By Elisa Anzolin and Emma Rumney
MILAN (Reuters) -Shares in Campari plunged over 13% on Thursday after the Italian spirits group significantly missed analyst expectations for sales and operating profit in the third quarter.
The maker of Aperol and Campari bitters outperformed other spirits makers that have suffered from a slowdown in demand in the United States after a post-COVID surge, poor weather in Europe and a tough economy in China, analysts said. But its performance was still weaker than expected.
Organic sales growth of 4.4% for the quarter was well behind the more than 8% expected by analysts on average, according to a company-compiled poll. Adjusted earnings before interest and tax were down 11.4% at 160.8 million euros due to a negative currency impact.
The company said poor weather in Europe, which has ranged between extreme heat and flooding this year, had hit sales in its home market in particular.
It also flagged big declines in other key markets like Jamaica, while a return to more normal levels of sales in the U.S. also hurt its performance.
“In the medium term, we remain confident to continue delivering strong organic topline and margin expansion leveraging mix improvement as well as input cost inflation easing,” Chief Executive Bob Kunze-Concewitz, who is due to retire in April, said in a statement.
In a phone interview with Reuters, the outgoing CEO said company strategy will not change under his successor and the appetite for acquisitions remains the same.
Campari confirmed the group’s full year guidance of a flat organic margin for EBIT-adjusted earnings. A Milan-based trader added that some had hoped Campari’s full-year margin outlook would be raised.
Campari’s shares trimmed earlier losses and were down 6.4% by 1450 GMT.
Trevor Stirling, analyst at Bernstein, said the initial hit to Campari’s share price was a “massive over-reaction” and the results did not indicate a fundamental issue for the group.
“Is there any sense here that this is a broken story? Not at all,” he said.
($1 = 0.9481 euros)
(Reporting by Elisa Anzolin in Milan and Emma Rumney in London; Editing by Barbara Lewis, Kirsten Donovan)