5%)
  • Net financial debt: € 655.7 million (€ 636.6 million as of 31 December 2011)

Milan, August 3, 2012 - The Board of Directors of Davide Campari-Milano S.p.A. (Reuters CPRI.MI - Bloomberg CPR IM) approved the consolidated results for the first half year ending 30 June 2012.

The Group’s results in the first half of 2012 were positive and in line with expectations, showing an acceleration in the second quarter 2012, despite a challenging trading environment, marked by macro-economic volatility and weakening consumer confidence, and a tough comparison base.

Bob Kunze-Concewitz, Chief Executive Officer: ‘In the first half of 2012 the performance in Europe was marked by the transition of the Group’s business to the Russian new sales platform, a commercial dispute in Germany and, finally, the weakening consumer confidence in Italy. Trading in South America was impacted, in particular, by a slowdown in consumption in Brazil. On the positive side, heightened brand building activities helped accelerate positive momentum across the portfolio in North America. Moreover, we continued to grow strongly in Asia Pacific, constantly taking market share. Looking forward into the second half of the year, which, traditionally, weighs considerably more on full year results, we remain cautiously optimistic. Whilst we do not expect any improvements in the tough overall trading environment in the most challenging markets, we expect to maintain a good balance between potential upsides and downsides. Positive momentum in North America and Asia Pacific with a return to normal trading conditions in Russia and slow but gradual resolution of the trade dispute in Germany should help compensate for a very challenging environment in Italy and South America.’.

In the first half of 2012 Group sales totalled € 618.3 million showing a reported growth of +5.0% and organic growth of +3.2% (+12.2% in first half of 2011). The exchange rates effect was positive by +2.2%. The perimeter effect was a negative -0.4%, entirely driven by changes in distribution agreements.

Gross profit increased to € 363.2 million, up +4.8%, or 58.7% of sales.

Advertising and promotion spending (A&P) was down by -2.4% to € 103.3 million, or 16.7% of sales (18.0% of sales in the first half of 2011), due to a month delay in a major advertising campaign.

Contribution after A&P (gross margin after A&P) was up by +8.0% to € 259.9 million (+5.2% organic growth), or 42.0% of sales.

Structure costs, i.e. selling, general and administrative costs, increased by +10.7%, or 18.2% of sales (17.3% in the first half of 2011), reflecting investments in new route-to-market and strengthened central functions.

EBITDA pre one-offs was up by +5.7% to € 162.9 million (+4.0% organic growth), or 26.3% of sales.

EBITDA reached € 159.3 million, an increase of +4.8%.

EBIT pre one-offs rose by +6.0% to € 147.4 million (+4.4% organic growth), or 23.8% of sales.

EBIT reached € 143.8 million, an increase of +5.0%.

Net financing costs stood at € 20.8 million, down from € 21.5 million in the first half of 2011, due to the Group's lower average debt level in the first half of 2012.

Pre-tax profit reached € 122.7 million, up by +6.3%.

Group net profit reached € 77.9 million, up +3.5.

As of 30 June 2012, net financial debt stood at € 655.7 million (€ 636.6 million as of 31 December 2011), mainly impacted by the trend in working capital due to the set-up of the Russian platform and the catch up in the whisky inventory build up.

Consolidated sales of FIRST HALF 2012

Looking at sales by region in the first half of 2012, the Americas (33.7% of total Group sales) posted a strong overall growth of +9.6%, with an organic increase of +7.2%, a perimeter effect of -1.9%, and an exchange rate effect of +4.3%. In the U.S. the positive momentum accelerated across all key brands, helped by heightened brand building activities: sales in the U.S. market (21.7% of total Group sales), registered an organic increase of +13.2%, driven by the Wild Turkey and SKYY franchises, Carolans, Espolón, Cabo Wabo and Campari, a perimeter effect of -3.3% (due to the termination of Cutty Sark agency) and an exchange rate effect of +9.0%. Sales in Brazil (6.1% of total Group sales) registered a negative organic performance of -14.2%,  driven by the destocking which followed pre-buying activities in the last quarter of 2011, ahead of the January price increase, as well as the slowdown consumption in the overall beverage sector, which impacted, in particular, our local brands. The exchange rate effect in Brazil was -4.5%. Sales in the other Americas (5.8% of total Group sales) showed an organic growth of +17.6%, mainly thanks to a strong performance in Canada (driven by SKYY Vodka and Campari), Mexico (driven by SKYY ready-to-drink’s, SKYY Vodka and Espolón) and Argentina (driven by Campari, Old Smuggler and the local brands). Perimeter and exchange rate effects were respectively +0.2% and +0.1%.

The Italian market (34.4% of total Group sales), where trading was impacted by a weakening consumer confidence, recorded a total growth of +1.4%, attributable to a positive organic growth of +1.1% and a positive perimeter effect of +0.4%. Organic growth was mainly driven by a continued positive performance of Aperol, Campari and SKYY Vodka, benefitting from the newly introduced flavoured range, more than offsetting weaker performances of GlenGrant, Cynar, still wines and Crodino.

