Campari takes 11.3% sales hit

It is not surprising that organic sales at Campari fell by 11.3% in the first six months of this year.

With both Italy, the group’s domestic market, and the USA, its top export market, among the nations worst hit by Covid-19, the company’s aperitif business, which relies heavily on the hospitality sector for sales, suffered heavily.

Group net adjusted profit fell by 33.5% to €77.6 million (US$91m) during the half year and the margin of earnings before interest and tax, a rough indicator of profitability, fell to 17% down from 21.3% in the same period in 2019.

Campari’s share price actually rose by 4% when the company’s results were published on 28 July.

The group said the negative impact of the pandemic is expected to lessen with the gradual lifting of the restrictive measures across markets and shipments are expected to catch up progressively with the positive sell-out trends once wholesaler destocking ends.

On a reported basis, the full year results are expected to be affected by incremental one-off costs estimated at €25 million, in addition to the non-recurring costs registered in the first half, mainly related to business re-organization initiatives as well as the transaction fees in connection with recent acquisitions and the transfer of the legal office to the Netherlands.

Bob Kunze-Concewitz, Campari’s chief executive, said the board is “uncertain with regards to the extent and timing of the economic recovery”, particularly as there is still little consensus on how long social distancing restrictions will be in place, and there is still the likelihood of a second wave in the latter half of the year.

Despite this, Kunze-Concewitz said shipments were impacted as on-trade customers destocked some of the company’s brands, which include Aperol, Grand Marnier, and Bulldog Gin, although “we continue to experience solid consumption trends for our brands across key markets.”

In the long term, he said the company will continue to work on its presence on e-commerce platforms and continue to pursue acquisitions to ensure “future profitable growth”.