DAVIDE CAMPARI-MILANO SPA Positive results across all key performance indicators in the nine months 2015 Continued outperformance of high margin Global Priorities1and Developed Markets
EBIT2growth +14.0% reported, organic growth +4.3% overall
- Sales: € 1,144.7 million (+7.9%, organic growth +2.5%)
- Contribution after A&P: € 439.9 million (+12.3%, organic growth +4.2%, 38.4% of sales)
- EBITDA pre one-off's: € 254.7 million (+14.4%, organic change +4.3%, 22.3% of sales)
- EBIT pre one-off's: € 220.7 million (+14.0%, organic change +4.3%, 19.3% of sales)
- Group pre-tax profit: € 178.5 million (+52.7%)
- Net financial debt: € 933.4 million (€ 978.5 million as of 31 December 2014). Net debt to EBITDA pro- forma ratio at 2.5 times (vs. 2.9 times as of 31 December 2014)
Bob Kunze-Concewitz, Chief Executive Officer: 'We achieved positive growth across all key performance indicators in the first nine months of 2015. In particular, notwithstanding the increased weakness in some emerging markets (particularly Russia, Brazil and Nigeria), key profitability indicators, organic growth and margin expansion, showed very positive performance and accelerated in the third quarter. This result was achieved thanks to the continuous improvement of the sales mix by brand, driven by the Global priorities, which grew by +7.1% in the first nine months and gained traction in the third quarter, and by region, thanks to the outperformance of core high-margin developed markets in comparison with emerging markets, having lower than Group average margin. Looking forward, we are on track to achieve a positive full year performance. We expect the improvement in operating margins achieved in the first nine months 2015 to continue for the remainder of the year. Overall, notwithstanding the increased weakness in some emerging markets, we expect risks and opportunities to be evenly balanced for the remainder of the year.'.
1 Campari, Aperol, SKYY, Wild Turkey and Jamaican rums.
2 EBIT pre one-off's.
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9M 2015 € million | 9M 2014 € million | Reported change | Organic Change | Forex impact | Perimeter impact | |
Net sales | 1,144.7 | 1,060.5 | +7.9% | +2.5% | +5.7% | -0.2% |
Contribution after A&P(1) | 439.9 | 391.8 | +12.3% | +4.2% | +6.9% | +1.2% |
EBITDA pre one-off's | 254.7 | 222,7 | +14.4% | +4.3% | +10.0% | - |
EBITDA | 255.7 | 189.4 | +35.0% | |||
EBIT pre one-off's | 220.7 | 193.7 | +14.0% | +4.3% | +9.9% | -0.3% |
EBIT | 221.7 | 160.3 | +38.3% | |||
Group pre-tax profit | 178.5 | 116.9 | +52.7% |
(1) EBIT before SG&A.
As disclosed on May 12, as required by IFRS, starting from January 1, 2015, Gruppo Campari has reorganised its geographic reporting segments to reflect some recent organisational changes. The new regions are Americas, SEMEA (Southern Europe, Middle East and Africa)3, North, Central and Eastern Europe and Asia Pacific.
Moreover, starting from January 1, 2015, Gruppo Campari has refined its brand clusters to better reflect the business focus on the key growth opportunities. The brand clusters are: Global Priorities, including Campari, Aperol, SKYY, Wild Turkey4 and the Jamaican rums; Regional Priorities, including bitters (Cynar, Averna and Braulio), liqueurs (Frangelico and Carolans), whiskies (GlenGrant and Forty Creek), tequila (Espolòn), sparkling wines and vermouth (Cinzano, Riccadonna and Mondoro); Local Priorities, including Campari Soda, Crodino, Wild Turkey ready-to-drink, Ouzo 12, Cabo Wabo, Sagatiba and Dreher; Rest of portfolio, including agency brands and non-core business.
In the first nine months of 2015 Group sales totalled € 1,144.7 million showing a reported increase of
+7.9%. Organic sales growth was +2.5%, driven by high margin Global priorities (+7.1%) and mitigated by the negative effects of a weak performance of lower margin markets (as Russia with a -1.5% impact on total Group organic growth) and the decline in seasonal non-core Jamaican sugar business (with a -0.4% impact on total Group organic growth), affected by poor weather conditions in the key first half of the year.
The exchange rate effect was +5.7%, driven by the appreciation of the US Dollar (+21.6%) and the Jamaican Dollar (+15.4%) as well as favourable trends in all other key Group currencies with the exception of the Russian Rouble and to a lesser extent the Brazilian Real, that lost value.
