The Italian drinks group Campari announced yesterday that its net profits grew 20% in 2001 to €63.4m (US$55.47m). The company said the growth was driven by a rise in sales and a significant drop in taxes.

Campari, the maker of the eponymous aperitif, along with Cinzano and Skyy Vodka, saw its sales rise 13.9% to €494.3m in 2001. However, pre-tax profits fell 3.6% to €94m, which suffered from foreign exchange losses.

"Net profits...benefited from a reduction in the tax rate compared with 2000, when substantial provisions for tax litigation were accounted for," Campari said in a statement, adding tax payments had dropped 31.5% .

In a note analysts West LB Panmure said: "This appears to be a solid set of results and the contribution of the Brazilian business (15.5% of sales) will have eased some concerns. We would contend that the main catalyst for a potential re-rating is likely to be acquisitions, as well as further innovative deals such as that struck with Miller in the production of SKYY Blue.

"Since the end of 2001 it is worth noting that Campari has become the controlling shareholder in SKyy spirits, and acquired 100% of Zedda Piras, a leading Sardinian spirits company, which controls 67.6% of Sella & Mosca, a major player in the Italian premium wine market.

"Campari has a very profitable business model due largely to the strength o its position in the Italian market and a higher than average rate of investment in advertising and promotion. The dependence on the Italian market could be perceived to be a risk, however recent/further acquisitions
should help to diversify this risk," it concluded.

Campari said it would propose a dividend of 0.88 euros per share.

Campari said it paid non-recurring costs of 5.6 million euros in 2001, related to its listing on Milan's bourse last July and a restructuring plan.