Davide Campari-Milano N.V. · MIL:CPR
Davide Campari-Milano — H1 2018 Earnings Presentation
57 slides from Davide Campari-Milano's earnings presentation, Aug 1, 2018
Slide 1: 2018 First Half Results
2018 First Half Results Investor Presentation 1 August 2018
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 New marketing initiatives Conclusion & Outlook Annex 2 Results for the half year ended 30 June 2018
Slide 3: Results for half year ended 30 June 2018
Results for half year ended 30 June 2018 Solid organic growth across topline and all profit indicators, partly offsetting the FX and disposal effects H1 2018 Change vs. H1 2017 (1) Q2 2018 (2) (3) Key figures € million % on sales Reported Organic FX Perimeter Organic change Net sales 778.2 100.0% -4
Slide 4: Key highlights
Key highlights Solid organic growth in H1, reflecting accelerated topline growth in Q2 and normalising trends across profit indicators > Net Sales • Solid organic grow th in H1 (+5.4%) thanks to acceleration in Q2 (+8.0%), as Q1 phasing issues w ere broadly recovered • Continuous im provement in sal
Slide 5: Overall positive organic sales growth
Overall positive organic sales growth Continuous sales mix improvement driven by key high-margin Global and Regional Priorities in core developed markets > Americas: solid growth driven by North America, particularly > Global Priorities: solid H1 performance (+8.7%), accelerating in the core US mark
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 New marketing initiatives Conclusion & Outlook Annex 6 Results for the half year ended 30 June 2018
Slide 7: Net sales results for first half 2018
Net sales results for first half 2018 Growth drivers +5.4% -6.4% -3.7% % change +44.4 -52.1 -30.4 €million 816.3 1,816.0 778.2 > Organic change of +5.4% or €44.4 million (+8.0% or €36.2 million in Q2), largely driven by high-margin Global Priorities (+8.7% in H1, +12.5% in Q2), despite a strong comp
Slide 8: Net sales by regions & key markets in H1 2018
Net sales by regions & key markets in H1 2018 US remains the largest market with 26.9% of Group Net Sales H1 2018 Group Net Sales €778.2 million Organic growth +5.4% Americas: 42.8% of total SEMEA: 30.3% of total Organic growth: +4.6% Organic growth: +4.0% Asia Pac: 7.0% of total NCEE: 19.8% of tota
Slide 9: Americas: +4.6% organic
Americas Americas: +4.6% organic 42.8% % change +4.6% -11.7% -3.1% Regional net sales organic grow th by quarter €million 371.1 +16.9 -43.3 -11.3 333.3 Q1 Q2 2017 8.0% 7.4% 2018 2.9% 6.0% (1) Organic grow th by key m arket > US +5.9% • Strong first half performance with an acceleration in Q2 (+8.2%)
Slide 10: SEMEA: +4.0% organic
(1) SEMEA: +4.0% organic SEMEA 30.3% % change +4.0% -0.1% -6.9% Regional net sales organic grow th by quarter 243.4 +9.8 -0.2 -16.9 236.2 €million Q1 Q2 2017 1.4% 3.8% 2018 1.1% 6.3% (2) Organic grow th by key m arket > Italy +3.1% • Continued positive trend driven by sustained growth of Aperol (+7.
