By Andrea Figueras


Aperol maker Davide Campari-Milano reported an increase in sales for the first half, bucking a slowdown in demand that hit beverage companies after a surge in the pandemic, but was cautious for the remainder of the year.

The Italian distiller's net sales were 1.52 billion euros ($1.64 billion), up 3.8% organically and 4.5% higher on a reported basis compared with the prior-year period. The result compares with analysts' forecasts of EUR1.51 billion, according to a poll of estimates compiled by Visible Alpha.

The results were mainly driven by strength in aperitifs, led by both Campari and Aperol labels, especially in the Americas and Germany, the company said Tuesday. The rest of the Europe, Middle East and Africa region was hit by poor weather.

Sales in the core U.S. market--which accounts for 45% of group sales--were up by 3.5%, with an acceleration in the second quarter boosted by Espolon, Aperol and Grand Marnier brands, it said.

The company's performance in the Americas contrasts with that of its rival Diageo. The U.K. company, which counts Johnnie Walker, Guinness and Smirnoff among its brands, said earlier today that it expects demand to remain soft after consumers in North and Latin America pulled back spending on alcohol in its last fiscal year.

Diageo's outlook reflects a broader trend weighing on the sector. Following a boom during the pandemic, demand has normalized, resulting in high inventories for distillers, particularly in the U.S.

In the Asia-Pacific region--which accounts for 6% of group sales--Campari saw a decline of 10.7%. This was partly due to a challenging environment in Australia.

The company noted that China was already back to growth in the second quarter. The performance of spirits companies in the country has been closely watched by analysts and investors after the Chinese government launched an anti-dumping investigation in January into brandy imported from the European Union.

The measure--perceived as an escalation of trade tensions--raised concerns as analysts said it could potentially hamper distillers, particularly those exposed to the country and with a higher proportion of their sales coming from cognac.

In fact, earlier this year, Campari acquired Beam Holding France, the owner of Courvoisier cognac, in order to strengthen the company's presence in both the U.S. and China.

Earnings before interest and taxes dropped to EUR335.6 million from EUR343.7 million.

For the remainder of the year, the group expects to continue to outperform the rest of the industry, but signaled that the current environment is marked by softer market dynamics and increased price competition in core markets.

The company also said that gross margin expansion will be hurt by poor weather, as well as agave supply contract renewals taking longer than expected, which will shift some of the related expected benefits to next year.

"Campari is incrementally cautious in its outlook statement," RBC Capital Markets analysts Emma Letheren and James Edwardes Jones said in a research note.

In the medium-term, the company remains confident in its continued growth momentum and aims to deliver profitable growth and operating margin expansion.


Write to Andrea Figueras at andrea.figueras@wsj.com


(END) Dow Jones Newswires

07-30-24 0729ET