Campari announces 2011 Half Year results
- Sales: € 589.1 million (+14.2%, organic growth +12.2%)
- Contribution after A&P: € 240.7 million (+14.9%, organic growth +11.5%, 40.9% of sales)
- EBITDA before one-offs: € 154.2 million (+19.9%, organic growth +16.4%, 26.2% of sales)
- EBIT before one-offs: € 139.0 million (+19.8%, organic growth +15.9%, 23.6% of sales)
- Group net profit: € 75.3 million (+8.7%)
- Net financial debt at € 669.0 million (from € 677.0 million at 31 December 2010)
- Acquisition of Sagatiba for a consideration of USD 26 million (corresponding to
€ 18 million on the acquisition’s date), plus earn-out
Milan, August 4, 2011 - The Board of Directors of Davide Campari-Milano S.p.A. approved the results for the first half year ending 30 June 2011, which show strong growth across all performance indicators, driven by sustained organic growth and a positive contribution of perimeter, offsetting a slightly negative exchange rate effect.
Bob Kunze-Concewitz, Chief Executive Officer: ‘Benefitting from our heightened marketing investments and strengthened route to market, we had another strong quarter with solid double digit growth across organic sales and key operating indicators. The strong momentum, founded on a well balanced growth across geographies, segments and brands also reflects the heightened seasonality of Aperol driven by increased internationalization.
Furthermore, the acquisition of Sagatiba, the leading super premium and fast growing cachaca brand in Brazil, significantly strengthens our brand portfolio in that key emerging market. It enables us to tap into the largest segment of the Brazilian spirits market as well as leverage the premiumization trend being driven by socio economic improvement. Looking forward, we expect our key growth drivers to continue delivering positive performances and remain committed to sustained investments in marketing and innovation. Based on a balanced view of risks and opportunities, we remain optimistic about our full year prospects.’
Consolidated results first half 2011
In the first half 2011 Group sales totalled € 589.1 million showing a reported growth of +14.2% and organic growth of +12.2% (+8.7% in first half of 2010). Perimeter effect was positive by +2.3%, mainly due to the acquisition of Frangelico, Carolans and Irish Mist. Exchange rates effect was negative by -0.3%.
Gross profit increased to € 346.5 million, up +15.7%, or 58.8% of sales.
Advertising and promotion (A&P) was up by +17.5% to € 105.8 million, or 18.0% of sales.
Contribution after A&P (gross margin after A&P) was up by +14.9% to € 240.7 million (+11.5% organic growth), or 40.9% of sales.
EBITDA before one-offs was up by +19.9% to € 154.2 million (+16.4% organic growth), or 26.2% of sales.
EBITDA reached € 152.1 million, an increase of +19.7%.
EBIT before one-offs rose by +19.8% to € 139.0 million (+15.9% organic growth), or 23.6% of sales.
EBIT reached € 136.9 million, an increase of +19.6%.
Profit before tax and minority interests reached € 115.4 million (+18.1%; +17.7% at constant exchange rates).
Group net profit reached € 75.3 million, up +8.7%(+8.1% at constant exchange rates) after taking into account both higher interest and tax charges.
As of 30 June 2011, net financial debt stood at € 669.0 million (€ 677.0 million as of 31 December 2010).
Consolidated sales of first half 2011
Looking at sales by region, sales in the Italian market (35.6% of total Group sales) recorded a total growth of +2.7%, thanks to organic growth of +2.6%, driven by strong momentum in Aperol and Campari (which more than offset a soft performance of Campari Soda, Crodino and Cinzano).
Sales in the rest of Europe (23.9% of total Group sales) increased by +30.4%, driven by strong organic growth of +22.9%, a positive perimeter effect of +6.6% and a positive exchange rate effect of +0.9%. Notably organic performance was driven by Germany (+39.9%), mainly thanks to continued growth of Aperol and positive momentum across the rest of portfolio. Positive results were also achieved in other key European markets, particularly Russia, Austria, Spain and France.
The Americas (32.3% of total Group sales) posted overall growth of +8.0%, due to an organic increase of +9.6%, a positive perimeter effect of +1.6%, mainly attributable to Frangelico, Carolans and Irish Mist brands, and a negative exchange rate effect of -3.2%. In the Americas, sales in the US market registered a total change of -1.6%, due to an organic increase of +3.1%, thanks to SKYY Vodka and Wild Turkey ranges, a positive perimeter effect of +0.2% and a negative exchange rate effect of -4.9%. Sales in Brazil grew overall by +13.0%, due to an organic growth of +7.7% (+61.3% in first half of 2010), driven by Campari, Dreher and SKYY Vodka, a perimeter effect of +0.7% and an exchange rate effect of +4.6%. Sales in other Americas grew by +53.4%, due to an organic growth of +50.7%, mainly driven by Argentina, Canada and Mexico, a perimeter effect of +11.7% and an exchange rate effect of -9.0%.
Sales in the rest of the world (including duty free), which accounted for 8.2% of total Group sales, grew by +75.6% overall, due to a positive organic change of +58.1%, driven by good consumption trends as well as the transition to the newly established distribution platform in the key Australian market, a positive perimeter effect of +6.9%, and a positive exchange rate effect of +10.6%.
Looking at sales by business segment, spirits (78.1% of total Group sales) grew +16.1%, the combined result of organic growth of +13.8%, a positive perimeter effect of +2.6% and a negative exchange rate effect of -0.3%.
