Sugar revenue sours, but stronger Jamaican dollar and rum boost Campari sales
Poor weather conditions chopped down Gruppo Campari's sugar revenue in Jamaica by €6.4 million ($820 million) from year-earlier levels during the first half of 2015.
A 16 per cent appreciation in the Jamaica dollar against the euro, when comparing the average exchange rate during the six months to June to the corresponding period in 2014, was more than enough to offset the fall-off from the non-core business line - the strengthening of the dollar translated into €7.9 million more revenue for the Italy-based spirits distributor.
The Jamaica rum portfolio has been doing well for Campari, especially the Appleton and Wray & Nephew White Overproof lines. The group's relaunch of the rums in the first half of 2015 helped drive advertising and promotional expenses up by €8 million, or eight per cent over the spend in the same period in 2014. At the same time, however, the Italians reported that Jamaica rum sales increased by 13.3 per cent.
Still, net sales out of Jamaica declined by 4.1 per cent to €56 million for the six-month period. This was due to a falloff in revenue resulting from the termination of some distribution agreements and the sale of non-core business in Jamaica.
$5m gain on sale
Campari inked a deal in December to sell its the Federated Pharmaceutical division of J. Wray & Nephew Limited to Kirk Distributors for US$14.4 million. It also signed an agreement to sell its
Agri-Chemicals division to Caribbean Chemicals and Agencies Limited for US$8.2 million. The latter sale was completed on July 9, although the international spirits distributor reported that the disposal of that business had no significant impact on the group's financial results. Federated provided a €5-million gain on sale to the bottom line.
Last year, the company also sold its one-third stake in real estate company Jamaica Joint Venture Investment for just shy of US$1 million.
Campari's net sales grew by 11 per cent year over year to €758 million in the first half of 2015. Its net profit climbed 36 per cent to €78 million.