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Campari Slides After Posting Surprise Decline in Annual Earnings

Davide Campari-Milano SpA, (CPR) the maker of Skyy vodka, reported an unexpected drop in annual profit amid declining sales in Italy and Brazil, and said this year will also be “challenging.”

Earnings before interest and taxes fell to 287.5 million euros ($374.3 million) from 295.5 million euros a year earlier, the Milan-based distiller said today, sending the shares down the most since November. The average estimate of 12 analysts surveyed by Bloomberg News was 307 million euros.

Revenue reached 1.34 billion euros. On a so-called organic basis, excluding currency shifts and acquisitions or disposals, sales at the maker of Wild Turkey bourbon rose 2.8 percent, compared with the 2.7 percent median estimate of seven analysts.

Trading in Campari shares was halted in Milan after the stock fell as much as 4.6 percent.

“We expect 2013 to be another challenging year due to heightened macroeconomic difficulties in eurozone markets,” Chief Executive Officer Bob Kunze-Concewitz said in the statement. The company expects “continued positive momentum” in the U.S. and Pacific regions as well as improvements in Latin America and eastern Europe, he said.

Turbulent economic and political conditions in Campari’s home market of Italy have roiled sales, while stagnant growth across the rest of the continent has offset growth in in the Americas region, which includes the U.S., the world’s most profitable spirits market. U.S. sales rose 8.6 percent on an organic basis last year, representing 22 percent of revenue. Brazilian sales plunged 7.9 percent as Campari sold fewer local brands. Revenue in Italy, which provided 29 percent of business last year, fell 3.3 percent on an organic basis.

Commercial Dispute

European sales increased 3.4 percent on growth in Russia and as the company sold more Aperol in Austria and Switzerland. Campari registered a 9.1 percent decline in Germany due to a commercial dispute that affected the Campari and Aperol brands.

Sales in the rest of the world advanced 12 percent, aided by sales of Wild Turkey in Australia and a “positive development” in China, South Africa and Nigeria.

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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