Slide 11: NCEE: +6.7% organic
NCEE: +6.7% organic % change +6.7% -2.5% -1.2% NCEE 19.8% Regional net sales organic grow th by quarter €million 150.0 +10.0 -3.7 -1.9 154.4 Q1 Q2 2017 11.5% 15.5% 2018 -3.8% 14.4% (1) Organic grow th by key m arket > Germany +7.4% • Solid grow th in H1, thanks to a strong second quarter (+14.9%), w
Slide 12: Asia Pacific: +14.6% organic
Asia Pacific: +14.6% organic Asia Pacific % change +14.6% -9.4% -0.6% 7.0% Regional net sales organic grow th by quarter 51.9 +7.6 -4.9 -0.3 54.3 €million Q1 Q2 2017 -1.1% 6.4% 2018 17.8% 11.7% Organic grow th by key m arket > Australia +10.7% • Solid grow th continued in the second quarter (+12.1%)
Slide 13: Net sales by key brand
Net sales by key brand Global Priorities Regional Priorities Local Priorities 57% of Total 15% of Total 13% of Total Organic change: +8.7% Organic change: +4.7% Organic change: -4.2% Rest of Portfolio: 16% (1) Agency brands & Co-packing 8% Rest of own brands 8% H1 2018 Group Net Sales €778.2 million
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 2018 in H1 2018 in Q2 2018 > Continued positive performance in core markets (Italy, Germany, Austria and Switzerland) 17% +24.7% +25.7% > Very strong double-digit growth in hi
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 2018 in H1 2018 in Q2 2018 > Positive organic growth of +13.2%, with shipments more robust than underlying trends due to a favourable 7% +13.2% +24.0% comparison base in its c
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 2018 in H1 2018 in Q2 2018 Tequila > Sustained strong double-digit growth in the core US market 3% +34.3% +38.6% (+38.2%) and continued positive trends in new markets such
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 2018 in H1 2018 in Q2 2018 > Very positive performance of Braulio, driven by the core markets of Italy, GTR and the US Italian bitters and > Cynar grew thanks to positive
Slide 18: Brand sales review - Local priorities
Brand sales review Local priorities Local priorities Brand sales as % Organic Organic of Group’s sales change change in H1 2018 in H1 2018 in Q2 2018 4% -1.9% -5.0% > Weakness in core Italian market > Overall soft performance due to core Italy, impacted by previous year’s innovation pipeline compari
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 New marketing initiatives Conclusion & Outlook Annex 19 Results for the half year ended 30 June 2018
Slide 20: Net sales & EBIT by region
Net sales & EBIT by region H1 2017 H1 2018 Net Sales breakdown by region EBIT (1) breakdown by region The Americas remain the Group’s largest region (42.8% of Group’s net sales and 41.0% of Group’s EBIT (1) in H1 2018). Decrease in the America’s weight on sales (-270 bps) and EBIT adjusted (-350 bps
Slide 21: EBIT by region - Americas
EBIT by region - Americas H1 2018 H1 2017 Reported 19.6% +110 bps 19.7% € million % of sales € million % of sales change Organic change (10) bps Net sales 333.3 100.0% 371.1 100.0% -10.2% +4.6% 0 bps (70) bps Gross profit 196.8 59.1% 215.9 58.2% -8.8% +6.5% A&P (63.2) -19.0% (68.2) -18.4% -7.4% +5.3
Slide 22: EBIT by region - SEMEA
EBIT by region - SEMEA Reported 18.1% +90 bps 18.6% H1 2018 H1 2017 € million % of sales € million % of sales change Organic change (40) bps (40) bps Net sales 236.2 100.0% 243.4 100.0% -3.0% +4.0% +40 bps Gross profit 152.5 64.6% 146.0 60.0% +4.5% +5.6% A&P (37.7) -16.0% (35.2) -14.5% +7.0% +7.0% S
Slide 23: EBIT by region - NCEE
