Citi has revised its price target for Davide Campari-Milano (DVDCF, Financial), bringing it down slightly from EUR 7.25 to EUR 7. However, the financial firm continues to uphold a Buy rating on the company's shares. This suggests that despite the adjustment, Citi remains optimistic about the stock's potential performance in the market.
DVDCF Key Business Developments
Release Date: May 08, 2025
- Organic Net Sales Growth: Negative 4.2%, equating to a decrease of €28 million.
- Total Sales Growth: 0.3% in Q1.
- EBITDA Adjusted: Declined by 17.2% organically with a margin dilution of 310 basis points.
- Gross Margin: Remained flat, impacted by negative mix due to lower US profit share.
- AMP (Advertising and Promotion): Increased by 2.4% with a 90 basis point margin deduction.
- SGNA (Selling, General and Administrative Expenses): Grew by 5.1% in value, causing a 200 basis point dilution.
- Pre-tax Profit Adjusted: €113.7 million, down by 22.4%.
- Net Financial Debt: €2.16 billion, relatively stable, up €83 million from December last year.
- Leverage Ratio: 3.4 times, slightly higher than December's 3.2 times.
- Americas Organic Change: Negative 6%.
- APAC Growth: 11%, with Australia growing by 16%.
- House of Agave (Espolon): Impacted by logistics delays, would have been around negative 1% excluding delays.
- Financial Expenses: €21.8 million, including exchange gains of €3.4 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Davide Campari-Milano NV (DVDCF, Financial) recorded significant double-digit growth in more than 10 less developed markets globally, showcasing the potential for geographic expansion.
- The company is on track with its cost containment program, expected to release benefits starting in H2 2025, which should improve operating leverage and margin profile.
- Aperol and Espolon showed strong performance in the US, with growth rates of 12% and 14% respectively, indicating robust brand health.
- The company reported a solid performance in APAC with 11% growth, driven by strong execution in Australia and positive trends in China and South Korea.
- Davide Campari-Milano NV (DVDCF) is maintaining a disciplined approach to pricing, which is crucial in a volatile market environment, ensuring long-term brand equity protection.
Negative Points
- The company experienced a negative 4.2% organic net sales growth in Q1 2025, primarily due to Easter timing impacts and logistic delays.
- Macroeconomic volatility and logistic challenges affected ordering patterns and shipments, particularly in the US, impacting overall performance.
- The EBITDA adjusted in value declined by 17.2% organically, with a margin dilution of 310 basis points, indicating pressure on profitability.
- The company faces potential negative impacts from tariffs, estimated at around €25 million on EBIT for 2025, which could affect financial performance.
- The weakening of the US dollar poses additional potential negative impacts for the remainder of the year, adding to the financial uncertainties.
