Campari Group announces 2023 first nine months results

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MILAN , October 30, 2023 (press release) –

The article reports that Davide Campari-Milano N.V. has achieved a 9.8% increase in net sales, reaching €2,201.3 million. This growth is primarily driven by strong brand momentum in aperitifs, tequila, and premium bourbon, as well as robust pricing across the portfolio.

Original Press Release:

Milan , Oct. 26 -- Campari Group issued the following news release:

- Strong momentum in the first nine months despite the expected normalisation in the third quarter and poor weather conditions in Europe

- Positive brand momentum confirmed, in particular from the aperitifs, tequila and bourbon

- Continuous industry outperformance in the core markets combined with robust pricing across the portfolio

FIRST NINE MONTHS 2023-RESULTS HIGHLIGHTS

* Reported net sales of €2,201.3 million, up +9.8% on a reported basis. Organic growth of +10.5% in the first nine months of the year thanks to solid brand momentum, in particular aperitifs, tequila and premium bourbon as well as robust pricing across the portfolio. Organic growth in the third quarter (+4.4%) reflected the expected normalisation as well as the very tough comparison base (Q3 2022: +18.6%, benefiting from the second round of price increases) and unfavourable weather conditions across key European markets, in particular Italy .

* EBIT-adjusted of €520.5 million, 23.6% on net sales, up +5.7% on a reported basis.

- Organic growth of +10.8% in the first nine months, +10bps organic margin expansion, of which: gross margin dilutive (-10bps), impacted by continued COGS inflation, only partially mitigated by positive pricing and mix, A&P accretive (+50bps) due to very poor weather conditions impacting summer activations, SG&A dilutive (- 40bps) reflecting the continuous investment in the business infrastructure, including the future route-tomarket expansion in Greece .

- Organic growth of +3.3% in the third quarter, with margin dilution (-20bps), largely impacted by SG&A costs which grew faster than sales.

- Negative FX (-6.1%, or €(30.1) million), mainly driven by the transactional forex effect of MXN penalising tequila costs, together with the depreciation of the US dollar and Argentine Peso. The perimeter effect was positive (+1.1%, or €5.4 million).

* Group profit before taxation-adjusted of €473.8 million, down -2.0%. Group profit before taxation-adjusted excluding the unrealised exchange gains/(losses) reached €485.9 million, up + 2.1%. Group profit before taxation of €445.2 million, down -1.7%.

* Net financial debt of €1,815.6 million as of September 30 th, 2023, up €260.3 million vs. December 31st 20221 , as positive cash flow generation was more than offset mainly by planned capex investments to increase production capacity as well as cash outlays for the dividend payment. Net debt to rolling EBITDA-adjusted ratio at 2.6 times as of September 30 th, 2023, compared with 2.4 times on December 31st, 2022 .

The Board of Directors of Davide Campari-Milano N.V. (Reuters CPRI.MI-Bloomberg CPR IM) approved the additional financial information for the nine months ended September 30th, 2023 .

Bob Kunze-Concewitz , Chief Executive Officer: ‘Overall, our strong performance continued into the nine months thanks to solid brand momentum, in particular from aperitifs, tequila and bourbon, as well as robust pricing across the portfolio, whilst also reflecting the expected normalisation in the third quarter and the impact of poor weather in Europe . Looking at the remainder of 2023, we expect our topline performance to reflect the strength of our key brands with continued outperformance vs. core reference markets, positive pricing and the continued normalisation of volume growth. Concomitantly, margins are expected to reflect positive pricing, sales mix linked to business seasonality, the normalisation of input costs inflation as well as the continued investments to strengthen the Group’s commercial capabilities. On a full year basis, we confirm our guidance of a flat organic EBIT-adj. margin despite the current volatile macro-environment[2] . In addition, we expect the negative forex trends to continue, reflecting the weakening US dollar and other key emerging market currencies as well as the appreciation of the Mexican Peso.

In the medium term, we remain confident to continue delivering strong organic topline and margin expansion leveraging mix improvement as well as input cost inflation easing.’.

