Segment reporting

Analysis by region

In 2015 the Group changed its segment reporting to reflect the reorganization of the business units and its operating model. Gruppo Campari business is structured in the following four geographic areas, identified as business segments, and for which profitability is analysed: ‘Americas’, ‘Southern Europe, Middle East and Africa(1)’, ‘Northern, Central and Eastern Europe’ and ‘Asia-Pacific

(1) Including Global Travel Retail

                 

 nEt Sales breakdown by region

netsales.jpg

 EBIT(1) BREAKDOWN BY REGION

ebit.jpg

(1) EBIT before one-off’s

Americas

The Americas (42.1% of total Group sales in 2016) posted an overall growth of +3.5%, with an organic change of +2.9%, an unfavourable exchange rate impact of -6.1% and a perimeter effect of +6.7%,. 
To provide a more detailed analysis of the region’s sales performance it is considered more efficient to provide the figures for the main markets (US, Jamaica, Brazil, Canada and Argentina) and the additional region of other countries on the American continent as in the two tables below.

 

Americas% of 
Group total
20162015change
total
organic
change
perimeter
effect
exchange rate
effect
 %€ million%€ million%%%%%
US 24.8% 427.6 58.9% 365.3 52.1% 17.0% 2.1% 14.7% 0.3%
Jamaica 4.6% 79.1 10.9% 97.2 13.9% -18.6% -2.1% -11.1% -5.4%
Brazil 3.3% 57.0 7.8% 68.8 9.8% -17.2% -12.7% -0.7% -3.8%
Argentina 2.6% 45.4 6.3% 51.0 7.3% -10.9% 42.3% -0.4% -52.7%
Canada 3.1% 54.0 7.4% 48.9 7.0% 10.5% 4.8% 9.1% -3.5%
Other countries 3.7% 63.2 8.7% 70.4 10.0% -10.1% -0.8% 0.9% -10.2%
Total Americas 42.1% 726.3 100.0% 701.6 100.0% 3.5% 2.9% 6.7% -6.1%

Income statement-Americas

The Americas region comprises the direct markets of the US, Jamaica, Brazil, Argentina, Mexico and Canada, which together represent around 90% of the region’s sales. In 2016, this region makes the largest contribution to the Group in terms of both sales and the result from recurring activities, at 42.1% and 43.2% respectively.

The results for the year were as follows.

 

Americas

2016

 2015

Change, of which:   
totalorganic

organic change in profitability

 €million%€million%%%basis points
Net Sales 726.3 100.0   701.6  100.0 3.5% 2.9%  
Gross Profit  412.3  56.8  377.0 53.7 9.4% 3.6%  40
Advertising and promotional costs  (136.8)  -18.8  (124.0) -17.7  10.3% 7.0%  (70)
Overheads (123.1)   -16.9  (117.6) -16.8 4.7% 7.3%  (70)
Result from recurring activities  152.4 21.0  135.4  19.3 12.5% -2.9% (110)

Overall, the region saw an increase in both sales (+3.5%) and the result from recurring activities (+12.5%).

As already shown in the section on sales, this region showed an exchange rate effect, which generated a decrease of -6.1% in sales, while the significant perimeter effect of +6.7% was due to the integration of the Grand Marnier brand from 1 July 2016. The negative exchange rate effect reduced the result from recurring activities by -2.2%, a phenomenon that was partly due to the high inflation in some South American countries, which has a greater impact on sales than profitability as these markets have a lower profit margin than the Group’s average. It should be noted that the Group’s production activity in these markets is managed in their own local structures.

Excluding both the exchange rate and the perimeter effects, organic sales growth in the region was +2.9%, while the result from recurring activities decreased by -2.9%, generating profitability dilution of 110 basis points. This was due to various contrasting factors, which are analysed below.

At gross margin level, the region saw an organic increase of +3.6%, which was partly penalised by the negative impact of the non-core sugar business in Jamaica.

As a percentage of sales, profitability increased by 40 basis points. This was due, on the one hand, to a favourable product and market mix, with good growth in the US, a highly profitable market, during the year. This positive mix, to which the contraction deriving from low-margin markets and businesses such as Brazil contributed, more than offset the dilution deriving from growth in countries with lower profitability than the Group average, such as Argentina.

