ITALY: Gruppo Campari to cut debt, with one eye on acquisitions

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Gruppo Campari will focus on cutting debt for the next 12 months following its acquisition of Wild Turkey Bourbon, but the Italian drinks firm remains on the lookout for fresh acquisition targets in key emerging markets, according to CEO Bob Kunze-Concewitz.

Campari is looking to cut its net debt to ebitda ratio from a current level of 2.6 to around 2.2 around the end of 2010, Kunze-Concewitz told journalists during a press conference in Milan on Friday (9 October).

Although reducing debt is the central focus of the group, it will be "window shopping" for acquisitions, said Kunze-Concewitz, a day after the company hailed the success of a EUR350m bond issue.

"We want to bring debt down to a level from which we can start to look at major acquisitions," he said.

Campari bought Wild Turkey Bourbon from Pernod Ricard this year for US$575m, expanding its presence in the US, as well as in Australia and Japan.

Further acquisitions are likely to be in spirits, which remains the group's core business, Kunze-Concewitz indicated. The firm is keen to expand in Latin America, notably by growing its presence in Argentina, and also in Eastern Europe - something Kunze-Concewitz says will reduce the company's reliance on the domestic Italian market.

"We have a huge mass in Italy, so we will not grow here as if we are start-up company," he said. "Italy sales will continue to grow, but its share of the total is bound to go down."

Italy accounted for 41% of Campari's net sales in the group's most recent fiscal year.

As part of the company's strategy to expand its core spirits portfolio, Kunze-Concewitz said the firm would be willing to listen to attractive offers on its domestic soft drinks business.

Aside from Crodino, which is pitched more as a non-alcoholic aperitif in Italy, "other soft drinks are less strategic", he said. The group's portfolio of soft drinks includes the Crodo mineral water brand. 

Campari saw half-year profits boosted by lower spend on advertising and promotion, following a drop in media rates in several key markets.




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