The perimeter effect was -0.2% of sales, the combined effect of acquisitions and both the termination of some distribution agreements and the sale of non-core businesses5.
Gross profit increased by +11.7% to € 631.3 million (+3.7% organic change), or 55.2% of sales. Advertising and promotion spending (A&P) was up by +10.3% to € 191.5 million, or 16.7% of sales. CAAP (Contribution after A&P) was up by +12.3% to € 439.9 million (+4.2% organic change), or 38.4% of sales. Structure costs, i.e. selling, general and administrative costs, increased by +10.6% to € 219.2 million, or 19.1% of sales. EBITDA pre one-off's was up by +14.4% to € 254.7 million (+4.3% organic change), or 22.3% of sales.3 Including Global Travel Retail.
4 Including Wild Turkey bourbon and American Honey.
5 Acquisitions Forty Creek Distillery Ltd. (closed on 2 June 2014) and Gruppo Averna (closed on 3 June 2014).
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EBIT pre one-off's increased by +14.0% to € 220.7 million (+4.3% organic change), or 19.3% of sales. Positive one-off's of € 1.0 million related to the gain on the sale of Federated Pharmaceutical division in Jamaica for € 5.0 million, in part offset by one-off restructuring costs. It should be noted that one-off's in the first nine months of 2014 were negative by € 33.4 million6. EBITDA reached € 255.7 million, an increase of +35.0%, or 22.3% of sales. EBIT reached € 221.7 million, an increase of +38.3%, or 19.4% of sales. Group pre-tax profit was € 178.5 million, up by +52.7%, driven by EBIT increase and the change in one-off items.As of September 30, 2015, net financial debt stood at € 933.4 million (€ 978.5 million as of December 31, 2014), after the dividend payment, the repurchasing of own shares. The healthy cash flow generation mitigated the unfavourable US Dollar trend. Net debt to EBITDA pro-forma ratio is 2.5 times as of 30 September 2015, improving vs. 2.9 times as of 31 December 2014.
Looking at sales by region, the Americas (42.8% of total Group net sales in the first nine months of 2015) posted an overall growth of +15.5%, with an organic change of +5.3%, a favourable exchange rate impact of +13.5% and a perimeter effect of -3.3%, driven by the termination of some distribution agreements and the sale of non-core businesses in Jamaica, partially compensated by the Forty Creek acquisition7. In the US (22.3% of total Group sales and 52.0% of the region), sales registered a positive organic performance of
+3.8% in the first nine months of 2015. Key drivers were the positive performance of Wild Turkey (Wild Turkey bourbon and American Honey) and of the Jamaican rums (particularly Appleton Estate and Wray&Nephew Overproof), the continued positive development of the aperitifs, such as Aperol and Campari, as well as strong growth in Esplòn, Frangelico and Carolans. SKYY showed a flattish performance, not reflecting the stronger underlying depletion and consumption performance. Sales in Jamaica (6.5% of total Group sales and 15.2% of the region) registered an organic change of +2.0%, thanks to the continued positive performance of Jamaican rums and Campari, benefiting from an increased focus on the core business, partly offset by the negative effect of the non-core sugar business. Sales in Brazil (3.8% of total Group sales and 8.8% of the region) declined organically by -4.9%, due to the weak macroeconomic environment. Sales in Argentina (2.8% of total Group sales and 6.7% of the region) continued to register a double-digit organic growth (+22.4%) driven by the robust volume performance of premium brands such as Campari, SKYY and Cynar. Sales in Canada (3.1% of total Group sales and 7.2% of the region) registered an overall organic growth of +4.7%, normalizing after the distribution change8, driven by Forty Creek, Campari, Aperol and Carolans and the positive progression of the Jamaican rums.
Sales in Southern Europe, Middle East and Africa9 (32.7% of total Group sales in the first nine months 2015), posted an overall growth of +5.4%, with an organic change of +2.2%, an exchange rate impact of
+0.3% and a perimeter effect of +3.0%, mainly driven by the Averna acquisition. The Italian market (25.6% of total Group sales and 78.4% of the region) showed an organic change of -0.5%. These were driven by the continued solid performance of Campari and Aperol, as well as the positive growth of carbonated drinks driven by good weather conditions. On the other hand, the single-serve aperitifs were negatively affected by a tough comparison base, and the sparkling wines and whiskies declined. The region's other countries (7.1% of Group net sales and 21.6% of the region) posted overall good organic results (+13.7%), driven by a strong growth particularly in Spain (Campari, Aperol, Frangelico, Cinzano, Carolans and Bulldog), France
6 Mainly relating to provisions for restructuring initiatives in connection with Gruppo Averna acquisition, still wine business and Jamaican non-core businesses, and goodwill write-down resulting from still wine business restructuring (non-cash).
