Analysis - Gruppo Campari set to struggle in Q1
Campari will see its home market drag on Q1 performance
Troublesome trading conditions in Italy and Germany will give Campari a tough start to 2013, an analyst has warned.
Earlier this month, Milan-based Campari posted a slight dip in full-year profits for 2012, with both its home market and nearby Germany dragging on performance. While a “worse-than-expected market environment” in Italy in the final quarter hindered sales, Germany was hit by a “commercial dispute with a key client” over Campari's Aperol brand.
In a note to clients today (26 March), Kepler Capital Markets said that the two markets will continue to prove difficult this year.
“In Italy,” Kepler said, “we expect that -8% underlying trend to continue/deteriorate further in H1, as austerity measures and the political conundrum continue to weigh on consumer confidence.
“In Germany, we fear the ‘me-too’ products - priced at a 50% discount to Apérol price - that popped up during Apérol’s delisting in 2012 might force Campari to step up marketing spend.”
Kepler forecast that full-year net profits for Campari in 2013 will come in at around EUR179m (US$232.1m), a year-on-year increase of 6.7%. This contrasts, however, with the firm's sector peers, who are expected to deliver a 14% lift in net profits on average this year.
“When reporting 2012 earnings,” Kepler continued, “Campari flagged that, in Q1, Italy would be hit by a EUR20m to EUR25m shift in revenues from Q1 into Q2-Q3 (delayed pre-load for the summer). This means sales in Italy could drop by 25% year-on-year in Q1, translating into a 3% like-for-like sales decline at group level."
Campari is set to release its Q1 results on 13 May.
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