Campari approves third-quarter results as of 30 September 2002

Continued good progress in North America and Asia Pacific and improvement in Brazil offset by deteriorating trading conditions at the back end of Q3
in Western Europe

Underlying strength of Group’s core brands and markets combinations unchanged thanks to heightened brand building and strengthened route-to-market


  • Sales: € 931.6 million (+4.8%, organic growth +2.2%)
  • Contribution after A&P: € 381.0 million (+5.2%, organic growth +2.6%, 40.9% of sales)
  • EBITDA pre one-offs: € 238.4 million (+2.5%, organic growth +0.9%, 25.6% of sales)
  • EBIT pre one-offs: € 213.9 million (+2.0%, organic growth +0.5%, 23.0% of sales)
  • Group pre-tax profit: € 175.7 million (+0.8%)
  • Net financial debt: € 608.0 million (€ 636.6 million as of 31 December 2011)

Milan, November 12, 2012 - The Board of Directors of Davide Campari-Milano S.p.A. (Reuters CPRI.MI - Bloomberg CPR IM) approved the consolidated results for the nine months ending 30 September 2012.

Bob Kunze-Concewitz, Chief Executive Officer:Results in the first nine months 2012 were impacted by a sudden change in September of consumption and trading conditions in Italy, poor trading in the high seasonal summer period in Germany and a less favourable macro-economic environment in other Western European markets. On the positive side, we saw improving trends in Brazil, and achieved continued positive momentum in North America, thanks to heightened focus on brand building activities, and in Asia Pacific, where we are consistently outperforming the local market.
Looking at the highly seasonal Q4 and the beginning of next year, we expect trading conditions in Italy to remain volatile. Consumer confidence in Italy will continue to be adversely impacted by high unemployment, higher taxation and increasing political uncertainty whilst the recent implementation of some legislation, which introduces restrictions affecting commercial relationships, is likely to generate trade destocking. On the positive side, we expect continued positive momentum in North America and Asia Pacific, improving performance in Brazil and Germany and a return to normal trading conditions in Russia. Despite the tough economic environment in Western Europe we remain committed to brand building and exploiting opportunities in the key brand market combinations and will heighten our focus on cost optimisation opportunities. For the medium term, we expect our strong ‘long’ aperitifs franchise to overcome short term adverse economic conditions in Italy and Europe and to maintain our positive momentum across categories in the rest of the world.’.

In the first nine months of 2012 Group sales totalled € 931.6 million showing a reported growth of +4.8% and organic growth of +2.2% (+10.5% in the first nine months of 2011). The exchange rates effect was positive by +2.6%. The perimeter effect was a negative -0.1%, entirely driven by changes in distribution agreements.
Gross margin increased to € 546.8 million, up +4.9%, or 58.7% of sales.
Advertising and promotion spending (A&P) was up by +4.2% to € 165.9 million, or 17.8% of sales (17.9% of sales in the first nine months of 2011), reflecting an acceleration of A&P spending in the third quarter 2012 (+17.3% quarter on quarter), as planned.
Contribution after A&P (gross margin after A&P) was up by +5.2% to € 381.0 million (+2.6% organic growth), or 40.9% of sales.
Structure costs, i.e. selling, general and administrative costs, increased by +9.7%, or 17.9% of sales, reflecting investments in new distribution platforms and strengthened central functions.
EBITDA pre one-offs was up by +2.5% to € 238.4 million (+0.9% organic growth), or 25.6% of sales.
EBITDA reached € 236.1 million, an increase of +3.1%, or 25.3% of sales.
EBIT pre one-offs rose by +2.0% to € 213.9 million (+0.5% organic growth), or 23.0% of sales.
EBIT reached € 211.6 million, an increase of +2.6%, or 22.7% of sales.
Net financing costs stood at € 33.2 million in the nine months 2012, up from € 31.5 million in the first nine months 2011, due to the Group's higher average cost of net debt, mainly driven by negative carry .
Group pre-tax profit reached € 175.7 million, up by +0.8%, or € 180.0 million, up +3.3%, before negative one-off’s relating to the set-up of the financing of the Lascelles deMercado acquisition of € 4.3 million, of which € 2.1 million of non-recurring costs and € 2.2 million of one-off financial expenses.
As of 30 September 2012, net financial debt stood at € 608.0 million (€ 636.6 million as of 31 December 2011), thanks to positive cash flow generation.

