Earnings Release • May 9, 2017
Earnings Release
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| Informazione Regolamentata n. 0530-32-2017 |
Data/Ora Ricezione 09 Maggio 2017 10:38:01 |
MTA | |
|---|---|---|---|
| Societa' | : | DAVIDE CAMPARI - MILANO | |
| Identificativo Informazione Regolamentata |
: | 89106 | |
| Nome utilizzatore | : | CAMPARIN05 - Garavini | |
| Tipologia | : | IRAG 03 | |
| Data/Ora Ricezione | : | 09 Maggio 2017 10:38:01 | |
| Data/Ora Inizio Diffusione presunta |
: | 09 Maggio 2017 10:38:02 | |
| Oggetto | : | Gruppo Campari announces 2017 first quarter results (REGEM, Informazioni Reg. Consob n.11971/1999) |
previste dall'art. 65,ter, comma 1-bis del |
| Testo del comunicato |
Vedi allegato.
Good start to the year despite some phasing effects, results in line with expectations in a small seasonality quarter
Positive overall growth and in organic terms across all performance indicators, driven by continuous outperformance of key priority brands and markets and positive contribution from Grand Marnier
Net sales reported +15.0%, organic +5.7% Global priorities +10.8% and Regional priorities1 +13.2% EBIT adjusted +19.5%, organic +1.6% Group pretax profit adjusted +56.0%
Bob Kunze-Concewitz, Chief Executive Officer: 'We had a good start to 2017, delivering results in line with expectations in a low seasonality quarter. We achieved sustained overall, growth in both organic and reported terms, across all performance indicators, thanks to a continuous improvement of our sales mix by brand and region. This good performance was delivered despite the late Easter and the expected phasing effects relating to accelerated investments in advertising & promotions and new distribution capabilities. Looking at the current year, our outlook remains fairly balanced and unchanged. Macro and political environments remain uncertain in most developed marketswhilst challenges in emerging market economies will persist. However, we remain confident in delivering a positive performance for the full year on both the top and bottom line. The continuous outperformance of the high-margin premium portfolio in key developed markets, which leverages our strengthened distribution networks and brand building investments, will continue generating a favourable sales mix and consequent gross margin expansion and help compensate some input costs inflation. The evolution in operating margins during the year will reflect the expected phasing
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1 Global Priorities include Campari, Aperol, SKYY, Wild Turkey and the Jamaican rums in Q1 2017. Regional Priorities include Espolòn, GlenGrant, Forty Creek, Bulldog, Averna, Frangelico, Carolans e Cinzano in Q1 2017.
2 EBITDA and EBIT before operating adjustments.
3 Group pretax profit before operating and financial adjustments of € (0.8) million in Q1 2017 and € (0.7) million in Q1 2016.
relating to brand building and route-to-market investments in the first part of the year, as well as the comparison base in the previous year.
Moreover, business will benefit from the full year consolidation of Grand Marnier, positively leveraging the enhanced distribution capabilities in the US and the brand strategy deployment, as well as the disposals of various non-core, low-margin businesses. Finally, we are pleased to announce that we have reached an agreement with the Italian fiscal authorities defining our tax benefits according to the 'Patent box' regime for the period 2015-2019. For the fiscal years 2015 and 2016 we will benefit from tax savings of approximately € 12 million and estimated € 16 million respectively, to be accounted for in the half year 2017 income statement.'
Milan, May 9th , 2017-The Board of Directors of Davide Campari-Milano S.p.A. (Reuters CPRI.MI-Bloomberg CPR IM) approved the additional financial information at March 31st 2017.
| Q1 2017 | Q1 2016 | Reported | Organic | Forex | Perimeter | |
|---|---|---|---|---|---|---|
| € million | € million | change | change | impact | impact | |
| Net sales | 376.6 | 327.4 | +15.0% | +5.7% | +2.7% | +6.6% |
| Contribution after A&P4 | 151.4 | 126.7 | +19.4% | +6.1% | +2.6% | +10.8% |
| EBITDA adjusted | 78.6 | 66.8 | +17.7% | +2.6% | +1.9% | +13.2% |
| EBIT adjusted | 64.4 | 53.9 | +19.5% | +1.6% | +1.7% | +16.2% |
| EBITDA | 77.8 | 60.8 | +27.8% | |||
| EBIT | 63.6 | 47.9 | +32.6% | |||
| Group pretax profit | 53.6 | 34.2 | +56.7% | |||
| Group pretax profit adj | 54.4 | 34.9 | +56.0% |
In the first quarter of 2017, Group salestotalled € 376.6 million, showing an increase of +15.0%. The organic sales growth was +5.7%, driven by strong organic growth of high-margin Global Priorities (+10.8%) and Regional Priorities (+13.2%). We also benefited from a positive exchange rate effect of +2.7% as many currencies increased in valuation vs. last year such as the US Dollar, Brazilian Real, Russian Ruble and Canadian Dollar. The perimeter effect of +6.6% was driven by the combined effect of the Grand Marnier acquisition, consolidated as of July 1st , 2016, the termination of some distribution agreements and the sale of non-core businesses. The acquisition of Bulldog London Dry Gin, closed in February 2017, did not produce perimeter effects as the brand was already integrated into the Group's distribution network.
