Good afternoon. This is the Chorus Call conference operator. Welcome, thank you for joining the Campari Group's second half 2020 financial results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Bob Kunze-Concewitz, CEO of the Campari Group. Please go ahead, sir.
Thank you very much. Good afternoon, everyone, and welcome to our first half 2020 call. If you follow me on page number four of our presentation, I'll kick off with the highlights. Overall, as expected, our strong brand momentum was affected by market-specific channel skew as well as destocking, and this particularly in Q2. Looking at net sales, the full effect of the pandemic, as well as the subsequent restrictive measures across all our key markets were, as expected, registered during the Q2 period, leading to a 15.9% decline. After the initial effects in Q1, you remember we were down by 5.3%, which leads to an overall average of 11.3% decline. Clearly, a tough comp base. You remember we grew by 8% in the first half of last year, also impacted that delta.
Measures to combat the virus have had a great impact, obviously, on the on-premise skewed markets, which were partly mitigated by quite resilient growth in the off-premise skewed markets. I must say that shipments were below sellout trends in those markets as well. Looking at it on a geographic basis, we've had strong declines in SEMEA, this is mostly to two very on-premise skewed markets, Italy and Spain, as well as global travel retail, which was impacted. Latin America was also impacted, the two put together were partly offset by quite positive trends in core off-premise markets, particularly Germany, the U.K., Russia, Canada, and Australia. The U.S. declined largely due to destocking effects at the wholesaler level in key brands, as well as the tough comp base. You remember that in the first half of last year, we grew by 10.9% in the U.S.
Looking at it by brand, we have overall strong brand momentum, which was affected by the channel skewed and destocking. Our global priorities declined by 9.9%, with unfortunately the Aperitifs, Aperol and Campari down low double digit, largely due to the on-premise focused Italian market, which felt the full impact of the restrictive measures during the Q2 period. Actually, the Italian on-premise was shut down for 10 weeks out of the 12 weeks of the quarter. Meanwhile, Wild Turkey, Grand Marnier, and SKYY also declined, largely due to destocking in the key U.S. market. The Jamaican rums, on the other hand, were quite resilient. Regional priorities were down 11.5%, with declines across the whole brand cluster, with the exception of Espolòn and Forty Creek.
Our local priorities were down 13.1%, overall due to double-digit declines in the single-serve Aperitifs in Italy, which offset quite resilient performance across the rest of the portfolio. On a reported basis, net sales were down 9.4%, reflecting a positive perimeter effect of 2.1%, as well as a slightly negative Forex effect of - 0.2%. Moving on to adjusted EBIT on an organic basis, it declined by 30.8%, which amounts to a 470 basis points margin dilution. Clearly, against a tough comp base, but largely due to COVID-19 impact, hitting in particular our high margin and on-premise skewed Aperitif business. Our cost containment initiatives in Q2 across both A&P and SG&A helped to mitigate the dilution, which was still heavily impacted by top-line decline and lower absorption of fixed costs.
On a reported basis, EBIT declined by 27.7%, with a positive Forex effect of EUR 8.9 million and a negative perimeter effect of EUR 3.4 million. Net profit on an adjusted basis came in at EUR 77.6 million, down 33.5%, and on a reported basis to EUR 73 million, down 40.6%. Net debt in the period reached EUR 1,061 million versus EUR 777 million, which we had at the end of the year, up by EUR 284 million. Clearly, this is due to the pre-acquisitions we did in the period, as well as the increased dividend payment, the share buybacks as well. This, all of it put together, led to a net debt to EBITDA on an adjusted ratio basis of 2.4x .
Moving on to chart number six, I think it's just graphically important to see the impact of SEMEA and Italy from a regional geographic standpoint, whereas you can see that from a brand basis, the performance hasn't been so divergent across the different clusters. Importantly, our global priorities continue to outperform the rest of the portfolio. What is more, I think, interesting to look at is our strong brand momentum across the off-trade in the U.S. during the lockdown, and you can see that perfectly portrayed on chart number seven, where you see on a weekly basis our performance in Nielsen terms versus the market. On average, you see that throughout the period from week 11 all the way to week 28, we've strongly outperformed the market on average by growing 50% faster than the market. Below, you see the performance by brand.
It's also important to underline that the same level of outperformance in the off-premise occurred also in key European markets. If we look at the lockdown volume percentage gains on Aperol and Campari in Italy, Austria, Germany, and the U.K., you see that on the one hand, we continue to perform at a double-digit pace in all of the markets. The growth rate would've been versus the market even bigger, because clearly we make a large part of the category. We've outperformed the market even more significantly, and on average, our Campari subsidiaries also grew 50% faster than their market reference across all key markets. Moving on to chart 10. Just to illustrate the fact with the strong decline in Italy, the Italian business only accounted for 59.9% of our sales in the first half, which on the other hand allowed the U.S. to grow to 32.1%.