EBIT by region - NCEE 29.1% +210 bps 0 bps 29.8% H1 2018 H1 2017 Reported € million % of sales € million % of sales change Organic change Net sales 154.4 100.0% 150.0 100.0% +3.0% +6.7% (140) bps (10) bps Gross profit 98.4 63.7% 92.3 61.5% +6.6% +10.3% A&P (26.5) -17.2% (23.5) -15.7% +12.8% +15.9% S
Slide 24: EBIT by region - Asia Pacific
EBIT by region - Asia Pacific 5.8% +220 bps 8.7% H1 2018 H1 2017 Reported € million % of sales € million % of sales change Organic change +40 bps Net sales 54.3 100.0% 51.9 100.0% +4.6% +14.6% +90 bps (50) bps Gross profit 24.2 44.5% 22.8 44.0% +5.8% +16.9% A&P (7.5) -13.8% (7.4) -14.2% +1.9% +11.2%
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 New marketing initiatives Conclusion & Outlook Annex 25 Results for the half year ended 30 June 2018
Slide 26: H1 2018 consolidated P&L
H1 2018 consolidated P&L H1 2018 H1 2017 Organic margin Reported Organic Forex Perimeter Q2 2018 € million % of sales € million % of sales accretion/(dilution) change change impact effect Organic change (bps) (3) Net sales 778.2 100.0% 816.3 100.0% -4.7% 5.4% -6.4% -3.7% 8.0% COGS (1) (306.3) -39.4%
Slide 27: EBIT adjusted - Key highlights
EBIT adjusted - Key highlights > Gross profit: on a reported basis down -1.1% in value, up to 60.6% on sales (+220 bps accretion): Organic growth of +7.5% in value, +110 bps margin expansion (0 bps in Q2 2018). Organic growth ahead of topline thanks to favourable sales mix by brand and market: out
Slide 28: EBIT adjusted – summary effects
EBIT adjusted – summary effects € m illion 15.5 (9.5) (8.9) % change +9.5% -5.8% -5.4% 163.4 160.5 -1.7% % on sales (1) 20.0% +80 bps -40 bps +20 bps 20.6% > EBIT adjusted of €160.5 million, down -1.7% on a reported basis, 20.6% margin on sales (+60 bps accretion). Key drivers: • Organic growth of +
Slide 29: Financial charges
Financial charges H1 2018 H1 2017 Change Net financial income (charges) (14.8) (23.0) 8.2 Adjustments to financial income (expenses) 1.6 (24.4) 26.0 Put option income (charges) (1) (0.9) (2.5) 1.7 Average net debt 955.7 1,214.8 Average cost of net debt (2) 3.0% 3.0% (1) Non cash P&L effects largely
Slide 30: Tax rate analysis
Tax rate analysis € million H1 2018 H1 2017 Reported Adjusted Reported Adjusted Pretax profit 166.0 144.8 108.5 137.8 - Recurring cash tax (32.3) (32.3) (32.4) (32.4) - Goodwill deferred tax (8.0) (8.0) (11.9) (11.9) Total recurring taxes (40.4) (40.4) (44.3) (44.3) Tax adjustments: - Fiscal effects
Slide 31: Non-recurring adjustments
Non-recurring adjustments € million Actual Actual H1 2018 H1 2017 Operating adjustments, of which: Gains from asset disposals (1) 38.5 Transactions fees, restructuring costs (2) (18.9) Total operating adjustments 19.6 (5.0) Financial adjustments 1.6 (24.4) Tax adjustments, of which: - Fiscal effects
Slide 32: 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 New marketing initiatives Conclusion & Outlook Annex 32 Results for the half year ended 30 June 2018
Slide 33: Free cash flow
Free cash flow H1 2018 H1 2017 Total Recurring Total Recurring €m €m €m €m EBITDA adjusted 187.9 187.9 191.7 191.7 Other changes (1) (13.4) 2.6 (34.7) (33.7) Taxes paid (24.2) (12.4) (22.2) (32.4) Change in OWC (at constant FX and perimeter) (21.1) (21.1) (13.4) (13.4) Net interests paid (1.1) (1.1)
Slide 34: Operating working capital
Operating working capital €m 21.1 (9.0) 42.4 583.6 638.1 OWC at OWC at Organic Forex Perimeter 31/12/2017 30/06/2018 % on 37.2% 33.3% sales > OWC as % of net sales at 37.2%as of 30 June 2018 or 34.7% when excluding perimeter effect • Organic increase of €21.1 million, mainly due to: i) decrease in r
