Davide Campari-milano N.v. · MIL:CPR
Davide Campari-milano — H1 2019 Earnings Presentation
59 slides from Davide Campari-milano's earnings presentation, Jul 30, 2019
Slide 1: 2019 Half Year Results
2019 Half Year Results Investor Presentation 30 July 2019
Slide 2: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 2 Half Year results ended 30 June 2019
Slide 3: Results for half year ended 30 June 2019
Results for half year ended 30 June 2019 Consistent solid performance across all key underlying indicators, driven by strong sales momentum H1 2019 (1) Change vs. H1 2018 Key figures € million % on sales Reported Organic FX Perimeter (2) Net sales 848.2 100.0% +9.0% +8.0% +2.3% -1.4% of which: Globa
Slide 4: Key highlights
Key highlights Continuous sales mix improvement driven by key high-margin Global and Regional Priorities in core developed markets with emerging market recovery > Net Sales • After a strong start to the year (Q1 2019 +9.6%), the performance in Q2, which is a high seasonality quarter for aperitifs, w
Slide 5: Strong organic sales growth
Strong organic sales growth Positive growth across all region and brand clusters > Americas: strong growth driven by the Group’s largest market, the > Global Priorities: overall strong half year performance (+9.8%), US (+10.9%), continued positive momentum in Jamaica (+18.6%) with continued double-d
Slide 6: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 6 Half Year results ended 30 June 2019
Slide 7: Net sales results for first half 2019
Net sales results for first half 2019 Growth drivers Organic change +8.0% +2.3% -1.4% % change +62.5 +18.1 (10.6) € million 778.2 1,816.0 848.2 > Organic change of +8.0% (after excluding the positive price effect in Argentina of 90 bps) (1) or €62.5 million (+6.9% or €30.4 million in Q2 2019) largel
Slide 8: Net sales by regions & key markets in H1 2019
Net sales by regions & key markets in H1 2019 The US is the largest market with 29.3% of Net Sales H1 2019 Net Sales €848.2 million Organic growth +8.0% Asia Pac: 6.4% of total Organic growth: +1.1% Americas: 45.3% of total Organic growth: +9.9% NCEE: 19.5% of total Organic growth: +7.0% SEMEA: 28.7
Slide 9: Americas: +9.9% organic
Americas: +9.9% organic Americas 45.3% % change +9.9% +5.5% -0.1% Regional net sales organic growth € million 333.3 +33.0 +18.5 (0.2) 384.6 by quarter Q1 Q2 2019 13.1% 7.3% 2018 2.9% 6.0% Organic growth by key market North America: +10.3% > US +10.9% • Solid half year performance of +10.9%, thanks t
Slide 10: SEMEA: +7.7% organic
(1) SEMEA : +7.7% organic SEMEA 28.7% % change +7.7% -0.1% -4.4% Regional net sales organic growth € million 236.2 +18.1 (0.3) (10.4) 243.6 by quarter Q1 Q2 2019 6.4% 8.6% 2018 1.1% 6.3% (2) Organic growth by key market > Italy +6.7% • Very solid half year performance with continued growth in Q2 (+6
Slide 11: NCEE: +7.0% organic
NCEE: +7.0% organic +7.0% +0.2% -0.0% NCEE % change 19.5% Regional net sales organic growth € million 154.4 +10.8 +0.3 0.0 165.5 by quarter Q1 Q2 2019 11.6% 4.2% 2018 -3.8% 14.4% Organic growth by key market > Germany +3.9% • Very satisfactory results in Germany, despite a flattish Q2 due to poor we
Slide 12: Asia Pacific: +1.1% organic
Asia Pacific: +1.1% organic Asia Pacific % change +1.1% -0.9% 0.0% 6.4% Regional net sales organic growth € million 54.3 +0.6 (0.5) 0.0 54.4 by quarter Q1 Q2 2019 -3.1% 4.9% 2018 17.8% 11.7% Organic growth by key market > Australia +3.5% • Positive performance, despite the tough comparison base (H1
Slide 13: Net sales by key brand
