Campari toasts strong off-trade sales, but remains cautious on outlook
Italian drinks group Campari has reported a strong start to the year, driven by good momentum in the off-trade across North America and Northern Europe as it launches a division dedicated to the US and global luxury markets. However it remained cautious on the outlook for the year.
Sales rose 17.9% organic growth to €397.9 million, (up 10.5% on a reported basis), which when compared to the first quarter of 2019, showed a 12.1% rise.
The adjusted EBIT benefitted from an easy comparison with 2020, showing organic growth of 63.3% €68.5 million, up +6.7%, compared to the first quarter of 2019.
Group profit before tax (adjusted) rose 84.7% to €64.1 million. Group profit before taxation of €64.8 million, up +112.1% after total positive adjustments of €0.7 million. Meanwhile, net debt fell €35.8 million over the quarter to €1,067.9 million, driven by the positive free cash flow generated by the business
The company said that the sustained home consumption trends had helped to offset weak on-premise and Global travel retail channels, which have obviously been hard hit by the pandemic. It noted particular growth in market skewed toward the off-trade, including North America, Northern Europe and emerging markets, with recovery also being seen in Jamaica, Brazil and Argentina.
Chief executive officer Bob Kunze-Concewitz said that overall it was a “very solid and satisfactory start to the year” driven by sustained home consumption.
However, he cautioned that this performance reflected a quarter with low seasonality and had been “amplified by an easy comparison base as well as an early Easter effect” and the outlook for the remainder of the year remained uncertain.
“Looking at the remainder of the year, in addition to a marginally worsening exchange rates outlook. volatility and uncertainty remain due to the ongoing restrictions and the timing of the vaccine roll out in the European Union, affecting the on-premise channel as well as Global Travel Retail.”
However, he noted that the positive brand momentum was expected to continue, fuelled by sustained marketing investments.
“[It is] expected to accelerate towards the peak aperitif seasons, a gradual reopening of the on-premise channel as well as e-commerce momentum,” he said.
He also looked forward to the new RARE division, which will mark a dedicated approach to establish Campari Group as a top purveyor of luxury offerings in the US and key global markets, with the aim of “engaging the high-end trade and consumers in the super premium and above spirits market.”