Once we're talking about the U.S., let's move on to the Americas on page number 11. Overall, an organic decline of 7.6%. Having said that, looking at it by different market, we see the U.S. down by 4.1%. This overall decline is due both to a very tough comp base, we were up 10.9% last year, as well as the negative impact from COVID-19 on on-premise restrictions. This was particularly amplified in Q2. Some key brands such as Espolòn, Wray & Nephew, Aperol, and Campari continued to grow, but this was unable to offset declines in SKYY, Grand Marnier, and Wild Turkey, which suffered from a de-stocking effect at the wholesaler level. Brand momentum in the off-premise remains very strong across our portfolio, as we've seen, and consistently above the market average.
Clearly, de-stocking at wholesaler level impacted shipments, which are lagging behind more positive depletions, which are in a high single digit on a total company basis, and even stronger sell-out trends. Jamaica was down 8.9%, an overall decline due to the closures of the on-premise as well as reduced touristic flows, as Jamaica is quite a tourist destination. This was also amplified, as in the case of the U.S., by tough comp base, where we grew very strong double digit last year by 18.6%. Canada, which is prevalently a off-premise market, had a very strong first half, up 9.6%. Very positive results across the portfolio of brands. Brazil was down by 8.5%. This is an on-premise skewed market, and here we also had a little bit of a mix issue in that the more premium brands and higher profitability brands, Campari and SKYY, suffered.
Whereas the more value-based and lower profitability local brands actually did well. The rest of the region was down 34%. Mexico was heavily impacted by restrictions on alcohol sales, down by 48.3%. Argentina did, I think, decently, given the circumstances of both the economic situation as well as the pandemic, down 22.1%. Moving on to Southern Europe, Middle East and Africa, we see where we've taken the brunt of the hit. Overall, this region is down 32.8%, with its largest component, Italy, down 33.1% on an organic basis. There was a strong decline driven by the full on-premise closure. You'll recall that 70% of our consumption in Italy happens in the on-premise. This was clearly a reaction to the pandemic. There were also limitations, particularly in the first half of the quarter, on customer traffic in the off-premise.
The whole Aperitifs portfolio declined, unfortunately, this occurred in a peak seasonal quarter, which was also amplified by a reduced tourism traffic. The on-premise recovery from late June started gradually as consumers began to return to bars with outdoor spaces. Clearly it's not a return to normal. The rest of the region was down 32%. France was flattish with a positive Q2. Q2 was up double-digit. Importantly, we had the, on paper, de-stocking effect due to the route to market change as we acquired our distributor. Spain, on the other hand, had a real decline, down 49.3%, clearly impacted by its on-premise issues as well as reduced tourism. Looking at Africa, Nigeria continued to grow, mainly thanks to Campari, Wild Turkey, and American Honey.
Clearly South Africa is strongly impacted, both by the closure of alcohol-selling outlets as well as the amplification brought about by route to market changes. Global Travel Retail, comes as no surprise, down by 60.7% as there was very little shopper traffic. We don't expect a major recovery on this part of the business, at least in the short term. Moving on to chart North Central Eastern Europe had a very solid first half of the year, up overall 5.9%. Germany was up 3.4%, a resilient growth with a nice acceleration in Q2. This is prevalently an off-premise market where we have positive sell-out trends continuing to outpace shipments in a key market for the group. Growth in our aperitifs France was strong. Aperol up 9.8%, Campari 4.7%, and that's particularly positive given the big price repositioning we did last year.
However, you'll recall from the chart I showed at the beginning that the sell-out trends are actually much, much stronger, double-digit trends. We've also seen modest growth in Liqueurs with Grant and BULLDOG, which helped offset declines in agency brands, as well as the on-premise St-Germain liqueurs, Italian Bitters, and Frangelico and Cinzano sparkling. The U.K. continues to go from strength to strength, up a very strong 36.2%. Robust growth continued into Q2, driven mostly by Aperol, Wray & Nephew Overproof, Magnum Tonic, as well as Campari. We have very strong growth in the off-premise, and I must say an unparalleled growth, three-digit in e-commerce channel, which really contributed to the overall performance. Russia, very positive, up 19.2%. Strong growth despite the tough comp base. We were up 10.9% last year. Again, this is a largely off-premise market. The key drivers here have been Mondoro, Aperol, and Cinzano Vermouth.
On a smaller base, though, Espolòn, Wild Turkey, and Campari continued to grow nicely. The rest of the region was down 3.2%. We've had resilient growth in Austria and Switzerland, particularly behind our Aperitifs. Belgium was flattish, but we saw some small declines in Eastern Europe and Scandinavian markets. To round up our geographies, Asia Pac also had a quite good first half, up 7.1%. Australia, on a full semester basis, was up 18.7%. This following a weak start to the year. You remember the January, February were impacted by bushfires. We have an overall great performance across the portfolio. Wild Turkey RTD, which obviously is very important there, Campari, and Espolòn also grew double digits. The rest of the region was down 19.2%, and with divergent performances. China, which is a predominantly on-premise, actually registered a double-digit growth as it recovered quickly post-COVID-19 pandemic.
