Campari Group reports slight sales decline for Q1

Campari Group has reported a 5.3% decline in organic sales for the first quarter of 2020 after suffering from the impacts of the coronavirus outbreak.

The group reported net sales of €360.2 million for the three months to March 31. That represents a 5.3% organic decrease compared to the same period in 2019, but it was down 2.7% on a reported basis after positive exchange rate and perimeter effects.

Pre-tax profit declined by 51.6% to €34.6 million for Q1, while adjusted pre-tax profit was down 45.7%.

Campari said it enjoyed “extremely strong” sales in January and February, but it was hit by the initial impact of the Covid-19 outbreak in Italy during March. It expects sales and profits to be affected to a greater extent in Q2 and at the beginning of Q3, as the coronavirus lockdown is set to wipe out the peak season for the high margin and on-trade skewed aperitif business.

“Inevitably our business is facing short-term headwinds,” said chief executive Bob Kunze-Concewitz. “As a highly agile organization, we are taking rapid actions to mitigate costs and preserve liquidity whilst remaining focused on our long term strategic agenda.

“To this extent, we are accelerating programs in digital transformation and e-commerce to further strengthen our digital capabilities across the entire organization.

“We are continuing to execute our merger and acquisition strategy, focused on long-term brand building. Last, but quite importantly, our financial profile remains very solid. Looking at the long-term, we remain confident of the positive consumption trends and growth opportunities of our business.”

The Americas represents 50.6% of group sales, and they decreased just 0.9% on an organic basis during Q1. Sales in southern Europe, the Middle East and Africa make up almost a quarter of the business, and that area suffered a 23% decline in Q1.

North, central and eastern Europe is the next largest region for Campari, and it enjoyed 19.1% growth. Highlights were a 38.3% growth in the UK – driven by Wray & Nephew rum, Magnum tonic wine, Appleton Estate rum and Campari – and 30.4% growth in Russia.

Sales in Asia Pacific grew organically by 3.5%. That was a result of 18.2% growth in Australia, while sales declined by 33.1% in the rest of the region.

Campari expects to close a deal to purchase Champagne Lallier in Q3.