Net sales by key brand Global Priorities Regional Priorities Local Priorities 59% of Total 15% of Total 12% of Total Organic change: +9.8% Organic change: +10.8% Organic change: +4.0% Rest of Portfolio: 14% (1) Agency brands & Co-packing 6% Rest of own brands 8% H1 2019 Net Sales €848.2 million Glob
Slide 14: Brand sales review - Global priorities
Brand sales review Global priorities Global priorities Brand sales as % Organic Organic of Group’s sales change change in H1 2019 in H1 2019 in Q2 2019 > Continued strong growth in core European markets despite bad weather in May, as consumption spreads into 20% +22.0% +19.5% meal occasions > Strong
Slide 15: Brand sales review - Global priorities
Brand sales review Global priorities Global priorities Brand sales as % Organic Organic of Group’s sales change change in H1 2019 in H1 2019 in Q2 2019 > Double-digit growth overall thanks to growth in the core US (+15.1%) and Australian markets, with a continued positive 8% (1)(2) +11.4% +12.7% con
Slide 16: Brand sales review - Regional priorities
Brand sales review Regional priorities Regional priorities Brand sales as % Organic Organic of Group’s sales change change in H1 2019 in H1 2019 in Q2 2019 Tequila > Core US market continued to grow by sustained double 4% +46.5% +63.5% digits (+50.1%), with an acceleration in Q2 (+71.8%). Seeding ma
Slide 17: Brand sales review - Regional priorities
Brand sales review Regional priorities Regional priorities Brand sales as % Organic Organic of Group’s sales change change in H1 2019 in H1 2019 in Q2 2019 > Overall decline in Braulio due a robust price increase in core Italy Italian bitters and > Overall weakness in Cynar as growth in core Italy a
Slide 18: Brand sales review - Local priorities
Brand sales review Local priorities Brand sales as % Organic Organic Local priorities of Group’s sales change change in H1 2019 in H1 2019 in Q2 2019 4% +5.8% +8.7% > Positive growth in core Italian market, against an easy comparison base > Positive performance in core market of Italy, partly thanks
Slide 19: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 19 Half Year results ended 30 June 2019
Slide 20: Net sales & EBIT analysis by region
Net sales & EBIT analysis by region H1 2018 H1 2019 Net Sales breakdown by region EBIT (1) breakdown by region The Americas remain the Group’s largest region in terms of net sales and profitability (45.3% of Group’s net sales and 42.2% of Group’s EBIT(1) in H1 2019), increasing its weight driven by
Slide 21: EBIT by region - Americas
EBIT (1) by region - Americas 19.7% +100 bps +30 bps 19.8% H1 2019 H1 2018 Reported change Organic change € million % of sales € million % of sales % % -20 bps Net sales 384.6 100.0% 333.3 100.0% +15.4% +9.9% -100 bps Gross profit 226.9 59.0% 196.8 59.1% +15.3% +9.5% A&P (77.1) -20.0% (63.2) -19.0%
Slide 22: EBIT by region - SEMEA
EBIT (1) by region - SEMEA 18.6% +110 bps +90 bps +30 bps 20.2% H1 2019 H1 2018 Reported change Organic change € million % of sales € million % of sales % % -70 bps Net sales 243.6 100.0% 236.2 100.0% +3.2% +7.7% Gross profit 165.2 67.8% 152.5 64.6% +8.3% +9.5% A&P (38.2) -15.7% (37.7) -16.0% +1.3%
Slide 23: EBIT by region - NCEE
EBIT (1) by region - NCEE 29.8% +190 bps 0 bps 29.7% H1 2019 H1 2018 Reported change Organic change € million % of sales € million % of sales % % -80 bps -110 bps Net sales 165.5 100.0% 154.4 100.0% +7.2% +7.0% Gross profit 108.5 65.5% 98.4 63.7% +10.2% +10.1% A&P (29.7) -17.9% (26.5) -17.2% +12.0%
Slide 24: EBIT by region - Asia Pacific
EBIT (1) by region - Asia Pacific 8.7% +280 bps +190 bps 11.0% H1 2019 H1 2018 Reported change Organic change € million % of sales € million % of sales % % -180 bps Net sales 54.4 100.0% 54.3 100.0% +0.2% +1.1% -70 bps Gross profit 25.3 46.6% 24.2 44.5% +4.9% +7.4% A&P (6.5) -12.0% (7.5) -13.8% -13.
