Campari posts 4.2% growth to €1.7bn in 2016

Gruppo Campari CEO Bob Kunze-Concewitz has hailed “sound growth” across all key performance indicators for the company in 2016, with sales up 4.2% to €1.7 billion.

The group’s full-year results include the following highlights:

• Sales: €1,726.5 million (+4.2%, organic growth +4.7%)
• Contribution after A&P: €676.0 million (+7.2%, organic growth +5.8%, 39.2% of sales)
• EBITDA adjusted: €405.3 million (+6.6%, organic change +4.4%, 23.5% of sales)
• EBIT adjusted: €352.5 million (+6.0%, organic change +3.6%, 20.4% of sales)
• Negative operating and financial adjustments of € 57.8 million pre-tax (€32.3 million post-tax) due to transaction costs, restructuring projects and non-recurring financial costs
• Group net profit adjusted: €198.6 million (+7.0%). Group net profit €166.3 million (-5.2%)
• Grand Marnier acquisition contributed €81.5 million in net sales and €16.1 million in EBIT adjusted, included in the perimeter effect
• Net financial debt: €1,199.5 million as of 31 December 2016 (€825.8 million as of 31 December 2015), after the dividend payment of €52.1 million and the acquisition of Grand Marnier (€584.1 million, net of the proceeds from disposals[5]) thanks to strong cash flow generation
• Free cash flow: €243.2 million (+21.6%)
• Proposed full year dividend for fiscal year 2016 of €0.045 per share, unchanged vs. previous year, on a rectified basis after the proposed stock split.

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

“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, the outlook remains fairly balanced.”

Regarding the macroeconomic environment, Kunze-Concewitz said that an uncertain political environments in developed markets, combined with challenging emerging economies, could have a negative effect on consumption trends and currencies. However, the company remained confident of being able to deliver a positive full-year top and bottom-line performance thanks to the consistent growth of its premium portfolio.

“In particular, in terms of the key organic growth drivers, the ongoing outperformance of high margin Global priorities in key developed markets and the gradual improvement in Jamaican sugar business is expected to continue driving our gross margin expansion, though mitigated by expected increases in input costs (inflation in emerging markets and agave price),” the CEO said.

“The brand building investments are expected to accelerate, driven by both the enhanced pressure on global brand opportunities in high-potential and seeding markets, with an increasing focus on digital, and a perimeter effect, following the Group’s exit from the still wine business (a low marketing intensity business).

“This acceleration is expected to become more visible in the first half of 2017, due to the phasing of some recent major marketing campaigns. We expect the structure costs also to accelerate in organic terms in the first half of the year, mainly driven by strengthened route-to-market initiatives, normalising in the second half.

“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.”