In Q2, for instance, we were up 60.4%. Japan declined 48.6%, and this mostly due to the continued de-stocking, which occurred ahead of our route to market change, which is occurring as we speak. Moving on, the brand by brand analysis, page number 16. Aperol impacted by Italy, SEMEA, down 11.6% on the half. If we exclude Italy and GTR, we would have been up by 4%. We have strong off-premise and online sales in all of our core markets, and feel very good about the prospects of the brand going forward. Campari similarly reflects the same performance, similar performance to Aperol, down 10.6%. Again, it's the largest market, Italy, which impacted it due to the closures in the peak period in Q2. Strong growth and nice for the mix with the U.S. up double digit, Germany up mid-single digit.
Grand Marnier was down overall 9.7%. Again here, different performances, very positive performance in Canada, up 13.6%. This was unable to offset weak shipments in the U.S. market. As you know, Grand Marnier is a 50/50 split between the two channels. Despite very positive off-premise sellout trends, we were not able to recover what we lost in the on-premise, as well as were impacted by de-stocking at the wholesaler level. Moving on to the following page in our Bourbon portfolio, down 7.7%, building momentum in Q2. Clearly, this overall negative performance needs to be seen also against a tough comp base. We were up 11.4% last year.
It's largely due to de-stocking the U.S., where actually in the case of Wild Turkey, we were the ones pushing the de-stocking in Q1 as we were preparing the brand for the relaunch of 101 behind new packaging, which then we had to postpone due to disruptions from COVID-19. Sales in Q2 progressively more positive and very strong growth in the second largest market, Australia. American Honey, on the other hand, registered a decline overall, and this is mostly due to de-stocking in the core U.S. market, which more than offset positive results in Australia and Nigeria. SKYY overall was down 16.5%, decline in the core U.S. market, but this mostly due to de-stocking at the wholesaler level in Q2, where the brand was down 20%.
We have very nice performances in terms of sell-out on core vodka, which is growing in the high single digits, roughly in line with the vodka market. That's quite positive. We have nice growth in China, this was unable to offset the declines across the other international markets. Our Rum portfolio is positive, up mid-single digits, 4.9%, with a slight acceleration in Q2. A key driver here is Wray & Nephew Overproof doing very nicely in its three core markets. The negative performance was driven by Appleton Estate, and this is mostly due to the de-stocking which happened across all of our markets ahead of packaging change in Q1. Clearly, on-premise closures, and particularly in Jamaica, didn't help either. Moving on for regional brands, Espolòn up 3.3%. Big difference between shipments and positive depletions, as well as higher sell-out trends.
Our depletions were up 47% in the period in the U.S., and our sell-out trends were even stronger. We're also continuing to see encouraging signs in seeding markets such as Russia, Canada, and Australia. BULLDOG, on the other hand, was impacted by its large prevalence in on-premise markets such as Spain as well as GTR. Unfortunately, improving consumption trends in Germany, the U.K., and Belgium weren't strong enough to offset the declines elsewhere. Glen Grant was also impacted by GTR and Italy, down 32.1%+, Forty Creek, which has the bulk of its sales in Canada, benefited from the strong growth across our portfolio in that market, up 13.8%. The Italian bitters were down unfortunately 23.5%. Again, they're quite skewed towards the on-premise and also have a large share of their sales in the core Italian market. Cinzano, the volume down by 16%.
On the positive side, the core Russia and Australia are doing quite nicely, but they weren't able to compensate for declines in GTR, Argentina, and the rest of European markets, where you will recall we repositioned the brand towards the end of last year behind a subsequent price realignment. That will take a while to iron itself out of the market. Sparkling wines were down 18.7%. Clearly, there aren't many celebratory moments during the pandemic, so anything with bubbles suffered. On the other hand, though, Mondoro and Riccadonna were flattish, particularly thanks to a very strong performance of Mondoro in Russia, up 19.1%.
To close it up with our local priority brands, we see that, unfortunately, this cluster was impacted by the negative performance of the mono-use Italian aperitifs, Campari Soda, and Crodino, which were down in the 30% range, 30.5% on soda and 34.7% on Crodino, which is a little bit of a shame because the rest of the portfolio did quite nicely. Most importantly, the quite profitable RTD business in Australia was up 23.5%. The lesser profitable local brands in Brazil were up 22.4%, and our two local heroes, Ouzo 12 in Germany and Cabo Wabo in the U.S., also did quite nicely. This is it from the net sales perspective. I'll pass on to Paolo, who will dissect the financials.
Thank you, Bob. If you follow me to page 23, we have the analysis of the Americas region performance in the first half of 2020. As you can see, the EBIT came in at EUR 69 million versus EUR 76 million of last year, showing an overall reported change of a negative 9.3% and 50 basis point EBIT margin dilution. Looking at the organic performance, the EBIT adjusted organic decline accounted for 19.3% in value with 250 basis point dilutions.