Advertising and promotion spending (A&P) increased organically by +14.5% to € 66.5 million, at 17.7% of sales due to phasing of major marketing initiatives.
CAAP (Contribution after A&P) was up organically by +6.1% to € 151.4 million, at 40.2% of sales.
Structure costs, i.e. selling, general and administrative costs, were € 87.0 million, at 23.1%of sales, increasing by +9.3% organically, driven by the continued strengthening of our distribution capabilities(the enhancement of the Group's on-premise capabilities in the US and a newly established route-to-market in South Africa and Peru).
EBITDA adjusted was up by +17.7%to € 78.6 million (+2.6% organic growth), at 20.9%of sales.
EBIT adjusted increased by +19.5% to € 64.4 million (+1.6% organic growth), at 17.1%of sales.
Operating adjustments were negative by € 0.8 million.
EBITDAreached € 77.8 million, at 20.7% of sales.
EBIT reached € 63.6 million, at 16.9% of sales.
Group pretaxprofit adjustedwas € 54.4 million (+56.0%). Group pretax profit was € 53.6 million, +56.7%.
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4 EBIT before SG&A.
Within the perimeter effect (net sales of € 21.7 million and EBIT adjusted of € 8.7 million), Grand Marnier contributed€ 32.5 million in net sales, € 9.2 million in EBIT adjusted and € 10.2 million in EBITDAadjusted.
Net financial debtstood at € 1,206.3 million as of March 31st, 2017, broadly in line in comparison to December 31st, 2016 (€ 1.199,5 million), after the payment of the Bulldog acquisition, partially offset by the proceeds from the Chilean winery disposal, for a net cash-out amount of approximately € 40 million.
Looking at sales by region, the Americas (46.8% of total Group sales in Q1 2017) posted an overall change of +30.9%, with an organic growth of +8.0%, an exchange rate impact of +3.4% and a perimeter effect of +19.5%. The US, the Group's largest market, accounted for 30.1% of total Group sales. Sales registered a positive organic performance of +7.5%, despite the tough comparisonbase (+14.8%), positively impacted by shipment catch-up after destocking in Q4 2016 ahead of route-to-market changes. Growth was driven by Wild Turkey bourbon (+21.8%) and the Italian specialties, particularly Aperol (+74.1%) and Campari (+29.9%). Espolòn continues its strong high double-digit growth momentum. These results were partially offset by SKYY, which continues to be affected by a very competitive environment and weakness in the flavoured category. Marketing support for SKYY was also shifted into Q2 2017 ahead of a new campaign. Sales in Jamaica (5.0% of total Group sales) registered an organic change of 25.7%, driven by Jamaican rums, in particular Wray&Nephew, whilst Campari also performed well (up by high double-digits). Sales in Brazil (2.7% of total Group sales) registered an overall organic sales increase of +51.7%, in a small quarter and despite the macroeconomic weakness, with the Brazilian brands and Campari up double digit against an easy comparison base (-27.2% overall in Q1 2016). Sales in Argentina (2.0% of total Group sales) saw an organic decline of - 26.3%, due to tough comparatives (+87.6% in Q1 2016) as well as a weak macroeconomic environment, which affected our largest brands, Campari and Cinzano. Sales in Canada (3.1% of total Group sales) registered positive organic growth of +4.8%, driven by Forty Creek, SKYY Vodka, Carolans and the aperitifs (Aperol, Campari).
