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Drinks Maker Campari Puts Margin Target On Ice Over Costs

Italian drinks group Campari noted on Wednesday that rising input costs would push back expected profitability gains, sending shares down more than 6%.

The maker of Aperol and Campari bitters, which had forecast gross margin to improve by around 70 basis points this year, warned this increase would not materialise due to higher costs.

Operating Margin

Campari now expects its operating margin to remain stable on a like-for-like basis this year compared with 2021.

"Temporary input costs pressure is expected to further intensify during the current year, postponing the gross margin accretion and ultimately leading to broadly unchanged organic EBIT margin in 2022," Bob Kunze-Concewitz, CEO said in a statement.

Shares in Campari were down 6.6% at 1105 GMT.

Beverage Price Hikes

The Milan-based group said that the new outlook included the possibility of beverage price hikes to mitigate rising costs.

Campari reported a nearly 26% rise in like-for-like sales in 2021 helped by increased online purchases of spirits and cocktail consumption at home.

On the 27 October 2021, the company said that it plans bigger than usual increases in drinks prices this year to offset surging costs for logistics and raw materials including glass, alcohol and sugar, its top executive said.

Adjusted operating profit, or earnings before interest and taxes (EBIT), came in at €137 million ($159.4 million), up 16% on the same period of 2021 when excluding foreign exchange, acquisitions and divestitures.

News by Reuters, edited by Donna Ahern, Checkout. For more Drinks stories, click here. Click subscribe to sign up for the Checkout print edition.

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