At the level of gross profit, the region suffered from a decline in value of 14.5%, stronger than top-line, which were down 7.6%, also leading to a decline of 440 basis point in terms of our margin. Three factors here to highlight. First and foremost, the unfavorable sales mix by both brands, namely high margin global priority suffering in the US and channel, was skewed from on-trade to the off-trade channel.
Secondly, we call out the negative aggregate purchase price impact. Thirdly, the lower absorption of fixed production cost given the top-line decline of 7.6% organically in the region. A&P has been contained by 27.1% in value, more than top-line, driving a 420 basis point margin accretion. Key drivers were cost mitigation initiatives, as well as different phasing of investments from Q2 into Q3. Thirdly, a shift from offline to online investments. G&A showed a moderate increase in value by 3.6%, still driving 230 basis point margin dilution due to the lower absorption, again, of structural cost given top-line decline. That was partly mitigated by the streamlining of some local structures, particularly in South America. The combined effect of FX and perimeter generated 100 basis point margin accretion.
We move on to the EMEA region, the EBIT came in with a negative EUR 1.8 million versus a positive EUR 49 million of prior year, showing on a reported basis a decline of 103.6% in value and 21% as a percentage of sales. Looking at the organic performance. The strong EBIT adjusted organic decline was heavily hit by COVID, particularly the high margin aperitif business in Italy, the GTR channel in Spain were the most affected. Gross profit in value declined by 35.2%, actually higher than the top line decline of 32.8%, driving 240 basis point margin dilution. Again, even in this region, we have the very same performance driver with unfavorable sales mix driven by on-premise closure, particularly in the Mediterranean markets, in Italy and in Spain, hitting the high margin aperitif business.
The A&P investments have been contained in value by 14.9%, but less than top line, resulting in 420 basis point margin dilution due to the combined effect of cost containment and shift from on-prem to online brand building investments behind particularly the aperitif portfolio to fuel the consumption momentum. The SG&A has been contained by 3.9% in value, but remained highly diluted. As you can see, 13.8% the dilution impact as a consequence of a lower absorption of fixed structural cost, given the strong double-digit top line decline. The dilution of marginality was partly mitigated by cost containment actions, reducing variable structural costs, including the usual suspect, traveling ban, hiring freeze, and so forth.
The combined effect of FX and perimeter accounted for 70 basis point dilution, totally driven by the first time consolidation of the French distributor, which we've recently acquired, which was negatively impacted by one-off destocking, as well as COVID-19 impact. If you move on to page 25, Northern and Eastern region analysis of performance. EBIT came in at EUR 57.4 million versus EUR 49 million of last year, showing a positive reported change of 16.9% and 370 basis point EBIT margin expansion. Looking at the organic performance, even here, the performance is quite strong. EBIT adjusted organic growth accounted for 16.8% in value, well ahead of top line, leading to 310 basis point accretion.
Gross profit actually grew in value by 2.9%, slightly lower than top line, which was up 5.9%, generating 180 basis point dilution, again, driven by unfavorable geographic sales mix, where the outperformance of Russia drove some dilution in the Northern and Central European P&L accounts. The A&P decreased in value by 13.4%, leading to 330 basis point accretion. Again, also in this region, worthwhile mentioning cost containment initiatives, different phasing of A&P investments, and so forth. SG&A decreased in value by 3.7%, generating 160 basis point accretion, reflecting the cost containment measures that were implemented in Northern Europe. The combined effect of FX and perimeter on marginality accounted for an accretive effect of 60 basis point, primarily driven by the termination of low margin agency distribution contracts in Europe. If you move on to APAC, page 26.
Overall, EBIT on a reported basis came in at EUR 5.7 million versus EUR 6 million of prior year, with a reported change decline of 4.8% in value and 80 basis points margin dilution. Looking at the organic performance, EBIT adjusted organic growth accounted for a positive 6.3%, slightly below top line performance of 7.1%, leading to 10 basis point dilution. Gross profit in APAC was up 8.6% in value, well ahead of top line, leading to 60 basis point accretion with positive sales mix by brand and markets within the region. A&P was slightly down in value, negative 0.7%, driving 80 basis point margin accretion. Again, mix and phasing of marketing initiatives played a key role. The SG&A were up in value, double digit, actually 14.3%, leading 160 basis point dilution due to the tailwind effect of the relocation of the regional head office from Australia to Singapore.
The combined effect of FX and perimeter in APAC accounted for a negative impact of 70 basis points, totally driven by FX. Moving on to the consolidated P&L, page 29. As you can see up there, overall in the first half of 2020, the EBITDA declined from EUR 180 million to EUR 130 million, it was overall down by EUR 50 million, with an organic decline of EBIT adjusted of 30.8% in value, with 470 basis point margin dilution, EUR 55.5 million in value. Three top drivers, just to summarize. We had a tough comp base where the first half of last year, EBIT was up 10.6% in value, that clearly played a key role in driving this double-digit negative performance. Of course, COVID-19, hitting in particular our high margin aperitif business in its peak period, and a lower absorption of fixed structural costs given the top line decline.
