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Gruppo Campari full-year sales climb 4.2%

Italian drinks firm Gruppo Campari saw a 4.2% reported growth uptick in 2016, driven by strong performances from its core portfolio of global and regional priority brands.

Gruppo Campari CEO Bob Kunze-Concewitz said his company saw “sound growth” in 2016

Total group sales reached €1.73 billion for the year, with gross profit climbing 7.4% to €984.6 million.

Group net profit however slid 5.2% to €166.3m, while EBITDA was up 6.6% to €405.3m.

The recent acquisition Grand Marnier made a “positive contribution” from external growth, the company noted.

Gruppo Campari’s global priorities portfolio – which includes Aperol, Campari, Skyy Vodka, Wild Turkey and the Jamaican rums – saw 6.3% sales gains, with regional brands – such as Cynar, Averna and Glen Grant Scotch – climbing 9.3%.

Aperol was a start performer with organic sales soaring 18.5%, driven by “continued sustained growth” in key Italian, German and French markets, with the latter posting triple digit gains.

Campari climbed 8.6% globally driven Italy, Argentina, the US, Germany and the UK, however the “poor consumer environment” in Brazil pegged back sales.

The Jamaican rums portfolio – Appleton Estate, J. Wray and Wray & Nephew Overproof – managed 2% gains, bolstered by Jamaica and Peru put held back by the US and Canada due to the transition to the new range.

Wild Turkey was stable at 1.0% growth, however “growing” markets, including the UK and Canada, saw “double digit” increases.

Skyy however was a weak link, with organic growth slipping 1.4% with the Infusions flavoured line “bringing down” the core expression, which was posted a marginal 0.2% positive.

The company recently acquired Bulldog Gin, and has said it “could be particularly active” in terms of M&A activity in 2017.

Performance by region

The Americas performed well for Gruppo Campari with reported sales up 3.5%, despite the negative exchange rate impact of -6.1%.

The US became the firm’s largest market, overtaking Italy, and posted a “positive” full-year performance of 2.1%, despite experiencing a contraction in the fourth quarter on stock rebalancing ahead of distribution changes.

Southern Europe, Middle East, Africa and Global Travel Retail saw reported sales lift by 1.4%, although the key Italian market was near-flat on an organic basis with 0.3% growth.

Gruppo Campari’s travel retail division bucked the wider market declines and posted strong growth of 11.9%, driven by Glen Grant, Apercol, Campari, Averna and Bulldog, plus “positive trends” from Frangelico Liqueur and Ouzo 12.

North, Central and Eastern Europe made 9.6% reported sales gains, with Germany up 6.0%.

Notably, the Russian market rebounded with a 27.7% organic sales increase as the market “normalised” following a “tough” 2015 when sales collapsed by 41.4%.

Asia Pacific posted reported sales gains of 6.4%, with Australia up 7.2% on Aperol and the Wild Turkey ready-to-drink portfolio. However phasing issues and route-to-market challenges knocked back Japan sales by 1.2%, while trading in China “continued to be tough”.

‘Positive progression’

“We continued to deliver sound growth across all key performance indicators in 2016, in reported as well as organic terms,” said Bob Kunze-Concewitz, Gruppo Campari CEO.

“We achieved these results thanks to the continued outperformance of the high margin global and regional priority brands in key high margin developed markets which helped compensate challenges in emerging markets as well as the negative impact of the low-margin non-core sugar business in Jamaica.

“The positive progression in operating margins, in part mitigated by a faster growth in some lower margin emerging markets (Argentina and Russia), was achieved thanks to the consistent execution of our growth strategy driving a continuous improvement of sales mix by brand and market, in line with our objectives.

“The business benefited also from a positive contribution from external growth, in line with expectations, driven by Grand Marnier, net of the disposals of non-core lower margin businesses.”

Looking ahead to 2017, Kunze-Concewitz said he expected the outlook to remain “fairly balanced”, although he did expect to be hit by inflation in emerging markets and raw material pricing.

“The uncertain political environments in developed markets and challenging emerging economies may affect consumption trends and currencies. Yet, we remain confident to continue delivering a positive full year top and bottom line performance, thanks to the consistent growth of our premium portfolio, positively leveraging our strengthened distribution capabilities and brand building investments.

“Furthermore, the business will benefit overall from the full year consolidation of Grand Marnier, positively leveraging the enhanced distribution capabilities in the US and the kick-off of the brand strategy deployment.”

Gruppo Campari saw its 2015 full-year sales increase 6.2%, despite “increased weakness” in Russia and Nigeria.

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