Looking at sales by region in the first nine months 2012, the Americas (35.2% of total Group sales) posted an overall growth of +10.1%, with an organic increase of +6.0%, a perimeter effect of -0.9%, and an exchange rate effect of +5.0%. In the U.S. the positive momentum continued across all key brands, helped by heightened brand building activities: sales in the U.S. market (22.7% of total Group sales), registered an organic increase of +10.0%, driven by the Wild Turkey and SKYY franchises, Carolans, Espolón, Cabo Wabo and Campari, a perimeter effect of -1.7% (due to the termination of Cutty Sark agency) and an exchange rate effect of +10.4%. Sales in Brazil (6.6% of total Group sales) registered a negative organic performance of -8.6% (-14.2% in the first half of 2012), notwithstanding an improvement in the third quarter (+1.4%) driven by a recovery of the Campari brand and a continued positive trend in SKYY Vodka, helped by the launch of the SKYY Infusions range, which offset a still negative trend of the local brands. The exchange rate effect in Brazil was -6.1%. Sales in the other Americas (6.0% of total Group sales) showed an organic growth of +13.3%, mainly thanks to a strong performance in Argentina (Cinzano, Campari and Old Smuggler), showing very positive results in the context of import restrictions in the whole quarter, Canada (SKYY Vodka and Campari) and Mexico (SKYY ready-to-drink’s, SKYY Vodka and Espolón). Perimeter and exchange rate effects were +0.5% and +1.5% respectively.
The Italian market (30.4% of total Group sales) recorded a total change of -1.3%, attributable to an organic performance of -1.9% and a positive perimeter effect of +0.5%. The organic performance reflected a disappointing third quarter 2012, particularly hit by sudden change in trading conditions and consumption trends in September. In particular, ‘long’ aperitifs Campari and Aperol, which continue to hold in consumption in the on-premise driven by the aperitif momentum, were not able to compensate for the negative performances of the rest of spirit portfolio (except for SKYY Vodka), which suffered from slowdown in consumption. Still wines continued to suffer from slowdown in the restaurants channel, and Crodino was hit by challenging environment and poor trading conditions in the day bars channel and the off trade in Italy.
Sales in the rest of Europe (24.0% of total Group sales) decreased by -0.7%, driven by a negative organic performance of -1.7%, a positive perimeter effect of +0.2% and a positive exchange rate effect of +0.8%. The organic performance was driven by contrasting results across the region: Germany registered a decrease of -9.6%, as a consequence of a tough comparison base in the nine months 2011 as well as a commercial dispute effect amplified by its impact in high seasonality summer period, which affected particularly Aperol and Campari. In the rest of Europe Austria and Switzerland grew strongly behind Aperol, whilst Spain and France were negatively impacted respectively by the economic crisis and an excise duty increase. In Russia, sales progressively returned to normalised trend in the third quarter after destocking which affected the first half year (in particular Cinzano and Mondoro), due to transition to own route-to-market.
Sales in the rest of the world (including Global Travel Retail), which accounted for 10.4% of total Group sales, grew by +22.1% overall, with a positive organic change of +13.4% and a positive exchange rate effect of +8.7%. Sales performed strongly in all key markets: in particular, Australia continued to show strong growth across the entire portfolio, showing continuing outperformance of the local market. A very positive development was also achieved in the other region’s key markets, including Japan, China, South Africa and Nigeria.
Looking at sales by business segment, spirits (78.3% of total sales) grew +5.7%, the combined result of positive organic growth of +3.0%, a negative perimeter effect of -0.5% and a positive exchange rate effect of +3.1%.
