Campari sees ‘positive’ H1 bolstered by forex impact

Gruppo Campari has reported shining 2015 H1 results, with “positive growth across all performance indicators”.

Campari

Sales increased 10.5% to €757.9 million (organic +3.4% excluding the negative impact of the non-core Jamaican sugar business) while group net profit soared +36.0% to €77.9 million.

EBITDA pre one-offs grew +13.0% to €161.7 million (organic +3.3%), while EBIT, again pre-one offs, increased 11.5% to €138.7 million (organic +2.5%).

The exchange rate effect was notably strong at +6.7%. This was driven by the appreciation of the US dollar (+22.8%) and the Jamaican dollar (+16.1%). Campari reported “favourable” trends in all other key Group currencies with the exception of the Russian rouble and Brazilian real.

Recent acquisitions Forty Creek (2 June 2014) and Gruppo Averna (3 June 2014) contributed to a perimeter effect of +1.0% of sales

While net financial debt (after dividend payment and repurchasing of own shares) reached €1,010.2 million, up from €978.5 million as of 31 December 2014, “healthy cash flow generation mitigated the unfavourable US dollar trend” regarding debt.

“We achieved positive growth across all performance indicators in the first half of 2015,” said Bob Kunze-Concewitz, Chief Executive Officer.

“In particular, the positive organic growth and the favourable mix was driven by the Five 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.”

Sales by region

The Americas, accounting for 42.7% of Campari’s H1 total group sales, posted overall growth of +15.7% (organic +3.4%), with the US, which makes up almost half of the region’s sales, growing at +3.0%. Other notable regional results included Argentina, which registered double digit organic growth of +21.5%.

Southern Europe, Middle East, Africa and Global Travel Retail currently accounts for 33.9% of the business and 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%.

Sales in North, Central and Eastern Europe saw sales decrease by -1.4%. While Germany reported +3.0% growth, Russia, which accounts for 1.0% of total group sales, showed an “expected negative organic performance” of -37.7%. Campari said this was due to the continued “tough environment affected by macroeconomic instability and continued tightening credit”.

Asia Pacific, which currently accounts for 6.5% of total Group sales, saw sales increase by 11.8% overall. Australia was a star performer with sales up +4.3%, while, according to Campari, good sales in New Zealand and China offset weaknesses in Japan.

Sales by brand

The majority of Campari brands posted positive organic growth. In the Group’s Global Priorities division, the Campari brand registered +2.5% uplift, driven by continued double digit growth in Argentina and the US. Aperol showed an organic increase of +5.7% thanks to results in France and Spain, as well as progression in the “high potential markets” including the US, UK and Greece. Skyy achieved positive organic growth of 4.8%, while Wild Turkey increased by a “very positive” +7.8%, only to be outperformed by the Jamaican Rums portfolio (Appleton Estate, J. Wray and Wray & Nephew Overproof) which soared +13.3%.

Regional Priorities also largely made gains. Cynar recorded positive organic growth of +4.0%, while Glen Grant whisky increased +4.5%, driven by Germany, Spain, Sweden and China. Carolans and Frangelico increased overall by +10.4% while Espolón tequila posted resounding organic growth of +24.9%. Wines Cinzano, Riccadonna and Mondoro all posted declines.

Local Priorities recorded more modest gains. Campari Soda (+1.3%), Crodino (+2%) and Wild Turkey ready-to-drink (+2.5%) outperformed Brazilian brands Dreher and Sagatiba which registered an overall organic loss of -0.9%.

Full year forecast

“Looking forward, we are on track to achieve a positive full year performance,” Kunze-Concewitz continued.

“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.”