Campari brand sales increased by +6.6% at constant exchange rates (+7.5% at actual exchange rates), thanks to positive performances in the key Italian, Brazilian and German markets, plus Argentina among developing markets. SKYY sales grew by +4.0% at constant exchange rates (-0.3% at actual exchange rates), driven by the strong growth of Infusions and a stable SKYY core in a still highly competitive market in the US, and steady growth in key international markets, particularly Brazil. Aperol continued its very strong momentum (+52.0% at constant exchange rates) thanks to strong performance in Italy, Germany, Austria and other European markets where the brand was recently launched. Wild Turkey franchise sales grew by +54.8% overall at constant exchange rates (+57.3% at actual exchange rates), driven by the positive performance of all the acquired brands in key markets (Wild Turkey core in US and Australia, Wild Turkey ready-to-drink in Australia and New Zealand and American Honey in US and Australia), as well as a return to a normalised trading in sales following the transition to direct distribution in Australia in first half of 2010. Brazilian brands were up by +3.9% at constant exchange rates (+8.4% at actual exchange rates) GlenGrant was up by +5.5% at constant exchange rates (+5.9% at constant exchange rates) and the tequilas were up by +1.2% at constant exchange rates (-3.7% at current exchange rates), driven by good performance of recently re-launched Espolón. Campari Soda recorded a decline of -5.1% at constant exchange rates, as a consequence of continued weakness in the Italian day bars channel (underlying sell-out trend was however more positive).
Wines, which accounted for 11.6% of total sales, increased by +16.0%, due to the combination of an organic performance of +14.4%, a perimeter effect of +1.9% and an exchange rate effect of -0.3%.
Cinzano vermouths grew by +42.0% at constant exchange rates (+38.8% at actual exchange rates) driven largely by a rebound in the key Russian market, in addition to the positive effect of the Argentine market. Cinzano sparkling wines sales increased by +2.2% at constant exchange rates (+2.8% at actual exchange rates), thanks to a positive performance in Germany more than offsetting a decline in in Italy. Other sparkling wines grew by +17.8% overall, driven by strong performance of Riccadonna in key Australian market and strong sales of Mondoro in Russia. Still wines (including Sella&Mosca, Enrico Serafino, Teruzzi&Puthod) grew by +2.5% at constant exchange. Perimeter effect was determined by the new agency brands in still wines.
Soft drinks (9.2% of total sales) increased by +0.8%, driven by positive growth in carbonated drinks (+6.6%). Crodino sales registered a slight decline (-0.9%) in the first half of 2011, after a good recovery in the second quarter.
Acquisition of Sagatiba
Gruppo Campari announces that on August 3, 2011, it acquired Brazilian brand Sagatiba, market leader in the increasingly attractive market of premium cachaça in Brazil. Gruppo Campari had started selling Sagatiba in Latin America under a distribution agreement in March 2010.
Gruppo Campari acquired 100% of the share capital of Sagatiba Brasil S.A., directly and indirectly controlled by the entrepreneur Marcos de Moraes. The acquired business includes the Sagatiba trademarks and the related business assets, including finished goods.
The acquisition price is USD 26 million (equivalent to € 18 million on the acquisition date), plus the payment of an earn-out calculated as 7.5% of annual sales value posted in the 8 years period after the deal’s closing. The implied EBITDA multiple in 2012 (the first year of full consolidation of the brand’s profitability) based on the overall acquisition price of USD 36.3 million (inclusive of the expected earn-out) is 13 times.
With the acquisition of Sagatiba, the Group aims to exploit the growing premium cachaça category in Brazil driven by the consistent trading up of local consumers towards premium brands, thanks to higher disposable income and positive demographics. The Group adds a high-quality business with relevant upside potential in the attractive Brazilian market and further enhances the Group’s local offering in terms of category (covering aperitifs, cachaça, vodka, local whiskies, liqueurs and local brandy) and price points.
Gruppo Campari enjoys a well established position in Brazil, with a strong leadership in the aperitif segment with internationally renowned brands like Campari (of which Brazil is one of the largest markets), Cynar and Cinzano. Moreover, the local offering includes strongly growing SKYY Vodka as well as nationally recognized brands, like the leading aguardiente Dreher and the admix whiskies Old Eight and Drury´s.
Founded by Brazilian entrepreneur Marcos de Moraes in 2004, Sagatiba’s portfolio offers consumers a variety of high quality cachaça, including an unaged offering (Pura), primarily marketed towards a younger demographic and positioned for mixed drinks, and an aged portfolio (Velha and Preciosa), targeted towards an older demographic who would consume aged cachaça ‘straight’.
In terms of consumption, Sagatiba achieved 112,000 nine-litre cases in 2010 posting a CAGR of +21.6% in 2005-2010 (source: IWSR). Brazil accounts for two thirds of brand’s global sales.
Cachaça is the most important spirit category in Brazil. It is derived from sugarcane and is the key ingredient in the classic ‘caipirinha’, Brazil's famed lime and sugar drink. Global sales of cachaça exceeded 85 million nine-litre cases on a worldwide basis in 2010. Brazil represents 99% of the global sales. The premium segment, which still represents a small portion of the total cachaça market, is gaining market share from low end categories. This growth is driven by the trading up of local consumers moving from standard spirits into premium brands.
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, Thursday, August 4, 2011, Campari’s management will hold a conference call to present the Group’s 2011 first half results to analysts and investors. 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
A recording of the conference call will be available from Thursday, August 4 until Wednesday, August 10, 2011.
To listen to it, please call the following number:
- from Italy: 02 72495
- from abroad: +44 1212 818005
(access code: 792#).
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Media conference call
At 2:30 pm (CET) today, Thursday, August 4, 2011, Bob Kunze-Concewitz, Gruppo Campari’s CEO, will hold a conference call in English to present the Group’s 2011 first half results to the media. To participate, please dial one of the following numbers:
- from Italy: 02 8058 811
- from abroad: +44 1212 818003