Slide 25: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 25 Half Year results ended 30 June 2019
Slide 26: H1 2019 consolidated P&L
H1 2019 consolidated P&L (1) COGS = cost of materials, production and logistics expenses (2) SG&A = selling, general and administrative expenses (3) Bps rounded to the nearest ten 26 Half Year results ended 30 June 2019
Slide 27: EBIT adjusted - Key highlights
EBIT adjusted - Key highlights > Gross profit: on a reported basis up +11.4% in value, to 62.0% on sales (+140 bps accretion): • Organic growth of +9.5% in value, +90 bps margin expansion. Organic growth ahead of topline thanks to favourable sales mix by brand and market despite the dilutive effect
Slide 28: EBIT adjusted – summary effects
EBIT adjusted – summary effects € million 17.0 4.3 (1.5) % change +10.6% +2.7% -1.0% 160.5 +12.3% 180.3 +70 bps (1) % on sales 20.6% +50 bps +10 bps +10 bps 21.3% > EBIT adjusted of €180.3 million, up +12.3% on a reported basis, 21.3% margin on sales (+70 bps accretion). Key drivers: • Organic growt
Slide 29: Financial charges
Financial charges > Net financial charges at €15.1 million in H1 2019, up by €0.3 million vs. H1 2018, broadly in line with last year, despite the lower average indebtedness (€892.5 million in H1 2019 vs €955.7 million in H1 2018), due to: • average cost of net debt of 3.7% in H1 2019, up from 3.0%
Slide 30: Group net profit adjusted and tax rate
Group net profit adjusted and tax rate > Group net profit adjusted at €116.7 million, +11.8%: • Recurring effective tax rate at 28.1% in H1 2019, slightly up from 27.9% in H1 2018 • Adjusting the recurring effective tax rate for the goodwill deferred taxes (broadly in line with last year), recurring
Slide 31: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 31 Half Year results ended 30 June 2019
Slide 32: Free cash flow
Free cash flow > Free cash flow at €81.2 million, down €(29.7) million vs. H1 2018. Recurring free cash flow at €86.2 million, down €(52.3) million vs. H1 2018. Key drivers: • increase in recurring EBITDA adjusted of €27.1 million • temporary bigger variation in operating working capital of €(56.1)
Slide 33: Operating working capital
Operating working capital(1) € million 77.2 4.9 0 636.0 718.1 % on sales 37.2% 40.3% > OWC increase of €82.1 million as of 30 June 2019 vs. 31 December 2018. Key drivers: • Organic increase of €77.2 million, due to: ▪ increase in inventory of €61.4 million (of which ageing liquid increase of €16.5 m
Slide 34: Net financial debt increased by €90.9 million
Net financial debt increased by €90.9 million € million (26.3) (81.4) 81.2 (7.1) (57.3) Total: €(90.9) million (846.3) (937.1) (1) (2) > Net financial debt at €937.1 million as of 30 June 2019, up €90.9 million from €846.3 million as of 31 December 2018 mainly driven by the first time adoption of IF
Slide 35: Debt maturity
Debt maturity(1) > Net debt of €937.1 million as of 30 June 2019 > Long-term gross debt at €1.2 billion(2) - Overall long-term gross debt average coupon at 1.97% - Fixed interest rate debt accounts for c. 76% of the overall long-term gross debt (3) (1) Refer to slide 55 Financial debt details (2) €2
Slide 36: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 36 Half Year results ended 30 June 2019
Slide 37: Aperol – celebrating 100 years in the home city
Aperol – celebrating 100 years in the home city Aperol Happy Together LIVE – Venice An important birthday deserves an unforgettable party. To celebrate the centenary of Aperol, a unique show joined different artists, set over a weekend, connected by the same passion for the music. Venice and Piazza
Slide 38: Aperol – celebrating globally
Aperol – celebrating globally Aperol Big Spritz Birthday Social – London & Manchester During May & June in London, at the Shoreditch Electric Light Station and at Manchester’s Oast House, Aperol invited Londoners and Mancunians (over 5,000 of them) to celebrate its centenary anniversary by immersing
Slide 39: Campari – Negroni Week: 1919 - 2019
Campari – Negroni Week: 1919 - 2019 Negroni Week – 100 years of the Negroni Negroni Week began by unveiling a plaque celebrating the creation of the Negroni in the presence of the Deputy Mayor of the city of Florence as well as Pier Lamberto and Paolo Andalò Negroni Bentivoglio, Count Camillo’s gran
Slide 40: SKYY Vodka – building on traditions
SKYY Vodka – building on traditions SKYY Vodka – US activities SKYY USA WorldPride Sponsorship In June 2019, SKYY Vodka continues its’ efforts to champion a new era of social progress fueled by diversity within the LGBTQ+ community in the USA, by serving as the Official Vodka of WorldPride NYC and L