Sales in Southern Europe, Middle East and Africa5 (29.0% of total Group sales in Q1 2017) posted an overall decline of -1.6%, with an organic change of +1.4%, a slightly positive exchange rate impact and a perimeter effect of -3.6%. The organic performance in the Italian market (21.3% of total Group sales) was slightly down from last year (-1.4%) mainly due to the late Easter. Aperol grew by +10.8%, while Campari declined against a very unfavourable comparison base (+44.0% in Q1 2016). The overall result was affected by the Local priority brands (mainly Campari Soda), which fell by -5.6%, mainly affected by the late Easter. The region's other markets (7.7% of Group net sales) showed overall a very solid performance. Global Travel Retail net sales were up by +18.2%, mainly driven by Aperol, GlenGrant, Appleton and Wild Turkey. South Africa enjoyed very strong growth (from a low base) as the Group transitioned into its own route-to-market, in part offsetting a decline in Nigeria, impacted by prolonged socio-economic instability.
Sales in North, Central and Eastern Europe (17.4% of total Group sales in Q1 2017) increased by +12.1% overall, driven by an organic change of +11.5%, an exchange rate effect of +2.8% and a perimeter effect of - 2.2%. Germany (7.9% of total Group sales) was slightly down, due to the weakness in agency brands and sparkling wines against an unfavourable comparable base. Importantly, though, Germany continued delivering a strong performance across Aperol (+21.1%), Campari (+12.0%) and Averna (+24.2%), as well as growth in Frangelico, Wild Turkey and Bulldog. Russia's turnaround continues (2.9% of total Group sales), growing organically by 86.5% in Q1 2017, with double-digit growth in Mondoro and triple-digit growth in Cinzano sparkling wines, while the local macro environment remains uncertain. The region's other markets (6.6% of Group net sales) registered an overall positive organic growth, mainly driven by UK (+22.2%), Austria and Belgium, thanks to the positive performances of Campari, Aperol and Appleton.
Sales in Asia Pacific (6.7% of total Group sales in Q1 2017) increased by +9.8% overall, with an organic change of -1.1%, an exchange rate effect of +8.0% and a perimeter effect of +2.9%. Organic performance inAustralia (5.1% of total Group sales) declined by -3.0% due to weakness in our Wild Turkey ready-drink portfolio and Wild Turkey bourbon due to strong competitive pressure as well as adverse weather conditions. There were,
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5 Including Global Travel Retail.
however, very positive results from Aperol, SKYY, Espolòn. The other Asia Pacific markets(1.7% of Group net sales) registered an overall positive organic change thanks to a very good performance in both China and Japan, the latter benefitting from Wild Turkey which recovered the previous year's delays, whilst SKYY, Cinzano sparkling wines also recorded growth.
Global Priority sales(53.3% of total) grew by +10.8% in Q1 2017. Aperol continued to outperform (+17.7%), driven by the sustained growth in the brand's core markets(Italy, Germany, Austria)andtheUS up by doubledigit) as well as very robust results also from Australia, Spain, Greece, Brazil, Canada and Russia, from a small base. SKYYsales achieved an organic change of +0.2%. The core US market registered a negative performance, mainly attributable to a very competitive environment and persisting weakness in the flavours category. Marketing support for the brand has also been shifted into Q2 ahead of the new campaign. Very good results were delivered on SKYY in South Africa, Brazil, Canada, Australia and China. Campari continued its positive momentum, up +3.1%organically, driven by the very good performance in the USA, Germany, France, Austria, Brazil and Jamaica, only partially offset by shipment weakness in Italy and Argentina, both due to a tough comparable base in Q1 2016, and continued weakness in Nigeria. Wild Turkey, which includes American Honey, registered a positive organic change of +23.9%, with strong results in the core US market, driven by the restocking of product after route-to-market changes with our distribution network, and Japan. The Jamaican rums, including Appleton Estate, J.Wray and Wray&Nephew Overproof, showeda positive organic growth of +16.8%. Outstanding performances from Jamaica, the US and the UK.
Regional Priorities(17.3% of total) grew by +13.2%in Q1 2017. The Cinzano franchise showed anoverall good organic result (+6.1%), mainly driven by Cinzano sparkling wines on the Russian market, more than compensating the negative performance of Cinzano vermouth in Argentina, also due to a particularly unfavourable comparison base in the first quarter of 2016, and Cinzano sparkling wines in Germany. Averna and Braulio continue to grow (+2.0%) despite a tough comparable from Q1 2016 (+61.6%), driven by the positive results of Braulio in Italy and Germany as well as and the strong double-digit growthof Averna in the US and Germany. GlenGrant continues to build positive momentum (+14.9%), mainly driven by France, Italy and South Africa. Forty Creek registered a good performance (+11.6%)in the US and Canada. Carolans grew organically by +2.7% despite a high comparable to Q1 2016 with good trends in Canada, Russia and Mexico while Frangelico increased by +12.2% organically, driven by Germany, the US and the UK. Espolòn continued to showa very strong double digit organic growth at +75.3%, thanks to the outperformance in the core US market (+79.2%), and the positive momentum in new markets (particularly Australia, but also Italy and Russia). Other sparkling wines (Riccadonna andMondoro) increasedorganically by +2.4%, attributable to the positive performance of Mondoro (Russia) which offset weakness in Riccadonna in France due to shipment phasing. Bulldog, now within our own Regional Priority brands cluster, grew high double-digit with strong performances in Belgium, the US, Germany and UK.