REVIEW OF CONSOLIDATED SALES FOR THE FIRST NINE MONTHS 2023 RESULTS

Analysis of organic net sales change by geography:

* Americas (44% of total Group sales) were up organically by +6.5%. The Group’s largest market, the US, grew by +9.1%, or +4.9% in the third quarter, reflecting the very tough comparison base (Q3 2022: +30.2%) as well as industry normalisation, although the Group continues to outperform the overall market both in terms of Nielsen and in terms of NABCA data. Jamaica grew overall (+4.3%) despite a softer Q3 (-11.7%) due to supply constraints and a tough comparison base. Overall positive performance for the other markets, with strong growth in Brazil and Mexico offsetting weakness in other markets due to major macroeconomic challenges, in particular Argentina .

* Southern Europe , Middle East and Africa[3] (29% of total Group sales) grew by +9.2%. The region’s largest market, Italy , was up +5.9%, after a softer performance in the third quarter which was impacted by the tough comparison base (+7.9%), wholesaler caution as well as poor weather affecting the aperitifs in their peak season. France delivered strong growth of +12.8% while other markets in the region registered an overall positive performance, including double-digit growth in Spain and Greece , led by Aperol and Campari. GTR was up +36.9% (Q3: +16.4%) with good momentum across the portfolio while weakness in Nigeria remained.

* North, Central and Eastern Europe (20% of total Group sales) grew organically by +16.1%. Germany registered strong growth of +24.6%, boosted by an acceleration in Q3 (+38.8%), helped also by robust pricing. The growth was largely driven by the aperitif portfolio in their peak season, including Aperol, Aperol Spritz ready-to-enjoy, Campari, all growing double digits, alongside the recent innovation Sarti Rosa . The UK grew by +14.7% despite difficult consumer dynamics as well as unfavourable weather in the third quarter thanks to momentum in the aperitifs and Wray&Nephew Overproof. Good underlying trends remain in other markets despite the poor weather.

* Asia Pacific (7% of total Group sales) grew organically by +26.6%. Australia grew +9.4%, with an acceleration in the third quarter (+12.9%) largely led by Wild Turkey ready-to-drink, Wild Turkey bourbon and Aperol. Other markets in the region registered an overall very positive performance (+54.7%), in particular South Korea , Japan and China .

Analysis of organic sales change by brand:

* Global Priorities (59% of total Group sales) registered an organic growth of +10.9%. Aperol delivered strong growth across all markets (+23.3%), with positive momentum continuing during the peak summer season despite unfavourable weather, boosted also by pricing and strong consumption, particularly in Germany . The Q3 performance was positive overall (+9.0%) despite a tough comparison in the core US market (Q3 2022: +110.3%), bad weather and wholesaler caution in core Italy . Campari delivered solid growth of +9.2% despite a softer Q3 (+1.8%) which reflected a tough comparison base (Q3 2022: +26.0%), poor weather conditions in core European markets and weakness in Argentina , Nigeria , and Jamaica . The Wild Turkey franchise registered a positive performance (+10.9%) overall, as strong brand momentum continued into Q3 (+8.0%) despite the tough comparison base (Q3 2022: +30.2%) with sustained outperformance of high-margin Russell’s Reserve. Grand Marnier was impacted by the US destocking in the first half and declined -21.8%, despite a normalisation of the trend in the third quarter. The Jamaican rum portfolio grew +7.8% overall, driven by core Jamaica , the US and the UK thanks to continued favourable category trends in premium rum. SKYY grew +2.4% overall thanks to growth in international markets such as China , while the third quarter registered a decline largely due to Argentina and the US.

* Regional Priorities (24% of total Group sales) grew +13.0%. Espolòn grew strong double digits (+37.6%), thanks to continued strong momentum in the core US (Q3 +32.4%) as the brand continues to gain market share. The GlenGrant grew double digits driven by premiumisation, while Aperol Spritz ready-to-enjoy was up +7.9% and Magnum Tonic was up +28.4%. The other brands such as Crodino, Cinzano sparkling wines and vermouth were all positive while the Italian Specialities were negative overall, largely due to Frangelico.

* Local Priorities (8% of total Group sales) grew +2.9% with positive growth from Wild Turkey ready-to-drink and SKYY ready-to-drink. X-Rated and Campari Soda grew as well.

Disclaimer: The full PDF release can be found at: https://www.camparigroup.com/sites/default/files/downloads/9M%202023%20Results%20Press%20Release.pdf

Source: Campari Group

[Category: Financial Results]

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