ITALY – Italian spirits giant Campari Group has reported a1.4 percent increase in net sales on a reported basis, reaching €753.6 million (US$816.3M) in its third quarter.
However, this represented a 1.4 percent decline on an organic basis, significantly below the anticipated 9 percent growth target.
Adjusted EBIT fell by 13.3 percent to €139.4 million (US$151.7M), or by 18.2 percent on an organic basis, adding to the company’s challenges as it confronts headwinds in several key markets.
Over the first nine months of the year, Campari’s net sales grew 3.4 percent to €2.28 billion (US$2.5B), up 2.1 percent organically.
Despite these gains, adjusted EBIT dropped by 4.1 percent on a reported basis, declining 4.2 percent organically to €499.4 million (US$543.3M).
According to the company, a range of challenges impacted its performance, including market-specific factors, natural disasters, and sluggish consumer demand.
In the United States, which represents a key market for Campari, the group faced “persisting challenges in selected categories.”
Additionally, the company noted the “extraordinary impact” of a hurricane in Jamaica, which disrupted operations. European markets, particularly those with a focus on the on-premise sector, were adversely affected by adverse weather conditions earlier in the year and in September.
The group’s performance in Italy also fell short of expectations, as “softer than expected consumption” impacted sales and resulted in below-expected re-orders towards the end of the third quarter.
The Asia-Pacific region encountered challenging trading conditions, compounded by macroeconomic pressures, although Campari anticipates some recovery in this region with a gradually improving economic outlook.
Looking ahead, Campari forecasts “ongoing muted consumption” in the U.S. and anticipates further impacts from the hurricane in Jamaica.
The company’s Europe, Middle East, and Africa division is expected to continue facing pressures from “destocking, competition, and low consumer confidence in select markets.”
However, Campari is cautiously optimistic about the Asia-Pacific market, which may see “some potential benefit” due to macroeconomic improvements, although challenges in route-to-market completion remain.
To mitigate these challenges, Campari has introduced a new cost containment plan, aiming to improve margins by 200 basis points as part of its medium-term outlook.
The group is also undertaking efforts to streamline its product portfolio, with plans to divest non-core brands to strengthen focus on its main categories.
These core brands will be organized under four newly created brand categories: the House of Aperitifs, House of Whiskey and Rum, House of Tequila, and House of Cognac & Champagne.
Following the announcement, Campari’s share price dropped 15 percent by 1000 GMT on October 30, marking a year-to-date decline of around 35 percent.
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