Forex and perimeter combined effect accounted for a positive 3.1% in value with 40 basis point margin accretion. Actually, perimeter effect was negative, mainly due to disproportional effect of the first-time consolidation of RFD, which was, as said before, negatively impacted by the one-off de-stocking ahead of the acquisition of the distributor as well as COVID-19. If we move on to page 30. The gross profit on a reported basis was down in value 13.9% with 310 basis point dilution to 58.9%. Organically, gross profit was down 16.3% in value, driving 350 basis point margin dilution. I will not reiterate the drivers which I've already mentioned. A&P on a reported basis was down in value 19.6% with 200 basis point accretion effect on EBIT.
Organically, the A&P was down by 20.2% in value, driving 180 basis point margin accretion, thanks to cost containment measures, postponement of certain initiatives in the on-premise and GTR channels to the back end of the year. That enabled us to sustain investments into digital brand building and online brand activation, as well as e-commerce initiatives. The SG&A on a reported basis were down 3.5% in value, with 320 basis point margin dilution. Organically, SG&A were flat in value, driving 300 basis point margin dilution, mainly due to lower absorption of fixed cost. Actually worthwhile calling out that the combined effect at group level of cost containment measures, starting the second quarter, led to 7.5% organic decline of SG&A in the second quarter. It's seen in isolation on a standalone basis. If you move on to page 31.
Operating adjustments of negative EUR 27.4 million were primarily related to the impairment of the BULLDOG trademark for EUR 16.3 million, which at the level of the overall P&L has been compensated, as you can see underneath, by the write-off of the vast majority of the earn-out liabilities for the earn-out for EUR 16.8 million. Net financial charges came in at EUR 19.2 million in first half, with negative exchange rate differences, an effect on the current valuation of financial assets, generating an overall negative impact of EUR 3.9 million.
We actually call out an increase of the average cost of net debt to 3.9%, mainly due to the negative carry on the recent round of refinancing. Actually, in H1 2020, the average net financial position accounted for EUR 908 million versus EUR 892 million of last year. That was the second driver of the overall increase of the net financial charges.
I've already given my comments on the put option and earn-out write-down. Profit before taxes came in at EUR 101 million, down in value by 34.3%. If you move on to page 32, group net profit adjusted came in at EUR 77.6 million, down in value by 33.5% in the first half of this year, with a recurring effective tax rate, which stood at 29.7%, slightly up from 28.1% of last year, with a recurring cash tax rate at 23.6%, and again, slightly up compared to last year, when it accounted for 23.2%. The group net profit came in at EUR 73 million, down 40.6% versus H1 of last year. The cash flow, page 34. Free cash flow was actually negative in the first half at EUR 4.5 million, down from EUR 85.7 million of last year.
If you look at the recurring free cash flow, it came in at EUR 65 million, down just EUR 21 million versus first half of last year. Key drivers of the reduction in recurring free cash flow is, of course, the decrease in EBIT adjusted, which accounted for EUR 45.4 million. Taxes paid had a negative impact, as we paid the taxes on the capital gain relating to the sale of Villa Les Cèdres, accounting for EUR 60 million actually in the second quarter of this year. We had a lower increase in operating working capital in the first half, EUR 55 million this year versus EUR 77 million of last year. CapEx came in at EUR 26.9 million, of which maintenance CapEx accounted for EUR 24.1 million. If we move on to page 35, we have the analysis of operating working capital.
It came in at EUR 744 million versus EUR 694 of last year, up on a reported basis by EUR 50 million. Looking at the organic increase of operating working capital, it accounted for EUR 55.4 million, due primarily to the increase in inventory, which accounted for EUR 59.2 million, of which aging liquid increase accounted for EUR 22.3 million. Mainly due to the business seasonality and the stock increase that we have laid down in anticipation of the gradual reopening of the trade activities in Q3. The decrease in payable and the decrease in receivables had basically generated a wash. The negative Forex impact accounted for EUR 35 million, the perimeter relating to the acquisition of our French distributor and the Champagne House, Lallier, accounted for EUR 29.8 million.
Operating working capital as a percentage of net sales came in at 42.2%, or 40.5%, taking into account the 12-month sales effect of the acquired businesses, basically broadly in line with H1 of last year. Moving on to page 36, we have the analysis of net group indebtedness. Net debt came in at EUR 1,061.5 million, up to EUR 284 million versus December of the last year, mainly driven by the acquisition of RFD, which accounted for roughly EUR 55 million. The acquisition of Lallier, which accounted for about EUR 44 million, as well as the investment in Tannico, which accounted for roughly EUR 24 million. Dividend payment accounted for EUR 62 million, and through June end, the share buyback program accounted for roughly EUR 96 million totaling an overall cash outlay of non-recurring outlay for EUR 281 million.
The leverage ratio and debt to EBITDA came in at 2.4x versus 1.6x as at December end last year. Page 37, the maturity. As you can see, we have a gross debt that accounts for EUR 1,181 million, of which EUR 600 million are recognized as long-term, with the vast majority of it expiring at the back end of the maturity curve. On the contrary, as you can see in the footnote, we have a Eurobond that is accounting for EUR 581 million that is expiring in September of this year, and whose repayment is already clearly covered by the existing excess cash, EUR 787 million. Of course, we can rely on credit lines in excess of EUR 1 billion at the moment. I think, Bob, this is it on the numbers.