Slide 35: Net financial debt decreased by €34.7 million
Net financial debt decreased by €34.7 million €m 110.9 22.3 (57.5) (17.9) (23.1) (981.5) (946.8) Net cash from Net debt at Purchase of Others (incl. Net debt at FCF Disposals& Dividend 31/12/2017 own shares (1) Forex) 30/06/2018 acquisitions > Net financial debt stood at €946.8 million as of 30 June
Slide 36: Debt maturity
Debt maturity > Net debt of €946.8 million as of 30 June 2018 > Long-term gross debt at €1.3 billion - Overall long-term gross debt average coupon at 2.41% - Fixed interest rate debt accounts for c. 77% of the overall gross debt 36 Results for the half year ended 30 June 2018
Slide 37: 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 New marketing initiatives Conclusion & Outlook Annex 37 Results for the half year ended 30 June 2018
Slide 38: Aperol – spreading the orange wave
Aperol – spreading the orange wave ‘Terrazza Aperol Spritz’ - Barcelona 'Aperol Big Spritz Social' - London Shoreditch in East London w as aw ash w ith Orange in May: The ‘Terrazza Aperol Spritz’, located near A sensorial environm ent was custom built Port Vell, a top to encourage spontaneous spritz
Slide 39: Campari – Negroni week
Campari – Negroni week Campari - Negroni Week: nearly 10,000 bars in 69 countries! +28% Follow ing the success of Negroni w eek from its inception in 2013 +29% +71% (100 bars), some of the w orld’s best bartenders, including # bars Cam pari’s ‘Red Hand’ bartenders, show cased their talents in +158%
Slide 40: SKYY Vodka – back to the roots
SKYY Vodka – back to the roots SKYY Watermelon: SKYY Vodka: Proudly American Americana The new SKYY Infusions Sun-Ripened Waterm elon offers a mouth-w atering and slightly sw eet spirit, w here the real- fruit flavor bursts forw ard to stand out w ith m ost any m ixer SKYY Infusions Sun-Ripened Wate
Slide 41: Other brand building initiatives
Other brand building initiatives Premium product launches, expressions and capacity upgrades Braulio – expanded ageing cellar Wild Turkey: Russell’s Reserve 2002 capacity Follow ing closely on the heels of Wild Turkey Master’s Keep Revival comes In order meet the continuous global dem and of Braulio
Slide 42: 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 New marketing initiatives Conclusion & Outlook Annex 42 Results for the half year ended 30 June 2018
Slide 43: Conclusion & outlook
Conclusion & outlook > Solid organic growth achieved in H1 2018, reflecting an accelerated topline growth in Q2, broadly recovering Q1 phasing issues, as well as the normalization of trends across profit indicators. Sales mix continued to be favourable thanks to the consistent outperformance of key
Slide 44: Table of contents
Table of contents Results Summary Sales Results ‒ By region ‒ By brand Consolidated P&L Net Financial Debt New marketing initiatives Conclusion & Outlook Annex 44 Results for the half year ended 30 June 2018
Slide 45: Annex index
Annex - 1 Net sales by region and key market Annex - 2 Q2 2018 consolidated P&L Annex - 3 Consolidated balance sheet at 30 June 2018 - Invested capital and financing sources Annex - 4 Consolidated balance sheet at 30 June 2018 - Assets and liabilities Annex - 5 H1 2018 consolidated cash flow Annex -
Slide 46: Net sales by region & key market
