Campari: Strong improvement in profitability
BUY, Fair Value EUR9,7 vs. EUR9,3 (+11%)
Q1 organic sales growth came in at 7.2%, almost 4% above expectations, driven by the Americas (6.9% vs consensus: +4.8%), Southern Europe/Middle East/Africa (4.8% vs consensus: +2%), and North/Central and Eastern Europe (+13.3% vs consensus: +3.4%). EBIT pre one-offs reached EUR53.9m, up 21% in reported terms and 20% in organic, and 16% above consensus estimates. The group benefited from a very favourable mix with strong growth in the highly profitable global priorities (+11.9%), especially Campari (+21.4%) and Aperol (+24.7%). We have lifted our organic sales growth estimate for 2016 to 5.3% vs 4.3% previously. More importantly, we have increased the pace of recovery in the group’s EBIT margin in coming years. We now stand at 21.4% in 2016 and 22.5% in 2017, vs previous estimates of 21.1% and 22.2% respectively. Our Fair Value is adjusted to EUR9.7.
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