I would hand back to you for the update on marketing initiatives.
Thank you, Paolo. Well, I'm not going to go into detail on the marketing initiative. I think you'll see these pretty pictures really highlight the fact that our sales and marketing folks have done a great job pivoting very quickly to a new business model, which is the right one for the COVID period, with a big focus on the off-premise, and on building a driving frequency of consumption of our key cocktails by moving into full digital from offline to online. We've done that very successfully across the portfolio. Where physically possible also, we continue to premiumize our portfolio by adding premium line extensions or relaunching existing brands such as. I think more important are the corporate initiatives on page 43. It's not only the marketing and sales folks who work very hard, but we also had a very intense period on the corporate level.
Clearly, we were able to complete the re-domiciliation of the company into Holland. The settlement of the withdrawn shares was done, and the cash outflow was lower than what we expected. Today, though, it's important to underline that the board of directors resolved to propose to an extraordinary shareholders' meeting, which has been called for September 18th, 2020, to grant shareholders holding special voting share C, which jointly with the underlying ordinary share grant 10 voting rights, with the right to convert such shares into a special class of shares granting multiple votes, each of which granting 20 voting rights. They will be called extraordinary shares. The right to convert is in line strategy to further strengthen our group stability as well as foster the development and the continuous involvement of a stable base of long-term shareholders.
The acquisition of Champagne Lallier went through. We're celebrating this little gem, which I think will give us a lot of satisfaction in the years ahead. We've also completed our financial investment into Tannico, which will give us significant insights into e-commerce and help develop our skills in that area. I think what is new for the market is our announcement today of a restructuring program for the sugar business in Jamaica. We're launching this program to restructure the agricultural sugar business subsequent to the significant losses we've accumulated over the years, which have been further penalized by the COVID-19 pandemic. Currently, a consultation process with local authorities as well as trade unions is ongoing. We aim to reach the best possible outcome for the local community hopefully soon. This will lead to a one-off provision, which will cover the expected restructuring costs.
These will be included in the group's results at a further date as a result of this consultation process, which as I said, is still ongoing. Looking forward, I think it's quite clear that we're quite confident for the long-term momentum of our business. In the short term, we expect uncertainty to remain with regards to both the extent as well as the timing of the economic recovery, which we all hope will happen in the context of a gradual lifting of the restrictive measures across different markets as well as under government economic impetus. With most of our key markets being affected by COVID-19, our performance clearly has been strongly impacted in the second quarter, which unfortunately is a peak season for the high margin and highly on-premise skewed Aperol business. On the other hand, strong brand sell-out momentum in the off-premise continued across key markets.
Again, here, this outperformance wasn't fully reflected in shipments as we underwent destocking across numerous markets. Looking at the remainder of the year, with regards to the organic performance, we expect the pandemic to continue to affect, in particular, the beginning of the third quarter. The negative impact could lessen in the gradual lifting of the restrictive measures across markets based on current visibility. Moreover, we expect shipments to progressively catch up with the positive sellout trends once the destocking activities are completed at wholesaler level, in certain markets actually at retailer level. On a reported basis, full year results are expected to be impacted also by an incremental one-off cost for an overall estimated amount of approximately EUR 25 million.
This is in addition to the non-recurring costs already registered in the first half and are mainly related to business reorganization initiatives as well as transaction fees in connections with the recent acquisitions and the transfer of our legal office to the Netherlands. Whilst we will continue to undertake all necessary non-structural actions to contain the effect of the pandemic on the business in the short term, we will remain focused on pursuing our long-term strategy. Clearly, we're long-term focused and orientated, remain confident about the long-term consumption trends and the growth opportunities for the group. We will continue to leverage the strength and resilience of our brand's business model as well as strategy, ensuring we're strongly positioned and ready to accelerate our growth as soon as consumers can resume their habits in the on-premise.
Talking about the on-premise as a committed and a quite long-term brand builder, we will remain focused and highly engaged in this key channel opportunity, thanks to our distinctive brand portfolio, as we are firmly convinced that the out-of-home social experience and conviviality will remain essential to consumers' lifestyles and will be important for us as we mainly use the on-premise to recruit new consumers into our franchises. This is it on our end, and we're looking forward to your questions.
Good afternoon. This is the conference call operator. We will now begin the question- and- answer session. Anyone who has a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up your receiver when asking questions. The first question comes from Mr. Simon Hales of Citi. Please go ahead, sir.
Thank you. Good afternoon, Bob. Good afternoon, Paolo. Just a couple of questions, please. Bob, maybe just sort of kicking off where you left off. Just around stock levels across the group, how do you feel stock levels are in the different regions? You mentioned maybe there's still a little bit of destocking going on into the third quarter. Where is that relative to where you think stocks are at the right levels? As we look forward to shipments going back to matching depletions, is that what we should expect by the end of Q3 or the end of the second half? Is there an opportunity to see some restocking perhaps in some markets where inventory has gotten a little bit low? That was the first question. The second question was around some of the cost elements.
