Campari Group

20/03/2007

2006 Full year results

Enzo Visone, Chief Executive Officer: “In 2006 the results we achieved were positive and in line with our objectives. Going forward, we remain confident on a positive performance of our business.”

Milan, 20 March 2007 - The Board of Directors of Davide Campari-Milano S.p.A. has approved the consolidated annual results for 2006. The Campari Group’s 2006 results were positive, thanks to recent acquisitions (Glen Grant Old Smuggler and Braemar and Teruzzi & Puthod), the distribution of new brands (Jack Daniel’s, the C&C portfolio and Midori) and organic growth.

Consolidated results for 2006
In 2006, Group sales totalled € 932.4 million, an increase of 15.1% (+14.4% at constant exchange rates).
The overall change in consolidated sales resulted from an organic growth of 4.6% and a positive exchange rate effect of 0.7%. External growth, which came in at 9.9%, was driven by recent acquisitions (Glen Grant Scotch Old Smuggler and Braemar whiskies and Teruzzi & Puthod wines) and sales of third-party brands covered by new distribution agreements (the spirits portfolio of the C&C Group on the US and Brazilian markets, Midori liqueur on the US market and Jack Daniel’s and other Brown-Forman brands on the Italian market).
Trading profit increased by 9.4% to € 256.9 million (+8.8% at constant exchange rates), or 27.6% of sales. Organic growth accounted for 4.0% and external growth for 4.9%, while positive exchange rate effects contributed 0.6%.
EBITDA before one-off’s increased by 7.1% (+6.8% at constant exchange rates) to € 210.6 million, or 22.6% of sales.
EBITDA rose by 4.2% (+3.9% at constant exchange rates) to € 209.7 million, or 22.5% of sales.
EBIT before one-off’s went up by 6.8% (+6.5% at constant exchange rates) to € 191.4 million, or 20.5% of sales.
EBIT increased by 3.6% (+3.3% at constant exchange rates) to € 190.5 million, or 20.4% of sales.
Profit before tax and minority interests was € 175.5 million, an increase of 0.7%.
Group net profit was € 117.1 million, a fall of 0.8% (-1.4% at constant exchange rates).
As of 31 December 2006, net debt stood at € 379.5 million (€ 371.4 million as of 31 December 2005). Note that on 15 March 2006, the Campari Group completed the acquisition of the Glen Grant, Old Smuggler and Braemar Scotch whisky brands and related assets for a cash consideration of around € 130 million. The acquisition was financed by bank debt.
On 2 November 2006, the purchase of the remaining 11% of Skyy Spirits, LLC that the Group did not already own was completed at a cost of around € 49 million, paid in cash and financed by bank debt (Skyy Spirits, LLC is now therefore 100% owned by the Group). Note that the debt figure at 31 December 2005 already included borrowings of € 45.5 million relating to the put option on the remaining shares in Skyy Spirits, LLC.

Consolidated sales in 2006
The spirits segment (70.5% of total sales) recorded growth of 19.1%, the combined result of organic growth of 5.3%, a positive exchange rate effect of 0.9% and external growth of 12.9%. External growth was driven by the newly-acquired Glen Grant, Old Smuggler and Braemar Scotch whisky brands, and by new distribution agreements, notably for the spirits portfolio of the C&C Group on the US and Brazilian markets, Midori liqueur on the US market, and Jack Daniel’s whisky on the Italian market. The Campari brand posted growth of 1.3% at constant exchange rates (2.6% at actual exchange rates). SKYY sales rose by 12.0% at constant exchange rates (+11.3% at actual exchange rates), thanks to a positive performance on both the US (+10.8% at constant exchange rates) and international markets (up by more than 20%). Regarding the other main brands, the spirits segment benefited from strong performances from Aperol (+19.9%), Ouzo 12 (+10.3%) and the Brazilian brands (+8.6% at constant exchange rates), while CampariSoda and Cynar closed out 2006 with negative performances (-0.1% and -12.3% at constant exchange rates respectively). Of the brands under licence, 1800 Tequila performed well (+15.7% at constant exchange rates) while Scotch whisky was in line with previous year (+0.2% at constant exchange rates).

The wines segment, which contributed 14.5% of total sales, registered growth of 7.8%, due to the combination of organic growth of 3.9%, a positive exchange rate effect of 0.3% and external growth of 3.6%, generated by the newly-acquired Teruzzi & Puthod. The segment’s positive performance was driven by Cinzano sparkling wines (+13.6% at constant exchange rates) and Cinzano vermouth (+4.2% at constant exchange rates). As for the Group’s other brands, Mondororegistered sales growth, but Sella & Mosca and Riccadonna suffered a decline in sales.

