‘Stable’ Campari Q1 hit by currencies

Despite an above expectation performance, Gruppo Campari’s net sales were pegged back by emerging market currency fluctuations in the 2016 first quarter.

Group sales totalled €327.4 million for the period, indicating a “stable” performance.

While organic growth soared 7.2% – more than double the 3.2% forecast by analysts – on a reported basis sales fell -3.8% as a result of the devaluation of key currencies, including the Argentine peso (-38.5%) and the Brazilian real (-25.3%). The Mexican peso and Russian rouble also had an unfavourable impact.

Geographically, the North, Central and Eastern Europe and Southern Europe, Middle East & Africa regions saw net sales increase 9.8% and 3.9% respectively. Despite organic growth gains, net sales declined across both the Americas (-6.3%) and Asia Pacific (1.1%).

The Group’s pre-tax profit fell -4.3% to €34.2 million, but when adjusted for one-offs, this climbed +26.1% to €40.2 million.

“In the first quarter of 2016 we delivered very positive results across all organic operating performance indicators,” said Bob Kunze-Concewitz, chief executive officer.

“These results reflect the consistent execution of our growth strategy which is delivering a continuous improvement of the sales mix by brand and market.”

Kunze-Concewitz drew particular attention to the “high-margin” global priority brands (Campari, Skyy, Wild Turkey and the Jamaican rums) which grew 11.9% in Q1 on an organic basis.

Looking forward, he said: “We expect that the volatility in some emerging markets and the recent devaluation of the Group’s key foreign currencies will continue during 2016. At the same time, we remain confident that the Group will deliver a positive and profitable performance driven, on the one hand, by the growth of high-margin global priority brands, particularly aperitifs, American whiskies and Jamaican rums and, on the other hand, by the positive performance of the Group’s core strategic markets.”

He added that the perimeter change in the second half of the year will reflect the recent Grand Marnier distribution and eventual acquisition agreement.

Gruppo saw its full year 2015 sales increase 6.2%, despite weakness in the Russian market.