How do we think about the A&P line as we move through the second half? You referenced a number of phasing, perhaps issues around the relaunch around packaging of some brands. Is that really shifting into Q3 A&P perspective, and then more broadly around cost containment, do we expect to see a continuation of the Q2 levels of SG&A reduction continuing through the second half? Thank you.
Okay. I'll take the first question and the first half of the second one and leave the rest to Paolo. Honestly, I think that in this environment, it wouldn't be realistic to expect any restocking going forward. I think that throughout the second half, whether it's going to be Q3 or in Q4, we would expect a realignment between shipments as well as depletions or sellout figures. We don't think that wholesalers or key retailers are going to go and restock themselves. Now, with regards to A&P phasing, yes, to a certain extent, there is a rephasing into Q3. Having said that, we've frozen quite a bit of A&P, and we're waiting to see how trading goes. We need to understand, for instance, how tourism goes and whether we can revert to some events the way we used to do them in the past. Probably not.
Having said that, yes, there will be more A&P into Q3.
Yes, with regards to the phasing of the A&P spend, the cost containment measures, as Bob has just said, clearly the third quarter of the year is still a big season for aperitifs. With the on-trade partly open in selected markets, we're trying to exploit that opportunity window. We're expecting A&P to build up in the third quarter. The fourth quarter of the year, we still have very limited visibility, and we actually cannot say. It will depend on consumption patterns, but also the evolution of pandemic, which actually we don't know. It's very difficult for us to give a guidance for the full year on A&P.
With regards to the second question, that is, the SG&A trend, again, with a relatively limited visibility, what we can say is that also in Q3, we're expecting to generate some efficiencies. Hopefully, if the market completely reopens and things go to its normality, we should be in a position in Q4 of having a more regular trend in SG&A. Savings will be primarily in Q3 and following a positive trend in Q2 and to a lesser extent in Q4.
Got it. That's helpful. Can I just come back on the reply to the stock level question? Where, Bob, are you still seeing de-stocking into the third quarter? Is it in all the markets you saw in Q2, or is it specific regions that are still seeing that de-stocking ongoing?
Well, we're seeing it to a small extent continuing in Europe as we're outperforming our markets, and we're not seeing the sellout numbers being reflected in the shipments. It probably will be more impacted by the U.S.
Got it. That's really helpful. Thank you.
The next question comes from Edward Mundy of Jefferies. Please go ahead, sir.
Afternoon, Kunze-Concewitz, Paolo. Two questions from me. The first is on Italy. You talked about some on-premise recovery from late June as consumers are coming back to bars without the space, but you're not quite seeing a return to normal. I think on the one hand, the mobility data does look quite good, I think, for Italy. On the other hand, tourism is quite slow. I was wondering if you would be able to provide a bit of an exit rate as we got to the back end of June into July for Italy, or certainly some more color on the Italian market. The second question is on Bitter Aperitif. As a category, you highlighted some pretty good performance in Aperol, ex- Italy, and GTR, and equally some very good performance with Campari, et cetera, in the U.S.
I think you mentioned that you're seeing some quite good frequency of consumption. To what extent do you think you're getting more trial and recruiting more consumers into both Aperol and Campari and the broader Bitter Aperitif occasion? The third question, apologies if this was covered in the opening remarks, is really around these special ordinary C class shares, which carry 20 votes. My question is, A, how many are there? Because you've got a lot, given that some shareholders have held onto the shares for a long time. B, do they need to continue to hold onto shares for 10 years to get the 20 votes? I was wondering if you could just provide a bit more color around the 20 vote element of the C classes.
Good afternoon, Ed. The on-premise in Italy reopened in the second half of June. When it first reopened, it was very much to empty houses. Gradually, those outlets which have been able to really grow their outside space, their doors, have started doing well, but there's still social distancing measures. We're seeing still more of a younger crowd going to the on-premise than the 30+ . Clearly, it is running below normal regimen. I think the big question for us is what's going to happen this summer? Is the local tourism going to be able to compensate for the loss of international tourism and so forth? I think only time will tell there. Your questions on the aperitifs with regards to frequency versus trial. We've been very good at remodeling our marketing mix, as well as refocusing our sales forces.
All the data we get so far indicates that it is much more an increase in frequency as opposed to a growing trial. We firmly believe that you need an on-premise presence and activation to effectively get liquid on lips and people to try. Yes, it is happening selectively, but it's a far cry from what we were able to do and used to do before the pandemic. With frequency, we're doing very nicely, but I think going forward, we will need trial to maintain momentum. At least grow the momentum, because I think the brands have good momentum. The vote share, with the current C-class votes, those people who had already registered and had two years just needed eight more years to get to the 10 years to qualify for the enhanced voting mechanism of 20.
Okay. Thank you.