Sales in the rest of Europe (22.2% of total Group sales) decreased by -2.1%, driven by a negative organic performance of -3.2%, a positive perimeter effect of +0.3% and a positive exchange rate effect of +0.8%. The organic performance was driven by contrasting results across the region: Germany registered a decrease of  -9.7%, as a consequence of a commercial dispute with a key retailer, negatively affecting Aperol and Campari, as well as poor weather conditions. In the rest of Europe Austria and Switzerland grew strongly behind Aperol, whilst Spain and France were impacted respectively by the economic crisis and an excise duty increase. In Russia, where performance was impacted by the transition of the Group’s business into the new sales platform, trading is progressively returning to a normalised trend (in particular, for the Cinzano and Mondoro brands).

Sales in the rest of the world (including Global Travel Retail), which accounted for 9.7% of total Group sales, grew by +22.5% overall, with a positive organic change of +15.0% and a positive exchange rate effect of +7.5%. Sales performed strongly in all key markets: in particular, Australia continued to show strong growth across the entire portfolio. A very positive development was also achieved in the other region’s key markets, including Japan, China, South Africa and Nigeria.

Looking at sales by business segment, spirits (78.9% of total sales) grew +6.1%, the combined result of positive organic growth of +4.5%, a negative perimeter effect of -1.0% and a positive exchange rate effect of +2.6%.

Aperol registered a positive organic growth of +1.7%, thanks to the continued strong growth in core Italian and Austrian markets, whilst Germany was impacted by a commercial dispute and poor weather conditions in the second quarter of 2012. Importantly, Aperol continued to grow strongly in the other European markets as well as in the rest of the world. Campari brand sales decreased slightly (-0.9% at constant exchange rates, -0,6% at actual exchange rates): a weak performance in Brazil and Germany was in part offset by continued growth in the core Italian market and good traction in all international markets (particularly Argentina, U.S. and Nigeria). SKYY sales grew by +11.0% at constant exchange rates (+18.5% at actual exchange rates), driven by the strong performance in the U.S., behind the successful SKYY Infusions business and positive momentum behind the SKYY core brand, as well as sustained growth in key international markets (particularly Brazil, South Africa and Italy). The Wild Turkey franchise sales grew by +22.1% overall at constant exchange rates (+31.9% at actual exchange rates), driven by the strong performance of all the brands in all main markets. Notably, Wild Turkey bourbon grew by +12.9% with strong results in the U.S., Australia and Japan; Wild Turkey ready-to-drink achieved a strong growth of +24.0%, driven by Australia and New Zealand; American Honey also continued to perform very positively growing by +45.9%, thanks to the U.S. and Australia. Frangelico, Carolans and Irish Mist registered an overall performance almost in line with last year (-0.2%), with Carolans growth offsetting Frangelico’s decrease. Tequilas registered a strong overall growth of +41.4% (+52.4% at actual exchange rates), driven by both Espolón and Cabo Wabo in key U.S. market. Brazilian brands were down by -16.7% at constant exchange rates (-21.0% at actual exchange rates) as a result of the pre-buying which occurred in the last quarter of 2011 (ahead of the January 2012 price increase) as well as a general slowdown in consumption in the overall beverage sector. Campari Soda sales were almost flat (-0.5% organic performance). GlenGrant registered a negative performance of -7.8% (-6.7% at actual exchange rates), mainly driven by weak results in Italy, impacted by a declining whisky category, and the excise duty increase in France.

Wines, which accounted for 11.1% of total sales, were in line with last year, driven by the combination of an organic performance of -3.1%, a perimeter effect of +2.1% and an exchange rate effect of +1.1%.

Cinzano vermouths decreased by -4.2% at constant exchange rates (-3.3% at actual exchange rates), as the improving performance in Russia was not able to compensate the category weakness in the rest of developed markets. Cinzano sparkling wines sales increased by +0.9% at constant exchange rates (+1.6% at actual exchange rates). The other sparkling wines (including Riccadonna, Odessa and Mondoro) grew organically by +4.6%, whilst the still wines (including Sella&Mosca, Enrico Serafino and Teruzzi&Puthod) declined organically by -10.8%, driven by the weakness in the traditional Italian on premise channel. The overall performance (-2.3%) was mitigated by the contribution of the new third party wines.

Soft drinks (9.0% of total sales) grew by +1.8%, driven by an organic performance of +1.7%, thanks to the good performance of the Lemonsoda range in Italy more than offsetting the decrease of Crodino (-2.6%), and an exchange rate effect of +0.1%.

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. 

Analyst conference call

At 1:00 pm (CET) today, Friday, August 3, 2012, Campari’s management will hold a conference call to present the Group’s 2012 first half 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, at

http://www.camparigroup.com/en/investors/home.jsp

A recording of the conference call will be available from Friday, August 3 until Friday, August 10, 2012.

To listen to it, please call the following numbers:

  •  from Italy: 02 72495
  • from abroad: +44 1212 818005

(access code: 752#).

Publishing date: 
03 Aug 2012
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Last updated May 27 2013