Campari approves first-half results to 30 June 2005
Milan, 26 September 2005 - The Board of Directors of Davide Campari-Milano S.p.A. has approved the half-year report to 30 June 2005. The results for the Campari Group for the first half of 2005 and the previous comparison periods have been prepared according to IAS/IFRS accounting standards.
The results of the Campari Group for the first half of 2005 were positive and showed growth in sales and profitability compared to the same period last year: sales rose 2.6%, while trading profit and all profitability indicators saw growth of between 3% and 18%.
CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2005
In the first half of 2005, Group sales totalled € 363.9 million, an increase of 2.6% (+3.2% at constant exchange rates).
Note that with the introduction of new international accounting standards, the Campari Group, in line with the practices of the main international operators in the wines and spirits sector, has adopted a strict interpretation of IAS 18 in relation to expenses that may be classed as discounts in calculating its revenues. According to the standard interpretation, trade promotions have been reclassified as discounts, and therefore have a direct impact on net sales.
The overall change in consolidated sales, shown in accordance with the new interpretation, was generated by organic growth of 2.8% and a negative exchange rate effect of 0.5%. External growth of 0.4% was the result of sales of third-party brands that the Group has begun distributing (Jack Daniel’s on the Italian market, and to a lesser extent, Martin Miller’s Gin in the US).
Trading profit increased by 3.2% to € 107.5 million (+4.5% at constant exchange rates), or 29.5% of sales.
EBITDA before one off’s increased by 5.7% (+7.3% at constant exchange rates) to € 89.4 million, or 24.6% of sales.
EBITDA rose by 7.0% (+8.5% at constant exchange rates) to € 92.0 million, or 25.3% of sales.
EBIT before one off’s went up by 6.3% (+8.1% at constant exchange rates) to € 81.0 million, or 22.3% of sales.
EBIT increased by 7.9% (+9.6% at constant exchange rates) to € 83.6 million, or 23.0% of sales.
With regard to depreciation and amortisation, please note that following the adoption of IAS/IFRS, the amortisation of intangible assets no longer includes goodwill and trademark amortisation.
Profit before tax was € 78.6 million, an increase of 8.6% (+10.1% at constant exchange rates).
Group’s net profit was € 53.4 million, a rise of 18.4% (+20.4% at constant exchange rates).
Shareholders’ equity was € 619.4 million at 30 June 2005.
At 30 June 2005, net debt stood at € 355.8 million (€ 226.7 million at 31 December 2004). Note that on 25 February 2005, the Campari Group acquired a further stake of 30.1% in Skyy Spirits, LLC, for a cash payment of approximately € 118 million.
CONSOLIDATED SALES IN THE FIRST HALF OF 2005
The spirits segment, which accounts for 66.8% of total sales, recorded growth of 4.2%, the combination of organic growth of 4.4%, external growth of 0.6% and a negative exchange rate effect of 0.7%. The Campari brand posted growth of 3.8% at constant exchange rates (+4.0% at actual exchange rates), thanks to a positive second-quarter performance in Germany, Italy and other major European markets. Sales of SKYY Vodka, including the flavoured lines, rose by 12.1% at constant exchange rates (+7.4% at actual exchange rates), thanks to a positive performance in both the US (+9.6% at constant exchange rates) and international markets (over 30% at constant exchange rates). Regarding the other main brands, the spirits segment benefited from strong performances from Aperol (+16.4%), Cynar (+30.5% at constant exchange rates) and Zedda Piras liqueurs (+6.9%). Meanwhile, CampariSoda sales fell 1.0%, sales of Brazilian brands declined 2.1% at constant exchange rates (but rose 7.6% at actual exchange rates), while after a strong recovery in the first quarter of 2005, Ouzo 12 sales dipped by 0.4%. Of the brands under licence, 1800 tequila performed well (+15.5% at constant exchange rates), while sales of Jägermeister and Scotch whiskies fell by 1.8% and 18.9% respectively at constant exchange rates.
The wines segment, which accounts for 12.6% of total sales, recorded growth of 5.6%, following organic growth of 6.2% and a negative exchange rate effect of 0.6%. The positive performance of the business was driven by sales of Cinzano vermouths, which grew by 30.3% at constant exchange rates, thanks to a good showing in Italy and other major European markets. Sales of Cinzano sparkling wines fell by 5.2%. Sales of wines were also supported by a sound performance from Mondoro (+27.2% at constant exchange rates) and Riccadonna (+34.3% at constant exchange rates), while sales of Sella & Mosca declined by 4.2%.
Soft drink sales (19.7% of total sales, almost entirely on the Italian market) fell by 2.4%. The strong performance of Crodino (+4.0%) was wiped out by the drop in sales of the less profitable Lemonsoda, Oransoda and Pelmosoda range (-2.9%) and of Lipton Ice Tea (-11.8%).
Looking now at results by region, sales on the Italian market, which account for 51.0% of total Group sales, fell by 1.3% in the first half of 2005. This was entirely due to the poor performance of two low-margin products, Campari Mixx and Lipton Ice Tea. With respect to the Group’s core business, Aperol, Campari, Crodino and Cinzano vermouths had a positive impact on Italian sales. Sales in Europe (17.7% of consolidated sales) grew by 9.7%, thanks to the strong performance in Germany and other major European markets. In the Americas, which account for 27.3% of total sales, the US market posted organic growth of 8.4% at constant exchange rates, and of 3.8% at actual exchange rates. Sales in Brazil were in line with the same period last year (+10.0% at constant exchange rates). Sales to the rest of the world (which include duty free sales), accounting for 4.0% of the total, jumped by 11.4% in organic terms at constant exchange rates. This result was boosted in particular by a positive performance on the Australian and New Zealand markets.
BOARD OF DIRECTORS
The Board of Directors of Davide Campari-Milano S.p.A. has appointed Pierleone Ottolenghi as an independent director replacing Luca Cordero di Montezemolo, who tendered his resignation as an independent director in June 2005 owing to the new system of corporate governance adopted by the FIAT Group, of which Luca Cordero di Montezemolo is Chairman and Luca Garavoglia is independent director.
During his career, Pierleone Ottolenghi has held a series of highly prestigious positions in both Italian and international companies. He was the first Italian to graduate with an MBA from Harvard Business School, and was Vice-Chairman of Caboto. He subsequently joined S.G. Warburg (later SBC Warburg), where he became Chairman and Managing Director of the company’s Italian office. Following the merger of SBC Warburg with UBS, he was Chairman of UBS Italia until 2002.
Chairman Luca Garavoglia said of his appointment: “We are very pleased that Pierleone Ottolenghi is to join our Board as an independent director. With his extensive financial experience, he is sure to bring his great professionalism to bear on the governance and development of our company.”
The Board of Directors of Davide Campari-Milano S.p.A. comprises eleven members, the majority of whom are independent