Advertising and promotional costs were slightly higher, at organic level, as a percentage of sales than in 2015, generating a dilution in profitability of 70 basis points.

Any changes in this item are due to the timing of various investments during the periods under comparison, which will subsequently be reabsorbed (such as the Wild Turkey advertising campaign).

Overheads increased by +7.3% at organic level, generating a dilution of 70 basis points, due mainly to the upgrading of the on-premise distribution capabilities ahead of the integration of Grand Marnier, and the effect of inflation in the emerging markets.

Southern EuropeMiddle East and Africa(1)

The region, which is broken down by main market in the table below, posted overall organic growth of +2.6%, with a slight fall in the fourth quarter (-0.2%).

SEMEA% of 
Group total
20162015change
total
organic
change
perimiter
effect
exchange rate
effect
 %€ million%€ million%%%%%
Italy 23.6% 407.1 76.4% 416.3 79.2% -2.2% 0.3% -2.5% 0.0%
Other countries(1) 7.3%  125.7 23.6%  109.0 20.8%  15.3%  11.6%  3.8%  -0.1% 
Total 30.9% 532.8 100.0% 525.3 100.0% 1.4% 2.6% -1.2% -0.0%

(1)Including Global Travel Retail

Income statement-Southern Europe, Middle East and Africa 

The Southern Europe, Middle East and Africa region, which includes the direct markets Italy and Spain, as well as markets served by third-party distributors, was the Group’s second-largest region in terms of sales and profitability in 2016, with a contribution of 30.9% and 31.7% respectively.

The results for the year were as follows.

SEMEA

2016

2015

Change, of which:      
totalorganic

organic
change in profitability

 €million%€million%%%basis points
Net Sales  532.8 100.0 525.3 100.0 1.4 2.6  
Gross Profit 313.7 58.9 304.6 58.0 3.0 3.5 50
Advertising and promotional costs (99.0) -18.6 (95.4) -18.2 3.8 0.8 (30)
Overheads (123.3) -23.1 (109.7) -20.9 12.4 6.3 (80)
Result from recurring activities 91.5 17.2 99.5 18.9 -8.1 3.0 10

Sales increased by +1.4% overall, while the result from recurring activities decreased by -8.1%.

Excluding both the exchange rate and the perimeter effect, the region recorded organic growth of +2.6% in sales and +3.0% in the result from recurring activities, which created a slight increase in profitability of 10 basis points.

This was due to various contrasting factors, which are analysed below.

In terms of the gross margin, the results showed an organic increase of +3.5%, increasing profitability by 50 basis points. This was due to a favourable product and market mix, with healthy growth in many global and regional priority brands in Italy, a highly profitable market, as well as in France, Spain, South Africa and the duty free channel.

Advertising and promotional costs increased as a percentage of sales compared with 2015, leading to an increase of 30 basis points in organic profitability.

With regard to Italy, investments were made in Aperol in various high-potential markets and in the new advertising campaigns of Averna and Campari Soda.

Overheads rose by +6.3%, in absolute terms, at organic level, generating a dilution in profitability of 80 basis points. The increase is due to the strengthening of the Group’s distribution structure in the region’s markets, such as South Africa. The increase of +12.4% in overheads, at organic level, includes the effect of the first consolidation of SPML which, by virtue of the concentration of administrative structures in the relevant region, led to a disproportional increase in overheads.

 

The perimeter effect in the region, which was mainly due to SPML, had a positive effect of +2.8% on sales and a negative effect of -13.5% on the result from recurring activities .


Northern, Central and Eastern Europe

This region reported overall organic growth of +11.9% for the twelve months and 8.6% in the fourth quarter, broken down as follows in the main markets.

 

NCEE% of 
Group total
20162015total
change
organic
change
perimiter
effect
exchange rate
effect
 %€ million%€ million%%%%%
Germany 10.2%  176.1 51.2%   165.4 52.7%   6.4%  6.0% 0.5%  -0.0%
Russia 2.2%  37.5 10.9%  30.9 9.8%  21.3% 27.7% 4.3%   -10.7%
Other countries 7.6%  130.4 37.9%  117.6  37.5% 10.9% 16.1% 1.1%  -6.3%
Total 19.9% 343.9 100.0% 313.9 100.0% 9.6% 11.9% 1.1% -3.4%


Income statement North, Central and Eastern Europe

The Northern, Central and Eastern Europe region, which includes the direct markets of Germany, Austria, Switzerland, Benelux, the UK, Russia and Ukraine, as well as areas served by third-party distributors, contributed 19.9% to the Group’s sales and 26.3% to the result from recurring activities.

