Gruppo Campari announces 2015 First half results
Positive first half 2015 results across all performance indicators
Organic growth and favourable sales mix
driven by 5 Global Priorities and core developed markets
FIRST HALF 2015 results Highlights
- Sales: € 757.9 million (+10.5%, organic growth +2.7%)
- Contribution after A&P: € 287.3 million (+13.2%, organic growth +3.9%, 37.9% of sales)
- EBITDA pre one-off’s: € 161.7 million (+13.0%, organic change +3.3%, 21.3% of sales)
- EBIT pre one-off’s: € 138.7 million (+11.5%, organic change +2.5%, +18.3% of sales)
- Group net profit: € 77.9 million (+36.0%)
- Adjusted Group net profit of € 70.6 million (+18.4%)
- Net financial debt: € 1,010.2 million (€ 978.5 million as of 31 December 2014)
Milan, August 4, 2015-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 ended 30 June 2015.
Bob Kunze-Concewitz, Chief Executive Officer: ‘We achieved positive growth across all performance indicators in the first half of 2015. In particular, the positive organic growth and the favourable mix was driven by the 5 Global priorities, which grew +5.8% in sales in the first half and gained traction in the second quarter, as well as the core developed markets. The positive results in terms of organic growth and the margin accretion were achieved despite a very tough comp base in 2014 and the negative effect of the non-core Sugar business in Jamaica, affected by the poor weather conditions. Looking forward, we are on track to achieve a positive full year performance. We expect a positive performance of the key brand-market combinations and the full margin accretion to come throughout the year. Overall we expect risks and opportunities to be evenly balanced for the remainder of the year.’.
GRUPPO CAMPARI UPDATED SEGMENT REPORTING
As disclosed on May 12, as required by IFRS, starting from January 1, 2015, Gruppo Campari has reorganised its geographic reporting segments to reflect some recent organisational changes. The new regions are Americas; SEMEA (Southern Europe, Middle East and Africa); North, Central and Eastern Europe; Asia Pacific.
Moreover, starting from January 1, 2015, Gruppo Campari has refined its brand clusters to better reflect the business focus on the key growth opportunities. The brand clusters are: Global Priorities, including Campari, Aperol, SKYY, Wild Turkey and the Jamaican rums; Regional Priorities,including bitters (Cynar, Averna, Braulio), liqueurs (Frangelico, Carolans), whiskies (GlenGrant, Forty Creek), tequila (Espolón), sparkling wines and vermouth (Cinzano, Riccadonna, Mondoro); Local Priorities, including Campari Soda, Crodino, Wild Turkey ready-to-drink, Ouzo 12, Cabo Wabo, Sagatiba and Dreher; Rest of portfolio, including agency brands and non-core business.
RESULTS FOR THE FIRST HALF 2015
In the first half of 2015 Group sales totalled € 757.9 million showing a reported increase of +10.5%, driven by an organic sales growth of +2.7%. It should be noted that the net sales organic growth excluding the negative impact from the non-core sugar business in Jamaica amounted to +3.4% (+2.9% in the second quarter 2015).
The exchange rate effect was +6.7%, driven by the appreciation of the US Dollar (+22.8%) and the Jamaican Dollar (+16.1%) as well as favourable trends in all other key Group currencies with the exception of the Russian Ruble and to a lesser extent the Brazilian Real, that lost value.
The perimeter effect was +1.0% of sales, driven by acquisitions, partially offset by both the termination of some distribution agreements and the sale of non-core businesses.
Gross profit increased by +12.8% to € 412.2 million (+3.4% organic change), or 54.4% of sales.
Advertising and promotion spending (A&P) was up by +11.9% to € 124.9 million, or 16.5% of sales.
CAAP (Contribution after A&P)was up by +13.2% to € 287.3million (+3.9% organic change), or 37.9% of sales.
Structure costs, i.e. selling, general and administrative costs, increased by +14.8%to € 148.6 million, or 19.6% of sales.
EBITDA pre one-off’s was up by +13.0% to € 161.7 million (+3.3% organic change), or 21.3% of sales.
EBIT pre one-off’s increased by +11.5% to € 138.7 million (+2.5% organic change), or 18.3% of sales.
One-off’s of € 2.9 million related to the gain on the sale of Federated Pharmaceutical division in Jamaica of € 5.0 million, in part offset by one-off’s restructuring costs.
EBITDA reached € 164.6 million, an increase of +17.6%, or 21.7% of sales.
EBIT reached € 141.6 million, an increase of +16.8%, or 18.7% of sales.
Pretax profit was € 113.3 million, up by +24.0%.
Group net profit reached € 77.9million, up by +36.0%.
Adjusted Group net profit was € 70.6 million, up by +18.4%.
As of June 30, 2015, net financial debt stood at € 1,010.2 million (€ 978.5 million as of December 31, 2014), after the dividend payment and the repurchasing of own shares. The healthy cash flow generation mitigated the unfavourable US Dollar trend.