Aperol registered a negative organic performance of -0.6%, driven by continued growth in established markets (Italy and Austria) with the exception of Germany, heavily impacted by difficult comparatives in the first nine months of 2011 and a commercial dispute with key client in high seasonality period. Importantly, Aperol continues to show strong double digit growth in second tier markets (Switzerland, Benelux, Spain, UK) and triple digit growth in RoW. Overall organic growth of Aperol excluding Germany was +9.1%. Campari brand sales decreased (-0.9% at constant exchange rates), as a result of negative performance in Germany and France, more than offsetting continued resilience in Italian market, an improving performance in Brazil and good traction in international markets, in particular in U.S., Argentina, Russia and Nigeria.
SKYY sales achieved organic growth of +9.4% at constant exchange rates (+18.2% at actual exchange rates), driven by positive performance in US (+5.5%) thanks to SKYY Infusions continued success and positive momentum behind core. Strong results were achieved in the international markets (+26.7%), particularly Brazil, South Africa and Italy. The Wild Turkey franchise achieved strong performance across all markets, showing an organic growth of +20.2% (+31.5% at actual exchange rates). Wild Turkey core brand grew by +9.0% thanks to positive performance across all three core markets (U.S., Australia e Japan). Wild Turkey ready-to-drink grew by +25.7% driven by core Australia. American Honey grew by +43.7%, driven by U.S. and Australia. Tequilas portfolio registered a strong organic growth of +26.4% (+38.1% at actual exchange rates), driven by both Espolón and Cabo Wabo in key U.S. market. Campari Soda declined by -4.8%, affected by adverse economic environment and poor trading conditions in day bars channel and off trade in Italy.
Brazilian brands were down by -13.7% (-19.4% at actual exchange rates), showing a stabilising trend in the third quarter 2012 after poor performance in the first half year, due to pre-buying in Q4 2011 ahead of January price increase, and general consumption slowdown. GlenGrant registered a negative organic performance of -3.8%: a positive performance in Germany, Australia, South Africa and U.S. was not able to offset weak performance in main markets such as France (due to excise duty increase) and Italy (due to decreasing whisky category). Frangelico, Carolans and Irish Mist registered an organic performance of -1.7%, with Carolans growth in core U.S. market more than offset by Frangelico’s decrease.
Wines, which accounted for 11.9% of total sales, grew overall by +1.7%, driven by the combination of a negative organic performance of -1.7%, a perimeter effect of +2.0% and an exchange rate effect of +1.4%.
Cinzano vermouths
registered an organic growth of +3.2%, driven by positive performance in Russia and Argentina offsetting category weakness in rest of developed markets. Cinzano sparkling wines sales registered a negative organic performance of -3.9%, due to improving performance in Russia, although not able to compensate soft sales in Germany and Italy. Other sparkling wines (including Riccadonna, Odessa and Mondoro) grew organically by +1.4%, whilst still wines (including Sella&Mosca, Enrico Serafino and Teruzzi&Puthod) declined organically by -7.2%, driven by the weakness in the traditional Italian on premise channel. An overall positive performance of +1.8% in the still wines was driven by the contribution of the new third party brands.
Soft drinks (8.6% of total sales) grew by +1.3%, driven by an organic performance of +1.2%, thanks to the good performance of the Lemonsoda range in Italy more than offsetting the decrease of Crodino (-4.1%), and an exchange rate effect of +0.1%.

Pursuant to articles 70, paragraph 8, and 71, paragraph 1 bis, of the Consob Issuer Regulations, the Board of Directors approved the opt-out from the obligation to publish an information document for significant transactions (e.g. significant mergers, spin-off’s, share capital increases by means of in-kind contributions of assets, acquisitions and disposals).

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.

Publishing date: 
12 Nov 2002
Last updated May 29 2013