(Bloomberg) -- Davide Campari-Milano NV shares plunged after it said profit dropped in the third quarter, hit by poor weather and cautious demand for high-end drinks among US consumers.
The Aperol maker’s adjusted earnings before interest and taxes fell 13% from the year-earlier period to €139.4 million ($151 million), missing a Bloomberg-compiled consensus of €178.5 million. The company, which recently parted ways with its chief executive officer, said it expects organic sales to grow by a low single digit percentage this year.
Shares of Campari fell as much as 14.8% in early trading. The stock is down 33% year-to-date.
The Italian beverages group said it will embark on a overhaul of its operating model into four “houses of brands,” as well as kick off cost savings initiatives. It also plans to dispose of non-core brands to free up resources for so-called top priority brands, which include Aperol, Campari and Espolon Tequila. It’s also starting on Wednesday a €40 million share buyback program.
“This was a really disappointing performance, particularly in light of signs from Diageo and Pernod Ricard that the slump in top line performance might be bottoming out”, analyst James Edwardes Jones at RBC wrote in a note. “We can’t find anything in the current performance to give us any confidence in management’s medium term aspirations.”
Campari is targeting a return to mid-to-high single digit organic net sales growth in the medium term as it reorganizes its products into four “houses of brands”, namely Cognac & Champagne, Aperitifs, Whiskeys and Rum, and Tequila.
“Campari may see a 2024 adjusted earnings per share decline of about 5%, as consumers continue to shun going out to bars and restaurants,” Bloomberg Intelligence’s Duncan Fox wrote in a note.
Campari is still seeking a new CEO after the abrupt departure of Matteo Fantacchiotti and said it will conclude the search by the first half of 2025. Fantacchiotti resigned in September after just five months at the helm of the Italian beverages group.
--With assistance from James Cone.
(Updates with details throughout.)
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