‘Solid growth’ for Campari as streamlining continues

Gruppo Campari has reported “solid growth” in its first half 2017 results in a year that has seen major streamlining for the group.

Campari announced sales of €844.7 million, representing growth of 13.5% and organic growth of 6.5%.

The Americas in particular posted a positive growth of 26.1% with organic growth of 7.6%. Overall, the US is the group’s largest market, and accounts for 27.6% of overall sales. Sales were driven by Wild Turkey, Aperol and Campari it was reported.

Sales in Jamaica (10.7% organic growth), Brazil (29%), Argentina (3.1%) Canada (8.1%) and Mexico have also all been strong markets so far this year.

Sales in southern Europe, the Middle East and Africa were largely flat and there was a slight uptick in the Italian market “thanks to a recovery in the second quarter”, with the Aperol brand continuing to see double digit growth (10.9%).

The performance of the north, central and eastern European markets was good, increasing by 12.6% thanks to the achievements, once again, of the group’s core brands.

Asia-Pacific grew 11% overall, although the weakness of Wild Turkey in Australia contributed to a 2.7% decline in the country. Sales in China and Japan were good, the latter recovering from a poor 2016 somewhat with good sales for Wild Turkey, Campari and Skyy vodka, while in China there was positive growth for Camus, Skyy and GlenGrant, “albeit off a small base.”

CEO Bob Kunze-Concewitz, commented: “We delivered very good results in the first half of 2017, delivering sustained growth, both in organic and reported terms, across all performance indicators. The solid organic growth was achieved after an acceleration in the second quarter of both sales and profitability.”

“The sustained gross margin expansion, which benefitted from the continuous improvement of our sales mix by brand and region and also from a gradual recovery in the sugar business, helped contain the adverse phasing of A&P investments, skewed into the first half of this year.”

“Looking into the second half of the year, our outlook remains fairly balanced and unchanged. Macroeconomic environments in some emerging markets remain uncertain whilst the political uncertainty persisting in some regions might continue fuelling the volatility of major currencies against the Euro. Moreover, we believe that the progressive strengthening of the euro against the US dollar may have a more adverse impact in the second half of the year. Nevertheless, we remain confident in achieving a positive performance across key indicators for the year, driven by the outperformance of the high-margin global and regional priorities”.

The group has been on something of a divestment binge of late, selling off the greater part of its wine business assets and, most recently, two Irish cream liqueur brands.

In its half year report Campari also announced it has sold off the Grand Marnier headquarters building in Paris for €35.3 million.

“The Group’s operating margin will benefit in the second half of the year from the gradual normalisation of A&P investments and structure costs, the latter also benefitting from the expected efficiencies generated by the Grand Marnier integration.”

“The perimeter effect will reflect our exit from some non-core businesses, particularly the recently announced Carolans and Irish Mist disposal, which will result in an increased focus on the premium high-margin brands in core markets. Such disposals which, combined with the sale of some real estate assets, amounted to a total of approx. €228 million year to date, will contribute to a further acceleration in the reduction of our financial indebtedness, alongside the continuous healthy cash flow generated by our business,” added Kunze-Concewitz.