CRIF Ratings affirms Campari’s “BBB/Stable” unsolicited long term issuer rating

Unsolicited rating without participation

CRIF Ratings (or ‘Agency’) has affirmed Davide Campari-Milano S.p.A.’s “BBB” long term issuer rating; the outlook remains “Stable”. The rating is assigned by CRIF Ratings on an unsolicited basis, without the participation of the rated entity and relying only on publicly available information. Davide Campari-Milano S.p.A. (‘Campari’ or ‘Group’) is the sixth global spirits producer with a turnover of EUR 1.8bn in FY19.

The affirmation of the rating reflects Campari’s healthy and resilient operating performance and its strong business profile, both supported by a high geographical diversification of consolidated sales and a wide portfolio of well-known spirit brands. The affirmation reflects the Group’s sustainable credit metrics as well, in line with CRIF Ratings’ previous expectations, which showed some improvements in FY19 remaining comfortably placed within the triggers set by CRIF Ratings in the previous rating action.

The Group’s consolidated revenues increased to EUR 1.8bn in FY19 from EUR 1.7bn in FY18 (+7.7% y-o-y). Such increase reflected an organic growth of +5.9% combined with favorable effect stemming from currency fluctuations (+2.1%), only slightly offset by a -0.4% perimeter effect. In this context, the Group maintained a satisfactory operating profitability (EBITDA margin up to 26% in FY19 from 25.3% in FY18), above the average for the spirits industry but still below the global top producers. The operating performance reflected the continuous support from key-margin Global and Regional Priorities in core developed markets, despite the increasingly adverse agave purchase price as well as the destocking activities carried out on certain high-margin brands ahead of changes to the route-to-market. The Group reported a 3.7% y-o-y increase of net profit to EUR 308m in FY19, mainly thanks to lower total taxes, which also include a tax benefit (for the fifth and last year) relating to the “Patent box” tax relief in Italy.

The satisfactory profitability continued supporting the Group’s Free Cash Flow (FCF) generation that reached EUR 197m in FY19 (EUR 178m in FY18), net of EUR 57m of dividends paid (in line with FY18) and EUR 92m of CAPEX (EUR 83m in FY18). The positive FCF prompted the consolidated net debt to decrease to EUR 792m at YE19 from EUR 862m at YE18. This improvement allowed Campari’s net leverage to decrease to 1.7x and 1.9x in FY19 on EBITDA and FFO basis respectively, from 2x and 2.2x in FY18.