The results for the year were as follows.

 

NCEE

2016

2015

Change, of which:  
totalorganic

organic change in profitability

 € million%€ million%%%basis points
Net Sales    343.9 100.0  313.9 100.0 9.6% 11.9%  
Gross Profit   198.5  57.7 177.8 56.6 11.6% 14.7% 140
Advertising and promotional costs  (52.5)  -15.3 (46.8) -14.9 12.3% 14.9% (40)
Overheads (53.2)  -15.5 (49.4) -15.7 7.8% 12.9% (10)
Result from recurring activities 92.7  27.0 81.6 26.0 13.6% 15.7% 90

Overall, sales in the region increased by +9.6%, while the result from recurring activities rose by +13.6%.

Excluding the negative exchange rate effects and the positive perimeter effects, sales increased by +11.9% at organic level, and the result from recurring activities by +15.7%, creating an improvement of 90 basis points. This healthy performance was due to the following factors.

At gross margin level, profitability increased by 140 basis points, due to the effects of the favourable geographical and product (aperitifs) mix. Specifically, as a percentage of sales, the gross margin benefited from the good performance of both the German market and other markets such as the UK.

Advertising and promotional costs for the period increased as a percentage of sales due to the investments made in these markets, especially Aperol in high-potential markets, which generated an organic dilution of 40 basis points.

Overheads increased by +12.9% at organic level, especially due to the effect of the comparison basis in markets such as the UK, where the new sales structure was completed in the second half of 2015. This generated a slight dilution in profitability of 10 basis points.

 

Asia-Pacific 

The table below shows the region, broken down into Australia and the other countries, with details of the changes in 2016. The region ended the year with overall organic growth of +6.0% and growth of +6.7% in the fourth quarter, confirming the positive trend seen in the first half of the year.

Asia-Pacific % of Group
total 
20162015total
change
organic
change
perimiter
effect
exchange rate
effect
 %€ million%€ million%%%%%
Australia 5.0% 86.0 69.6% 80.7 69.5% 6.6% 7.2% 0.3% -0.9%
Other Countries 2.2% 37.5 30.4% 35.4 30.5% 6.0% 3.2% 4.3% -1.5%
Total 7.2% 123.5 100.0% 116.0 100.0% 6.4% 6.0% 1.5% -1.1%

Income statement Asia-Pacifico

The Asia-Pacific region, which includes the direct markets of Australia, New Zealand and China, as well as areas served by third-party distributors, made a contribution of 7.2% to the Group’s sales and 7.0% to the result from recurring activities.

The results for the year were as follows.

Asia-Pacific

2016

2015

Change, of which:    
totalorganic

organic change in profitability

 €million%€million%%%basis points
Net Sales  123.5 100.0  116.0 100.0 6.4% 6.0%  
Gross Profit  60.0  48.6 57.6 49.7 4.2% 5.1% (40)
Advertising and promotional costs  (20.2)  -16.4 (20.1) -17.3 0.9% 0.7% 90
Overheads (23.9)  -19.3 (21.4) -18.5 11.4% 13.1% (120)
Result from recurring activities 15.9  12.9 16.1 13.9 -1.3% -0.0% (80)

The region recorded an overall increase of +6.4% in sales, while the result from recurring activities decreased by -1.3%.

Excluding the negative exchange rate effects and the positive perimeter effects, the organic increase was +6.0%, while the result from recurring activities was in line with that of 2015. The most significant effects overall were the following.

The gross margin grew by +5.1% at organic level, generating a dilution of 40 basis points; the peak in bottling activities, a less profitable business, carried out in Australia in 2016, and considered not repeatable, contributed to this dilution.

As an organic percentage of sales, advertising and promotional costs were not as high as in 2015, generating an increase of 90 basis points.

Overheads increased by +13.1% at organic level, mainly due to the strengthening of the structure in Australia and the Asian markets. The increase in these costs led to a dilution in the region’s profitability of 120 basis points.

Share/Save
Last updated Apr 27 2017