Release Date: March 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Davide Campari-Milano NV (DVDCF, Financial) achieved a 2.4% organic top line growth and a 5.2% total growth despite challenging macroeconomic conditions.
- The company reported a solid performance in Q4 with a 3.4% increase in top line and a 40 basis points improvement in gross margin.
- The House of Brands structure is expected to drive more focused and structured growth, leveraging geographic expansion opportunities.
- The company has a strong brand portfolio with significant growth potential, particularly in the US market where Aperol's awareness is still low.
- Davide Campari-Milano NV (DVDCF) is committed to its ESG journey, having made significant steps and improvements in its S&P Global ESG rating.
Negative Points
- The company faced significant macroeconomic and geopolitical volatility in 2024, impacting consumption patterns and leading to destocking across the trade.
- Poor weather conditions in Europe negatively affected sales, particularly during the peak season.
- The company anticipates ongoing cyclical headwinds in 2025, viewing it as a transition year with moderate organic growth.
- There is a potential impact from recently announced tariffs on imports from Mexico and Canada into the US, estimated at around €50 million annually.
- The company experienced a 2.5% decline in adjusted EBITDA due to increased depreciation and amortization from its extraordinary CapEx program.
Q & A Highlights
Q: How do you prioritize growth opportunities given the potential for geographic expansion and low market penetration?
A: Simon Hunt, CEO, emphasized the need to be pragmatic and plan growth over several years, leveraging existing market capabilities. He highlighted cost containment programs and efficient deployment of A&P as key funding sources for growth. The focus will be on strategic market share ambitions and leveraging Campari's unique culture and team quality.
Q: What gives you confidence that the current industry headwinds are cyclical rather than structural?
A: Simon Hunt, CEO, believes the current challenges are cyclical, noting that moderation has been a long-standing trend in the industry. He highlighted that the simultaneous downturn in multiple global markets is unique but expects consumer behavior to rebound, with Campari well-positioned to target evolving consumption occasions.
Q: Can you elaborate on the strategy for the House of Brands model and its expected impact?
A: Simon Hunt, CEO, explained that the House of Brands model creates a single-minded focus on brand management, integrating operations, supply chain, and innovation. This structure fosters healthy tension between brand and market focus, aiming to optimize brand building investments and leverage geographic expansion opportunities.
Q: What is the outlook for pricing and gross margins in 2025?
A: Paolo Marchesini, CFO, stated the objective of achieving a flat margin for the year, excluding tariff impacts. He noted potential pricing risks due to a tense promotional environment but expects sales mix improvements and cost efficiencies to support margins. The company aims to step up A&P investments to 17-17.5% of net sales.
Q: How is the company addressing the potential impact of tariffs on imports from Mexico and Canada?
A: Simon Hunt, CEO, mentioned that the company is assessing mitigation actions for the potential EUR 35 million impact in 2025 due to tariffs. Strategies include adjusting transfer prices and exploring opportunities to offset impacts through new launches and international market expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
