FDBusiness.com

Gruppo Campari has reported a 13.5% increase in first half sales to €844.7 million, reflecting strong organic sales growth of 6.8%, favourable currency exchange rates and a 5% impact stemming from the acquisition of Grand Marnier (consolidated on July 1 2016), the termination of some distribution agreements and the sale of non-core businesses, such as Carolans and Irish Mist.

The Grand Marnier acquisition contributed €58.9 million in net sales, €12.4 million in adjusted EBIT and € 14.2 million in adjusted EBITDA in the first half. Adjusted group EBIT increased by +11.6% to €163.4 million and by 2.9% organically, while adjusted group EBITDA rose by +11.5% to €191.7 million (3.4% organic growth).

The acquisition of Bulldog London Dry Gin, which closed in February 2017, did not produce any significant benefit as the brand was already integrated into the group’s distribution network.

Advertising and Promotion spending (A&P) during the first half increased organically by 16.1% to €162.7 million – equivalent to 19.3% of sales, due to the adverse phasing of advertising investments, skewed into the first half of this year.

Bob Kunze-Concewitz, chief executive of Gruppo Campari.

In July 2017 Gruppo Campari signed an agreement for the sale of the Grand Marnier headquarters building in Paris for €35.3 million. The transaction is in line with the Italian drinks group’s strategy to streamline its non-core businesses and follows the disposals of the wineries in Chile and France, which also became part of Gruppo Campari via the Grand Marnier acquisition.

Bob Kunze-Concewitz, chief executive of Gruppo Campari, comments: “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. This effect, combined with investments in enhanced distribution capabilities, lead to the expected margin dilution in operating margin in the first half.”

He continues: “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. We expect the gross margin to continue benefitting from the favourable sales mix despite being penalized by inflationary effects on material costs in emerging markets as well as rising prices in some raw materials such as agave.”