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Campari’s H1 profit loss no surprise

Gruppo Campari’s profits have continued to plummet this year “in line with expectations” despite a return to sales growth in the second quarter.

Skyy Vodka Moscato hip hop
Skyy Vodka Infusions has helped boost sales for Gruppo Campari in the US

Announcing its half-year financial results for 2013, the Italian drinks group revealed a net profit loss of 26.1% for the first six months of the year to €57.6 million, in line with the 25% profit loss reported in its Q1 results in May.

Sales for H1 came in at €698.6m – up 13% on the same period last year – buoyed by the positive contribution of the Lascelles deMercado buyout in 2012. The acquisition was hailed as the core factor behind the group’s positive 1.4% sales growth in Q2, alongside the “sustained growth in North America, Russia and Argentina as well as the stabilisation or improvement of trends in other developed markets (particularly Italy and Germany)”.

The US, which accounts for over 21% of Campari’s total sales, saw organic sales increase 8.2%, driven by double-digit growth on Wild Turkey and Campari, as well as continued success for its Skyy vodka range.

A slowdown of local brands Dreher, Old Eight and Drury’s saw sales decline slightly in Brazil by 1.5%, although positive performances from Skyy, Sagatiba and Campari offset the fall.

Sales in the ‘other Americas’, which account for 18.4% of Campari’s total revenue, grew 14.4%, driven by strong growth in Argentina.

Campari’s home market of Italy, which contributes to a quarter of the group’s sales, recorded an overall sales decline of 15.7% as a result of the continued poor economic environment.

The rest of Europe however bucked the trend and saw sales row by 4.6%, with Russia up 21.1%. The rest of the world and travel retail grew by 7.9%.

Bob Kunze-Concewitz, chief executive officer, said: “Following the negative impact of the one-off destocking in Italy in the first quarter of 2013, the overall performance in first half of 2013 was also affected by a disproportional concentration of non-recurring charges which reflected the decisions of the Group to accelerate on restructuring projects to strengthen the business in the medium term.

“Looking forward, whilst the group’s overall trading environment should remain volatile due to macroeconomic difficulties in key markets, we expect the business to continue improving gradually over the second half of 2013, driven by sustained brand building across key brand-market combinations and the strengthening resonance of the brand portfolio in new geographies”.

Earlier this year the group announced plans to buy a AUS$20m packaging plant in Australia to improve its RTD business int he region.

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