ANALYSIS OF CONSOLIDATED SALES OF THE FIRST HALF OF 2015
Looking at sales by region, the Americas, accounting for 42.7% of total Group net sales in the first half 2015 (40.7% in the first half 2014), posted an overall growth of +15.7%, with an organic change of +3.4%, a favourable exchange rate impact of +15.1% and a perimeter effect of -2.8%. In the US (21.3% of total Group sales and 49.8% of the region), sales registered a positive organic performance of +3.0% in the first half of 2015, driven by the strong performance across all core brands for the market. SKYY and Wild Turkey showed a positive organic performance, registering +4.6% and +8.2% respectively. TheJamaican rums continued to register a positive performance, particularly Appleton Estate and Wray&Nephew Overproof. The aperitifs also continued to register a favourable trend, particularly Aperoland Campari. The exchange rate effect was positive at +21.6%, while the perimeter effect was negative at -6.1%, as a result of the termination of some distribution agreements. Sales in Jamaica (7.5% of total Group sales and 17.5% of the region) registered an organic change of -7.2%, as a result of the decrease of the sales of non-core sugar business, affected by poor weather conditions. Adjusting for the sugar business, sales in Jamaica registered an organic change of +0.6%, driven by the Jamaican rums, Campari and SKYY Vodka. The exchange rate effect was +13.3% and the change in perimeter was -10.2%, relating to the termination of some distribution agreements and sale of non-core businesses. Sales in Brazil (4.0% of total Group sales and 9.4% of the region) declined organically by
-1.9%, due to the persisting weak consumption environment. The exchange rate effect was -4.1% and the change in perimeter was -1.3%. Sales in Argentina (2.9% of total Group sales and 6.9% of the region) continued to register a double-digit organic growth (+21.5%) driven by the good performance of premium brands such as Campari, Cinzano vermouth, SKYY, Aperol and Cynar. The exchange rate effect was +11.2% and the perimeter effect was neutral. Sales in Canada (2.8% of total Group sales and 6.6% of the region) registered an overall positive organic growth (+14.4%), notwithstanding the negative temporary effect of the distribution change. The exchange rate effect was +10.6% and the perimeter was +61.0%, driven by the Forty Creek acquisition.
Sales in Southern Europe, Middle East and Africa, accounting for 33.9% of total Group sales in the first half 2015 (33.9% in the first half 2014), posted an overall growth of +10.5%, with an organic change of +4.7%, an exchange rate impact of +0.3% and a perimeter effect of +5.4%, mainly driven by the Averna acquisition. The Italian market (26.9% of total Group sales and 79.2% of the region) showed a positive organic performance of +0.7%, mainly driven by the growth of Campari (+10.3%) and the single-serves aperitifs, partially offset by the softness of sparkling wines (Cinzano and Riccadonna). Aperol registered a stable net sales performance, whilst consumption was positive. The perimeter effect was +4.3%, driven by the Averna acquisition. The region’s other countries (7.1% of Group net sales and 20.8% of the region) posted overall very good organic results (+24.6%), driven by a very positive performance in Spain across the entire portfolio (Campari, Aperol, Frangelico, Cinzano, Carolans and Bulldog) and a solid growth in France, South Africa and Global Travel Retail, mainly driven by Aperol. The exchange rate effect was +2.0% and the perimeter effect was +10.8%.
Sales in the North, Central and Eastern Europe, accounting for16.9% of total Group sales (18.9% in first half 2014), decrease by -1.4% overall, driven by an organic change of -3.0%, an exchange rate effect of -0.2%, and a perimeter effect of +1.7%,mainly driven by the Averna acquisition. Sales in Germany (9.2% of total Group sales and 54.7% of the region) recorded an overall organic growth of +3.0%, driven by the continued good performance of Cinzano vermouth, Frangelico and Ouzo 12, partially offset by the soft performance of the aperitifs. The perimeter effect was +2.6%. Russia (1.0%of total Group sales and 5.8% of the region) showed an expected negative organic performance (-37.7%), as a result of a tough market environment affected by macroeconomic instability and continued tightened credit, as expected. Those factors negatively influenced the performanceof the sparkling wines portfolio (Cinzano, Mondoro) and Cinzano Vermouth. The exchange rate effect was -16.0% and the perimeter effect was -0.2%. The region’s other markets (6.7% of Group net sales and 39.5% of the region) registered an overall positive organic growth (+0.5%). The exchange rate effect was +5.0% and the perimeter effect was +1.1%.
