Campari announces solid 2009 results with strong growth across all key performance indicators Excellent generation of cash flow (free cash flow): € 184.3 million Proposed dividend increased by 9.1%
Campari announces solid 2009 results with strong growth
across all key performance indicators
Excellent generation of cash flow (free cash flow): € 184.3 million
Proposed dividend increased by 9.1%
Highlights - 2009
- Sales: € 1,008.4 million (+7.0%, organic growth -1.0%)
- Contribution after A&P: € 401.2 million (+17.6%, organic growth +7.6%, 39.8% of sales)
- EBITDA before one-offs: € 265.1 million (+21.4%, organic growth +9.2%, 26.3% of sales)
- EBIT before one-offs: € 239.7 million (+20.4%, organic growth +8.6%, 23.8% of sales)
- Group’s net profit: € 137.1 million (+8.3%)
- Excellent cash generation (free cash flow): € 184.3 million
- Bonus share capital increase, in the proportion of one new share for each old share owned
- Proposed dividend increased by 9.1%
Milan, March 31, 2010 - The Board of Directors of Davide Campari-Milano S.p.A. approved the full year results for the year ending 31 December 2009.
In 2009 Campari achieved solid results with strong growth across all indicators. The consolidation of the sales and profit results of the Wild Turkey acquisition, included in the Group’s perimeter as of June 2009, significantly impacted the full year results, which were very good even at a constant perimeter and exchange rates. In particular, the slight decline in organic net sales (-1.0%) can be considered a satisfactory result given the tough economic environment, and, most of all, the return to positive organic growth in the second half of 2009 (+0.7%). All operating profit indicators posted strong growth on a like for like basis, thanks to the favourable sales mix and the effective cost containment.
Moreover, Campari achieved a strong cash generation (free cash flow) - € 184.3 million - thanks also to a disciplined management of working capital. As a result, the Group obtained a fast deleveraging, reaching objectives a year ahead of plan.
Bob Kunze-Concewitz, Chief Executive Officer: ‘In 2009 we achieved strong results. Looking forward to 2010 we are confident of the positive development of our business, despite a relatively volatile environment. In 2010 we will benefit from the full year effect of the consolidation of our acquisitions in our distribution network. With regards to our key brand and geography combinations, we expect a balanced situation in terms of trading risks and opportunities’.
Consolidated results for 2009
In 2009, Group sales totalled € 1,008.4 million (+7.0%, -1.0% organic growth, +0.7% exchange rate effect and +7.3% perimeter effect, the latter due to the acquisitions of Wild Turkey, Destiladora San Nicolas, Sabia and Odessa, and two new agency brands, i.e. Licor 43 in Germany and Cointreau in Brazil).
Gross margin increased to € 572.8 million, up 11.4%, mainly thanks to a favourable sales mix driven by double digit spirits growth.
Contribution after A&P (gross margin after A&P) was up by 17.6% to € 401.2 million (+7.6% organic growth), or 39.8% of sales.
EBITDA before one-offs was up by 21.4% to € 265.1 million (+9.2% organic growth), or 26.3% of sales.
EBIT before one-offs rose by 20.4% to € 239.7 million (+8.6% organic growth), or 23.8% of sales.
EBITDA reached € 261.0 million, an increase of 21.6%.
EBIT reached € 235.6 million, an increase of 20.6%.
Profit before tax and minority interests reached € 198.3 million (+15.0%; +13.0% at constant exchange rates).
The Group net profit rose to € 137.1 million, an increase of 8.3% at constant exchange rates and +6.6% at actual exchange rates.
As of 31 December 2009, thanks to excellent cash flow generation (cash flow from operating activities of € 271.4 million and free cash flow of € 184.3 million), net financial debt stood at € 630.8 million (€ 326.2 million as of 31 December 2008) after payment of the Wild Turkey acquisition (€ 418.4 million) and the Odessa acquisition (€ 14.8 million).
Consolidated sales for 2009
Sales of spirits (73.3% of total sales) grew +11.4%, the combined result of organic growth of 0.9%, a positive exchange rate effect of 1.0% and a positive perimeter effect of 9.5%.
Campari brand sales declined by 7.3% at constant exchange rates, entirely attributable to destocking in Brazil and Eastern Europe. SKYY sales grew by 1.3% at constant exchange rates (+6.1% at actual exchange rates), also driven by strong growth in the international markets. Aperol confirmed its spectacular growth trend (+40.3% at constant exchange rates) in Italy and in international markets (particularly Germany). Campari Soda finished 2009 with a positive performance of 2.2%. The Brazilian brands’ sales were impacted by the increase in the excise duties and wholesalers’ de-stocking (decline of 14.9% at constant exchange rates and 17.8% at actual exchange rates). A positive performance was achieved by Ouzo 12 (+7% at constant exchange rates) and Cynar (+17.1% at constant exchange rates). GlenGrant registered a decrease of 3.8% at constant exchange, mainly attributable to the Italian market, where the brand is market leader and gained market share in a declining market.
Wines, which accounted for 15.4% of total sales, registered a decrease of 1.7%, due to the combination of negative organic performance of 5.6% and a positive perimeter effect of 3.9%. The segment’s negative performance was driven by Cinzano vermouth (-15.5% at constant exchange rates) due to heavy de-stocking in Russia. Cinzano sparkling wines grew (+2.5% at constant exchange rates). Riccadonna was positive (+3.2% at constant exchange rates) thanks to good performance in the key Australian market. Among still wines, Sella & Mosca registered a decrease of 4.4% at constant exchange rates mainly due to a slow-down in consumption in the restaurants channel in Italy.