Local Priorities (11.8% of total)declined by -3.0%, mainly due to Campari Soda and Crodino in the core Italian market, affected by the late Easter. Wild Turkey ready-to-drink in Australia declined too, driven by competitive pricing pressure as well as poor weather at the start of the year. Brazilian brands registered a recovery (+48.8%) against a low comparison base in a market that continues to be impacted by macroeconomic challenges.
On April 28th 2017, the parent company Davide Campari-Milano S.p.A. reached an agreement with the Italian fiscal authorities ('Agenzia Generale delle Entrate') defining the methodology for the calculation of the share of tax-exempt profits from income taxes (IRES and IRAP) for the purposes of the so-called Patent Box regime, i.e. the size of the economic contribution to the company's income generated by intangible assets. This tax relief scheme is granted to Italian enterprises that generate income through the direct use or the licensing to third parties of intellectual property rights. The agreement applies to the fiscal years from 2015 until 2019. For fiscal year 2015 the tax benefit is calculated exempting from taxation 30% of the income attributable to the use of intangibles that fall within the scope of the regime; for fiscal year 2016 the quota shall be equal to 40% and for fiscal years 2017-2019 equal to 50%. As of the approval of the Quarterly financial information to March 31st, 2017, the tax benefit (IRES and IRAP) amounts to approximately € 12 million for fiscal year 2015; the estimated amount for fiscal year 2016 is approximately € 16 million. The 2017 tax benefit will be
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accounted for in the half year income statement to June 30th, 2017 on a pro quota basis. The tax benefit relating to fiscal years 2015 and 2016 will be accounted for in the same period as a non-recurring tax income and will be deducted from income tax payments during 2017.
The Executive responsible for preparing Davide Campari-Milano S.p.A.'sfinancial reports, Paolo Marchesini, certifies-pursuant to article 154-bis, paragraph 2 of the Legislative Decree 58/1998-that the accounting disclosures in this statement correspond to the accounting documents, ledgers and entries.
This document contains forward-looking statements that relate to future events and future operating, economic and financial results of Gruppo Campari. By their nature, forward-looking statements involve risk and uncertainty because they depend on the occurrence of future events and circumstances. Actual results may differ materially from those reflected in forward -looking statements due to a variety of factors, most of which are outside of the Group's control.
It should be noted that the company's accounts and consol idated results are currently subject to auditing.
At 1:00 pm (CET) today, May 9th, 2017, Campari's management will hold a conference call to present the Group's first quarter 2017 results. To participate, please dial one of the following numbers:
The presentation slides can be downloaded before the conference call from the main investor relations page on Gruppo Campari's website, at http://www.camparigroup.com/en/investors.
A recording of the conference call will be available from today, May 9th , until Tuesday, May 16th, 2017. To listen to it, please call the following numbers:
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| ChiaraGaravini | Tel. +39 02 6225 330 | Email: [email protected] |
|---|---|---|
| Francesco Davico Bonino | Tel. +39 02 6225 689 | Email: [email protected] |
| Elena Tiozzo | Tel. +39 02 6225 290 | Email:[email protected] |
| Thomas Fahey | Tel. +44 (0)20 31009618 | Email: [email protected] |
Enrico Bocedi Tel.: +39 02 6225 680 Email: [email protected]
http://www.camparigroup.com/en/investor http://www.camparigroup.com/en http://www.youtube.com/campariofficial https://twitter.com/GruppoCampari
Gruppo Campari is a major player in the global spirits industry, with a portfolio of over 50 premium and super premium brands, spreading across Global, Regional and Local priorities. Global Priorities, the Group's key focus, include Aperol, Appleton Estate, Campari, SKYY, Wild Turkey and Grand Marnier. The Group was founded in 1860 and today is the sixth-largest player worldwide in the premium spirits industry. It has a global distribution reach, trading in over 190 nations around the world with leading p ositions in Europe and the Americas. The Group's growth strategy aims to combine organic growth through strong brand building and external growth via selective acquisitions of brands and businesses.