Slide 41: Regional Priorities
Regional Priorities Bulldog – World Gin Day Bulldog was the exclusive Gin partner at the Field Day London music festival, hailed ‘London’s hippest music festival’ and hosting approximately 60k visitors. The activation included the new Bulldog Gin Yard Container Bar; an immersive, experiential ‘Bulld
Slide 42: Top awards
Top awards GlentGrant 15 Year Old: two Grand Marnier Cuvées separate awards GlenGrant Single Malt 15 year old Batch Strength Grand Marnier Wins in Ultimate Spirits expression received a Double Gold Medal from the Challenge (April 2019). Awards: 19th annual San Francisco World Spirits Competition (SF
Slide 43: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 43 Half Year results ended 30 June 2019
Slide 44: Conclusion and Outlook
Conclusion and Outlook > A strong first half driven by a combination of positive underlying sales momentum in core developed markets, thanks to growth in high-margin Global and Regional priorities, enhanced by a recovery in emerging markets > For the full year 2019, the outlook remains fairly balanc
Slide 45: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Operating Results by Region Consolidated P&L Cash Flow & Net Financial Debt Marketing Initiatives & Developments Conclusion & Outlook Annex 45 Half Year results ended 30 June 2019
Slide 46: Annex
Annex - 1 Net sales by region and key market Annex - 2 Net sales by brand cluster Annex - 3 Q2 2019 consolidated income statement Annex - 4 Consolidated balance sheet at 30 June 2019 – Invested capital and financing sources Annex - 5 Consolidated balance sheet at 30 June 2019 – Assets and liabilitie
Slide 47: Net sales by region & key market
Annex - 1 Net sales by region & key market Region breakdown by key market 47 Half Year results ended 30 June 2019
Slide 48: Net sales by region & key market
Annex - 1 Net sales by region & key market 48 Half Year results ended 30 June 2019
Slide 49: Net sales by brand cluster
Annex - 2 Net sales by brand cluster 49 Half Year results ended 30 June 2019
Slide 50: Q2 2019 Consolidated income statement
Annex - 3 Q2 2019 Consolidated income statement (1) COGS = cost of materials, production and logistics expenses (2) SG&A = selling, general and administrative expenses 50 Half Year results ended 30 June 2019
Slide 51: Consolidated balance sheet
Annex - 4 Consolidated balance sheet Invested Capital and Resources 51 Half Year results ended 30 June 2019
Slide 52: Consolidated balance sheet (1 of 2)
Annex - 5 Consolidated balance sheet (1 of 2) Assets 52 Half Year results ended 30 June 2019
Slide 53: Consolidated balance sheet (2 of 2)
Annex - 5 Consolidated balance sheet (2 of 2) Liabilities 30 June 2019 31 December 2018 Change € million € million LIABILITIES AND SHAREHOLDERS’ EQUITY Shareholders’ equity - Share capital 58.1 58.1 - - Reserves 2,180.4 2,104.7 75.7 Capital and reserves attributable to Parent Company 2,238.5 2,162.8
Slide 54: H1 2019 consolidated cash flow
Annex - 6 H1 2019 consolidated cash flow 54 Half Year results ended 30 June 2019
Slide 55: Financial debt details
Annex - 7 Financial debt details Gross debt composition as of 30 June 2019 Outstanding Amount Issue date Maturity Type Currency Coupon Original tenor As % of total (€ million) Oct 25, 2012 (1) Oct-19 Unrated Eurobond EUR 4.5% 219 7 years 15% Sep 30, 2015 Sep-20 Unrated Eurobond EUR 2.75% 581 5 years
Slide 56: Operating working capital
Annex - 8 Operating working capital Reported Organic Forex Perimeter 30 June 2019 31 December 2018 change change impact effect € million % sales € million % sales € million Receivables 284.1 15.9% 285.9 16.7% (1.7) (5.3) 3.6 - Inventories 629.3 35.3% 566.1 33.1% 63.2 61.4 1.9 - - Maturing inventory
Slide 57: Exchange rates effects
Annex - 9 Exchange rates effects (1) (1) Following the adoption of IAS 29-‘Financial reporting Hyperinflationary economies’ in Argentina, the average exchange rate of Argentine Peso for H1 2019 was adjusted to be equal to the rate as of 30 June 2019 57 Half Year results ended 30 June 2019
Slide 58: Disclaimer
Disclaimer This document contains forward-looking statements that relate to future events and future operating, economic and financial results of Campari Group. By their nature, forward-looking statements involve risk and uncertainty because they depend on the occurrence of future events and circums
Slide 59: EIR
TE = 1 EIR
Davide Campari-Milano — H1 2019 Earnings Presentation on 6ix