Soft drinks (9.9% of total sales) recorded a negative variation of 2.6%, mainly attributable to the weak performance of the soda range and mineral waters. Crodino was basically stable (-0.1%).
Looking at results by region in 2009, sales in the Italian market (38.5% of total Group sales) recorded an increase of 0.2%, thanks to organic growth (+0.8%), partly offset by a negative perimeter effect of 0.6%. Sales in Europe, excluding Italy, (23.0% of consolidated sales) increased by 8.8%, driven by a positive organic performance of 4.5%, with positive trading in Western European markets (in particular Germany and Austria) which compensated the decline in Eastern Europe, and a positive perimeter effect of 4.3%. The Americas (32.3% of total sales) posted a negative organic variation of 7.2%, partially offset by a positive exchange rate effect (+2.0%) and a positive perimeter effect (+14.9%) due to the acquisitions of Wild Turkey, Destiladora San Nicolas and Sabia. In the Americas, the US market registered an organic decrease of 9.6%, driven by destocking, offset by a positive exchange rate effect of 4.9% and positive perimeter effect of 16,8%. In Brazil, sales registered an organic decrease of 13.6%, a positive perimeter effect of 1.8% and a negative exchange rate effect of 2.9%. Sales in the rest of the world (including duty free sales), which accounted for 6.3% of total sales, grew by 39.3% overall, driven by a positive perimeter effect of 38.9% and an organic growth of 1.5% and a positive exchange rate effect of 1.9%.
Conclusion and outlook 2010
In 2009 Campari achieved solid and satisfactory results. The positive consumption trend in some key developed markets helped alleviate the negative impact driven by the destocking activities operated by distributors in other markets. The Group significantly enhanced its commercial set up, in terms of brand portfolio and distribution network. A strong growth in the cash flow generation allowed the Group to fund major acquisitions and carry out investments in new projects. These achievements led the company to propose a bonus share capital increase (which, ceteris paribus, will amount to halving the current stock price) and a dividend increase.
Looking forward to 2010 the Group is confident of the positive development of the business, despite a relatively volatile environment. Hence, this will allow A&P spend to return back to a normalised trend, as the Group expects accelerated competitive pressure in key markets. This year, moreover, we will benefit from the full year effect of the consolidation of recent acquisitions in the Group’s distribution network. With regards to our key brand and geography combinations, the Group expects an overall balanced situation in terms of risks and opportunities.
Proposal for a bonus share capital increase. The Board of Directors has voted to propose to the extraordinary and ordinary Shareholders' meeting convened for 30 April 2010 a bonus share capital increase with the issuance of 290,400,000 new shares with a par value of € 0.10 each. The new shares will be granted to current shareholders in the proportion of one new share for each share owned, converting for the purpose corresponding reserves into share capital.
The capital increase will be effected as soon as possible either on 10 May 2010 or otherwise on 17 May 2010, depending on inscription timings. The new shares’ entitlement is effective 1 January 2009. Further to the bonus capital increase, the share capital shall be equal to € 58.080.000 divided into 580,800,000 shares.
It should be noted that, ceteris paribus, the execution of the bonus share capital increase will amount to halving the current stock price.
Dividend. The Board of Directors has voted to propose to the Shareholders' meeting a full year dividend of € 0.06 (with an increase of 9.1% vs. the 2008 dividend of € 0.055 on a pro-forma basis) for each of the shares resulting from the bonus capital increase with the exception of own shares. Should the proposed bonus share capital increase not be approved by the Shareholders meeting, the proposed dividend would be of € 0.12 per share (with an increase of 9.1% vs. the 2008 dividend of € 0.11). The dividend will be paid on 27 May 2010 (after the execution of the bonus capital increase) with the prior detachment of coupon no. 7 on 24 May 2010.
Auditors. Upon proposal from the Board of Statutory Auditors, the Board of Directors has voted to propose to the Shareholders’ meeting the engagement of the audit firm PricewaterhouseCoopers S.p.A. for the period 2010-2018, as the audit mandate of Reconta Ernst & Young S.p.A. has expired and cannot be renewed further.
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 2011. 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 (Art. 84-bis, Consob Regulation no. 11971/99) disclose an information document regarding the new stock option plan.
Statutory changes. The Board of Directors has voted to propose to the Shareholders’ meeting several changes in the bylaws of the Company reflecting the regulatory measures introduced by Legislative Decree no. 27/2010 transposing Directive 2007/36/EC. The Board has also voted to propose the renewal for a further period of five years of the authorisation to the Board of Directors to proceed to share capital increases, issue convertible bonds and other financial instruments.
The Manager in charge of 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 (Consolidated Law on Financial intermediation) - that the accounting disclosures in this statement correspond to the accounting documents, ledgers and entries.
Please note that at 12.00 am (CET) today, Wednesday, 31 March 2009, Campari’s management will hold a conference call to present the Group’s 2009 full year results to analysts, investors and media. To participate, please dial one of the following numbers:
- from Italy: 02 8058 811
- from abroad: +44 203 147 47 96