Headquartered in Milan, Italy, Campari owns 18 plants and 1 winery worldwide and has its own distribution network in 20 countries. The Group employs approximately 4,000 people. The shares of the parent company Davide Campari -Milano S.p.A. (Reuters CPRI.MI - Bloomberg CPR IM) have been listed on the Italian Stock Exchange since 2001. For more information: www.camparigroup.com/en Please enjoy our brands responsibly
- Appendix -
| % on Group sales | % change, of which: | ||||
|---|---|---|---|---|---|
| total | organic | Exchange rate effect |
external growth | ||
| Global Priorities(1) | 53.3% | 33.9% | 10.8% | 2.4% | 20.7% |
| Regional Priorities | 17.3% | 19.1% | 13.2% | 5.8% | 0.0% |
| Local Priorities | 11.8% | 0.8% | -3.0% | 3.8% | 0.0% |
| Rest of portfolio | 17.6% | -15.7% | -4.2% | 0.4% | -11.8% |
| Total | 100.0% | 15.0% | 5.7% | 2.7% | 6.6% |
| 1 January-31 March 2017 | 1 January-31 March 2016 | % | |||
|---|---|---|---|---|---|
| € million | % | € million | % | Change | |
| Americas | 176.4 | 46.8% | 134.8 | 41.2% | 30.9% |
| SEMEA (Southern Europe, Middle East and Africa) | 109.2 | 29.0% | 111.0 | 33.9% | -1.6% |
| North, Central & Eastern Europe | 65.7 | 17.4% | 58.6 | 17.9% | 12.1% |
| Asia Pacific | 25.4 | 6.7% | 23.1 | 7.1% | 9.8% |
| Total | 367.6 | 100.0% | 327.4 | 100.0% | 15.0% |
| Total | Organic | Exchange | External | |
|---|---|---|---|---|
| Breakdown of % change | % Change | growth | rate effect | growth |
| Americas | 30.9% | 8.0% | 3.4% | 19.5% |
| SEMEA (Southern Europe, Middle East and Africa) | -1.6% | 1.4% | 0.7% | -3.6% |
| North, Central & Eastern Europe | 12.1% | 11.5% | 2.8% | -2.2% |
| Asia Pacific | 9.8% | -1.1% | 8.0% | 2.9% |
| Total | 15.0% | 5.7% | 2.7% | 6.6% |
(1) Including Grand Marnier
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| 1 January - 31 March 2017 | 1 January - 31 March 2016 | Change | |||
|---|---|---|---|---|---|
| € million | % | € million | % | % | |
| Net sales(1) | 376.6 | 100.0% | 327.4 | 100.0% | 15.0% |
| COGS(2) | (158.8) | -42.2% | (148.3) | -45.3% | 7.1% |
| Gross profit | 217.9 | 57.8% | 179.2 | 54.7% | 21.6% |
| Advertising and promotion | (66.5) | -17.7% | (52.4) | -16.0% | 26.8% |
| Contribution after A&P | 151.4 | 40.2% | 126.7 | 38.7% | 19.4% |
| SG&A(3) | (87.0) | -23.1% | (72.8) | -22.2% | 19.4% |
| EBIT adjusted(4) | 64.4 | 17.1% | 53.9 | 16.5% | 19.5% |
| Adjustments | (0.8) | -0.2% | (6.0) | -1.8% | - |
| Operating profit=EBIT | 63.6 | 16.9% | 47.9 | 14.6% | 32.6% |
| Net financial income (charges) | (10.0) | -2.7% | (19.0) | -5.8% | -47.3% |
| Financial adjustments | 0.1 | 0.0% | 5.3 | 1.6% | - |
| Profit before taxes | 53.6 | 14.2% | 34.2 | 10.5% | 56.6% |
| and non-controlling interests | |||||
| Group pretax profit | 53.6 | 14.2% | 34.2 | 10.5% | 56.7% |
| Group pretax profit adjusted(5) | 54.4 | 14.4% | 34.9 | 10.6% | 56.0% |
| Depreciation & Amortisation | (14.2) | -3.8% | (12.9) | -3.9% | 10.1% |
| EBITDA adjusted(4) | 78.6 | 20.9% | 66.8 | 20.4% | 17.7% |
| EBITDA | 77.8 | 20.7% | 60.8 | 18.6% | 27.8% |
(1) Net of discounts and excise duties.
(2) Includes cost of material, production and logistics costs.
(3) Includes selling, general and administrative costs.
(4) EBITDA and EBIT before operating adjustments.
(5) Group pretax profit before operating and financial adjustments of € (0.8) million in Q1 2017 and € (0.7) million in Q1 2016.
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