7 Acquisition of Forty Creek Distillery Ltd. closed on 2 June 2014.
8 As of 1 January 2015, Gruppo Campari started direct distribution in Canada.
9 Including Global Travel Retail.
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(Aperol, GlenGrant, Cynar and Riccadonna) and South Africa (SKYY), mitigated by a temporary slowdown of Global Travel Retail and weakness in Nigeria (Campari).
Sales in the North, Central and Eastern Europe (17.8% of total Group sales in the first nine months 2015), decrease by -1.7% overall, driven by an organic change of -2.1%, an exchange rate effect of -0.2%, as a result of the devaluation of the Russian Rouble, and a perimeter effect of +0.6%, mainly driven by the Averna acquisition10. Sales in Germany (10.0% of total Group sales and 56.0% of the region) recorded an overall organic growth of +6.5%, thanks to an acceleration in the third quarter, driven by Aperol and Campari, which benefited from a very positive summer. The continued good performance also of Cinzano vermouth, Frangelico, Ouzo 12 and the agency brands offset the weakness of Cinzano sparkling wines. Russia (0.9% of total Group sales and 4.9% of the region) showed a negative organic performance (- 52.8%), as a result of a further deterioration of the macroeconomic situation. The performance was also significantly affected by increasing competitive pressure triggered by the decline in consumer confidence and the Group's tight credit control procedures leading to destocking. The region's other markets (7.0% of Group net sales and 39.1% of the region) registered an overall positive organic growth (+6.1%), mainly driven by the UK (Aperol, Campari, SKYY and the whiskies), whilst the Central and Eastern European markets were mainly driven by the aperitifs and GlenGrant.
Sales in Asia Pacific (6.7% of total Group sales in the first nine months 2015) increased by +3.8% overall, with an organic change of +1.3%, an exchange rate effect of +2.5% and a neutral perimeter effect. Organic performance in Australia (4.7% of total Group sales and 69.7% of the region) was positive by +1.2%, driven by the good performance of Campari, Aperol, Wild Turkey ready-to-drink and SKYY Vodka, more than offsetting the weakness registered in the third quarter due to the phasing of co-packing activities. The other markets (2.0% of Group net sales and 30.3% of the region) registered an overall positive growth of
+1.4%, mainly driven by New Zealand (Appleton Estate, Coruba and SKYY ready-to-drink) more than offsetting the weak performance in Japan affected by distributor stock phasing ahead of new Wild Turkey packaging. China registered a soft performance as a result of the temporary weakness of sparkling wines almost entirely offset by the very positive results of SKYY ready-to-drink.Looking at sales by key brands in the first nine months 2015, with regards to the Global priorities, Campari registered a very positive organic growth of +6.0%, driven by the high single digit growth in Italy and the continued double digit growth in Argentina, US, Spain, Jamaica, UK and Canada more than offsetting the declines in Brazil and Nigeria.
Aperol showed an organic increase of +11.4%, mainly driven by the positive growth achieved in Italy, Germany and core Central European markets, and was boosted by continued double digit growth in high potential markets (France, Spain, UK, US) and in seeding markets (Eastern Europe, Brazil, Australia). SKYY sales achieved a positive organic growth of +2.1%, showing a flattish performance in the US, not reflecting the stronger underlying depletions and consumption performance. The brand achieved positive results in Brazil, South Africa, Italy, Argentina, Australia, UK, Spain, Mexico and Jamaica. Wild Turkey registered a positive organic change of +3.7%, driven by the good results achieved in the key US market, for both core and American Honey, offsetting the weakness in Japan, due to shipment phasing of distributor ahead of new Wild Turkey packaging. A positive progression continued in seeding markets (Canada, Germany, UK and Russia).The Jamaican rums, including Appleton Estate, J.Wray and Wray&Nephew Overproof, achieved a very positive organic growth of +15.7%, mainly driven by the core US, Jamaican and Canadian markets, as well as Mexico.
With regards to the Regional Priorities, Cynar showed a positive organic growth (+1.2%), mainly driven by the continued positive results achieved in US, France and Argentina. GlenGrant registered a good organic performance of +4.4%, driven by France, Spain, Germany and other Central European markets. Carolans and Frangelico increased overall by +7.8% organically. Carolans was driven by positive results in core US and Canada, and Frangelico was favoured by double-digit growth in the US, Spain and Germany. Espolòn
10 Acquisition of Gruppo Averna closed on 3 June 2014.
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