Sales of soft drinks (13.7% of total sales), which are generated almost entirely on the Italian market, show a positive performance by Crodino (+1.9%) and carbonated drinks (+1.6%). Growth for Lipton Ice Tea was 6.9%; it should be noted that the contract for distribution of this third-party brand ended in December 2006.

Looking now at results by region, sales on the Italian market (43.1% of total Group sales) recorded an increase of 5.2% in 2006. Italian sales were boosted by external growth of +4.6%, thanks to both newly-acquired brands (Glen Grant and Teruzzi & Puthod) and new distribution agreements (Jack Daniel’s and the other Brown-Forman brands); organic sales growth was 0.6%. Sales in Europe (18.8% of consolidated sales) grew by 15.5%, due to a combination of external growth of 11.2%(mainly generated by the new brands Glen Grant and Teruzzi & Puthod) and organic growth of 4.4%. In the Americas (33.7% of total sales), the US market registered organic growth of 11.7%, external growth of 26.8% and a negative exchange rate effect of 1.0%. In Brazil, sales registered organic growth of 5.4% at constant exchange rates. The exchange rate effect was positive at 11.4%, while external growth was a negative 2.7%. Sales in the rest of the world (including duty free sales), which accounted for 4.4% of total sales, grew by 18.5% overall, driven by organic growth of 15.4%.
Enzo Visone, Chief Executive Officer, said: “In 2006 the results we achieved were positive and in line with our objectives. Going forward, we remain confident on a positive performance of our business.”

Other resolutions
Dividend. The Board of Directors has voted to propose a dividend of € 0.10 per share to the Shareholders' meeting scheduled for 24 April 2007. This is unchanged from the previous year. The dividend will be paid on 4 May 2007 (coupon no. 3 to be detached on 30 April 2007) except on own shares.

Own shares. The Board of Directors has approved the report to be presented to the Shareholders’ meeting relating to the resolution to authorise the purchase and/or sale of own shares, mainly to be used to service the stock option plans. The authorisation concerns the purchase and/or sale of shares, which including existing own shares, will not exceed a maximum of 10% of the share capital. As of today’s date, the proportion of own shares held is close to zero. The authorisation will remain valid until 30 June 2008. The unit price for the purchase and/or sale of own shares will not differ by more than 25% (whether higher or lower) from the weighted average closing price in the three stock market trading sessions prior to each transaction.

Merger of Glen Grant S.r.l. into Davide Campari-Milano S.p.A. On 20 March 2007 the Board of Directors of Davide Campari-Milano S.p.A. has approved the merger of Glen Grant S.r.l. into Davide Campari-Milano S.p.A. The purpose of this transaction is to rationalise the Group’s organisational structure.

* * *

Conference call Please note that at 17.00 (CET) today, Tuesday 20 March 2007, Campari’s management will hold a conference call to present the Group’s 2006 full year results to analysts, investors and journalists. To participate, please dial one of the following numbers:

• from Italy: 800 914 576 (toll free number)
• from abroad: +39 02 3700 8208

The presentation slides can be downloaded before the conference call from the main investor relations page on Campari’s website, at www.camparigroup.com/investors.
A recording of the conference call will be available from 21.00 (CET) on Tuesday 20 March until 21.00 (CET) on Tuesday 27 March 2007. To hear it, please call +44 20 736 584 27 (access code: 123487).
Presentation of the 2006 results to the financial community and the press
Please note that at 10.00 (CET) tomorrow, Wednesday 21 March 2007, Campari’s management will present the Group’s 2006 results to the financial community at Four Seasons Hotel, Via Gesù 6/8, Milan.

Download financial tables (PDF - 17KB)

* * *

The Campari Group is a major player in the global beverage sector, trading in over 190 nations around the world with a leading position in the Italian and Brazilian markets and a strong presence in the US, Germany and Switzerland. The Group has an extensive portfolio that spans three business segments: spirits, wines and soft drinks. In the spirits segment stand out internationally renowned brands, such as Campari, SKYY Vodka and Cynar together with leading local brands, such as Aperol, CampariSoda, Glen Grant, Ouzo 12 and Zedda Piras and the Brazilian brands Dreher, Old Eight, Drury’s. In the wine segment together with Cinzano, known world-wide, are Liebfraumilch, Mondoro, Riccadonna, Sella & Mosca and Teruzzi & Puthod all respected wines in their category. In the soft drinks segment are Crodino, Lemonsoda and its respective line extension dominating the Italian market. The Group has over 1,500 employees. The shares of the parent company, Davide Campari-Milano, are listed on the Italian Stock Exchange.

For further information:

Download the full press release (PDF - 56KB)

The document is in PDF format. To view PDFs you need the Adobe Acrobat Reader.
This program is available free of charge from the Adobe website.