13th May, 2014 by Lauren Eads
Weak shipments and “unfavourable exchange rates” caused the profits of Italian drinks group, Gruppo Campari, to slip by nearly 50% in the first quarter.
Campari announced its financial results for the first quarter of 2014 today revealing a drop in pre-tax profits of 47.4% to €20.7 million, while the group’s sales dropped 8.4% to €288.7 million.
It was also revealed that Suntory, who completed its $16 billion acquisition of Beam Inc earlier this year, would be terminating its distribution agreements in the US with Campari, changes which will come into effect from July 2014.
In a statement Bob Kunze-Concewitz, chief executive officer of the group, said “weaker shipments in March”, despite solid performances in the preceding two months, and a slowdown in Russia due to “tightened credit control” had impacted profits.
Despite falling profits, Kunze-Concewitz noted a “strong performance” of its aperitifs across all markets and continued growth of Skyy vodka.
He said: “Net in net, traditionally a small quarter, the first quarter in 2014 is not reflective of the underlying business momentum which is improving across most markets.
“Net sales year-to-date to the end of April 2014, thanks to the normalization due to the full inclusion of the Easter effect, were back to positive territory in terms of organic growth. Going forward, whilst the political and macroeconomic context and forex outlook remain challenging for the remainder of the year, we expect our marketing initiatives to bear their fruits and continue to gradually strengthen the underlying business.”
In March of this year Gruppo Campari, whose brands including Wild Turkey Bourbon, Aperol and Skyy Vodka, bought the Canadian Forty Creek whisky distillery for €120.5 million, and later in April the Italian drinks producer Fratelli Averna for €104 million.