Sales in Asia Pacific, accounting for 6.5% of total Group sales in the first half 2015 (6.4% in first half 2014), increased by +11.8% overall, with an organic change of +4.8%, an exchange rate effect of +7.0% and a neutral perimeter effect. Organic performance in Australia (4.5% of total Group sales and 68.8% of the region) was positive by +4.3%,mainly driven by the growth of Wild Turkey ready-to-drink,as well as the good performance ofCampari, Aperol and SKYY Vodka. However, market conditions remain difficult with weak consumer confidence. The exchange rate effect was +5.3% and the perimeter effect was neutral. The other markets (2.0% of Group net sales and 31.2% of the region) registered an overall positive growth of +6.1%, mainly driven by New Zealand (Appleton Estate, Coruba) and China (Campari, GlenGrant, Wild Turkey and SKYY ready-to-drink), more than offsetting a weak performance in Japan affected by route-to-market changes. The exchange rate effect was +10.9% and the perimeter effect was neutral.
Looking at sales by key brands in the first half of 2015, with regards to the Global priorities, Campari registered a positive organic growth of +2.5%, driven by the continued double digit growth in Argentina and the US, as well as the recovery in Italy and Spain, more than offsetting the softness in Brazil and Nigeria. Aperol showed an organic increase of +5.7%, thanks to the very good results achieved in France and Spain, as well as a positive progression in high potential markets (particularly the US, UK, Canada, Eastern European markets and Greece). In core Italian market, whilst shipments were stable, consumption continued to grow. SKYY sales achieved a positive organic growth of +4.8%, driven by the positive results of core brand achieved in almost all key brand-market combinations, particularly in the US, also benefiting from the launch of the line extension SKYY Barcraft. Wild Turkey registered a very positive organic change of +7.8%, thanks to satisfactory results in the core US market, for both core and American Honey, and a positive progression in seeding markets, particularly Canada, UK and Russia. The Jamaican rums, including Appleton Estate, J.Wray and Wray&Nephew Overproof, achieved a very positive organic growth of +13.3%,driven by the core US and Jamaican markets, more than offsetting the negative performance in Canada and UK due to the change in distribution.
With regards to the Regional Priorities, Cynar showed a positive organic growth (+4.0%), mainly driven by the good results achieved in France, US and Argentina. GlenGrant registered agood organic performance of +4.5%, driven by Germany, Spain, Sweden and China. Carolans and Frangelico increased overall by +10.4% organically. Results were positive overall for both brands and in particular for Frangelico in the US and Spain. Espolón registered an organic increase of +24.9%, driven by the growth achieved in the core US market. Cinzano registered an organic change of -8.0% overall, as a result of the negative performance of Cinzano sparkling wines in Russia, partially offset by the good results of Cinzano vermouth in Argentina and Germany. Other sparkling wines (Riccadonna and Mondoro) decreased organically by -38.2%, entirely driven by the adverse market condition in the core Russian market.
With regards to the Local Priorities, the Italian single-serve aperitifs registered a positive organic performance: Campari Soda showed a positive growth (+1.3%),and Crodino recorded a very good performance (+2.0%), despite the tough comparable base (+31.9% in the first semester 2014). The Australian range Wild Turkey ready-to-drink increased by +2.5% organically. Lastly, the Brazilian brands Dreher and Sagatiba registered an overall organic change of -0.9%.
Closing of the disposals of Enrico Serafino S.r.l. in italy and Agri-Chemicals division in Jamaica
On June 30, 2015, Gruppo Campari completed the disposal of 100% of Enrico Serafino S.r.l. to Krause Holdings, Inc., whose deal was signed on June 11, 2015. The deal consideration was € 6.1 million (USD 6.8 million at the exchange rate on the closing date) on a cash free / debt free basis and the transaction had no significant impact on the Group’s financial results.
Moreover, on July 9, 2015, Gruppo Campari completed the sale of the Agri-Chemicals Division of J. Wray & Nephew Limited in Jamaica to Caribbean Chemicals and Agencies Limited, whose deal was signed on December 23, 2014. The deal consideration was USD 8.2 million (€ 7.4 million at the exchange rate on the closing date) on a cash free/debt free basis and the disposal of the business had no significant impact on the Group’s financial results.
Filing of documentation
The half-year report at 30 June 2015 has been made available to the general public at the Company's head office and on the SDIR-NIS circuit for the storage of Regulated Information, operated by BIt Market Services (www.emarketstorage.com). The documentation is also available in the ‘Investor’ section of the website www.camparigroup.com/en and by all other means allowed by applicable regulations.
 Group net profit adjusted for one-off’s and relating fiscal effects for 1H 2015 and 1H 2014
 Including Global Travel Retail.
 Including Wild Turkey bourbon and American Honey.
 Acquisitions of Forty Creek Distillery Ltd. (closed on 2 June 2014) and Gruppo Averna (closed on 3 June 2014).
 Group net profit adjusted for one-off’s and relating fiscal effects for 1H 2015 and 1H 2014
 As of 1 January 2015, Gruppo Campari started direct distribution in Canada.
 Including Global Travel Retail.
 As of 1 March 2015, Gruppo Campari started direct distribution in UK.