Annex - 1 Net sales by region & key market H1 2018 H1 2017 Change of which: Q2 2018 €m % €m % % total organic perimeter forex total organic Americas 333.3 42.8% 371.1 45.5% -10.2% 4.6% -3.1% -11.7% -7.0% 6.0% Southern Europe, Middle East & Africa 236.2 30.3% 243.4 29.8% -3.0% 4.0% -6.9% -0.1% -3.3%
Slide 47: Net sales by region & key market
Annex - 1 Net sales by region & key market Southern Europe, Middle East & Africa by market v H1 2018 H1 2017 Change a of which: Q2 2018 r €m % €m % %totale organic perimeter forex total organic Italy 180.5 76.4% 190.8 78.4% -5.4% 3.1% -8.5% 0.0% -8.2% 2.4% Other countries 55.6 23.6% 52.6 21.6% 5.8%
Slide 48: Q2 2018 Consolidated P&L
Annex - 2 Q2 2018 Consolidated P&L Q2 2018 Q2 2017 Reported accretion/(dilution) change ( Organic change Forex impact Perimeter effect € million % of sales € million % of sales % b % % % Net Sales 442.2 100.0% 450.2 100.0% -1.8% 8.0% -5.4% -4.4% COGS (1) (170.3) -38.5% (180.5) -40.1% -5.7% 8.0% -6.0
Slide 49: Consolidated balance sheet
Annex - 3 Consolidated balance sheet Invested capital and resources 30 June 2018 31 December 2017 Change Total fixed assets 2,901.7 2,888.4 13.3 Other net non-current assets / liabilities (476.2) (492.3) 16.1 Operating working capital 638.1 583.6 54.5 Other assests / liabilities (100.5) (55.5) (44.9
Slide 50: Consolidated balance sheet (1 of 2)
Annex - 4 Consolidated balance sheet (1 of 2) Assets 30 June 2018 31 December 2017 € million € million ASSETS Non-current assets Net tangible fixed assets 424.5 430.9 Biological assets 0.9 1.0 Investment property 122.4 120.9 Goodwill and trademarks 2,316.4 2,302.7 Intangible assets with a finite lif
Slide 51: Consolidated balance sheet (2 of 2)
Annex - 4 Consolidated balance sheet (2 of 2) Liabilities 30 June 2018 31 December 2017 € million € million LIABILITIES AND SHAREHOLDERS’ EQUITY Shareholders’ equity Share capital 58.1 58.1 Reserves 1,958.2 1,884.5 Capital and reserves attributable to Parent Company 2,016.3 1,942.6 Non-controlling i
Slide 52: H1 2018 Consolidated cash flow
Annex - 5 H1 2018 Consolidated cash flow 30 June 2018 31 December 2017 € million € million EBITDA Adjusted 187.9 191.7 Changes from operating activities (13.4) (34.7) Taxes paid (24.2) (22.2) Cash flow from operating activities before changes in working capital 150.3 134.8 Changes in net operating w
Slide 53: Financial debt as of 30 June 2018
Annex - 6 Financial debt as of 30 June 2018 Gross debt composition as of 30 June, 2018 30 June, 2018 Issue date Maturity Type Currency Coupon Original tenor As % of total € million Aug 3, 2016 Aug-21 Term Loan EUR 0.85% +3m euribor 300 3 years 23% Oct 25, 2012 Oct-19 Unrated Eurobond EUR 4.5% 219.1
Slide 54: Operating working capital
Annex - 7 Operating working capital € million 30-Jun-18 31-Dec-17 Reported Organic Forex Permimeter € million % sales € million % sales Change Change Impact Effect Receivables 233.6 13.6% 317.5 18.1% (83.9) (71.7) (12.8) 0.7 Inventories 592.0 34.5% 491.7 28.0% 100.3 56.5 1.0 42.8 - Maturing inventor
Slide 55: Exchange rates effects
Annex - 7 Exchange rates effects Average exchange rate Period end exchange rate H1 2018 H1 2017 30 June 2018 change vs 31 December 2017 : 1 Euro % : 1 Euro % US Dollar 1.211 -10.6% 1.166 2.9% Canadian Dollar 1.546 -6.6% 1.544 -2.6% Jamaican Dollar 152.834 -9.0% 151.224 -1.2% Mexican Peso 23.074 -8.9
Slide 56: 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 circum
Slide 57: EIR
TE = 1 EIR
Davide Campari-Milano — H1 2018 Earnings Presentation on 6ix