The next question is from Trevor Stirling of Bernstein. Please go ahead, sir.
Hi, Bob and Paolo. Just one question really from mine, I guess the others have been answered already. The U.S. on-trade, Bob, we've seen opening and closing going on in parallel with some states, particularly in the Northeast, relaxing restrictions, and then states in the South reimposing restrictions. What's your impression of the net momentum at the moment? Are we plateauing or is it still positive, or are we actually starting to see a net negative for the U.S. on-trade?
Well, we think there's more of a net negative on the U.S. on-trade, which then reverts into a positive for the off-trade.
Understood.
Yeah.
Thank you.
My pleasure.
The next question is from Chris Pitcher of Redburn. Please go ahead.
Hi there. A couple of questions from me. Following up on the U.S. business and some of the earlier questions from Simon and Trevor, can you say what you think wholesaler stock levels have gone from and to, and also the same, what you think retailer stocks have gone to? Within that context, you quote the Nielsen number +40. Can you say whether you think that's reflective of the whole off-trade or whether it's inflated versus the rest of that? Secondly, following on from the redomiciliation question. It's a bigger picture question, but the use of equity. Is this because you see the need for bigger transactions or sellers, smaller companies rather, looking perhaps for greater equity participation? Have you missed out on deals in the short term because of your equity structure? Thank you.
Well, I'll just give you a few figures, and you can figure the rest with regards to the U.S. Our shipments in value terms were down 4% in the period. Our depletions were up 9%, and our sellout numbers, Nielsen-wise, were the figure you quoted. In terms of NABCA, we're talking more around 11%-12%. You can calculate from there onwards. Clearly, there is quite a difference, I think, going from sell-out to depletions to our shipments. We'll see how far we'll go. With regards to equity, I don't think that in the past we've suffered from the structure we've had. The reason we did the redom was much more looking forward, looking into the long term, and having the flexibility to generate different types of deals than we've had in the past.
Thank you. Perhaps can I ask one quick follow-up on Mexico while I have the microphone? Can you say whether there was a meaningful sequential improvement in Mexico during the quarter?
No, we haven't seen, at least on our portfolio, any meaningful improvement in Mexico.
Thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your touch-tone telephone. For any further questions, please press star and one on your touch-tone telephone. The next question is from Paola Carboni of EQUITA SIM. Please go ahead, madam.
Yes. Hi, good morning, everybody.
Good morning, Paola. We're expecting you.
We were betting on this timing.
Okay, two very quick questions. First of all, I come back on the U.S. market. I was wondering whether you noticed at least a bit closing of the gap between sell-out and your shipments compared to, let's say, April, May, June. If at least sequentially, you have seen the wholesaler trade, let's say, becoming a little bit less cautious and approaching a little bit more the sell-out trends. Just to understand what could be the exit speed of this restocking process, let's say. Instead, the second point is about the impressive, from my point of view, growth of the off-trade channel in Northern Europe. I was wondering whether, according to your perception or your understanding, this might be a structural lift-up of spirit consumption, or is more, let's say, a kind of psychological effect of the lockdown.
Do you believe that spirit consumption have increased to a structurally higher level, possibly? Thanks.
Yes, with regards to the U.S., we're seeing some closing of the gap between the various indicators. As we've indicated, we think that our shipments will end up meeting and correlating perfectly with our sell-out values sometime during the second half. I think we don't have any visibility now as to tell you when that will occur. With regards to the strong growth in the off-premise, I think there's something important happening here. I think on the consumer level, the resistance to making cocktails at home is seriously coming down. Consumers have experienced that they're able to prepare themselves a Negroni or even an Aperol Spritz or an Old Fashioned, or what have you. We have done really a lot marketing-wise to educate the consumer and make it as easy as possible for them. I think that contributed to it.
We as an industry, our category are sourcing quite a bit from beer, and we're seeing that across different categories. Net-to-net, I think it's positive for us, particularly if you consider certain cocktails such as the Negroni, which people habitually would order in the on-premise, not necessarily knowing what's within a Negroni. And we've seen an acceleration on Campari since, because we've been hammering on the message, "No Negroni without any Campari," and clarifying to consumers that a Negroni is built around Campari, and it's also not that difficult to make at home. I think this is more here to last for a while.
Sorry, if I may go on on that. I assume your comments about Northern Europe, do you see anything different?
Excuse me, Ms. Carboni, could you please speak closer to the microphone?
Can you hear me, sorry?
Yeah. Now we can.
Yeah. Okay, sorry. No, I was saying, I assume your comments were mainly about Northern Europe.
My comments were general because I think those mega trends are true for also Australia as well as North America.
Okay. No, I was mainly referring to Italy, where off-trade has been also impressively strong. In that case, do you also see a structural change or more correlated to the drop of the on-trade and so to the lockdown and possibly, I mean, the net balance to stay unchanged on a structural level, let's say?
Well, I think we've got a long way to go in Italy. I mean, Italy, 70% is on-premise. We've seen the off-premise grow, but more behind simpler cocktails, and it's all behind our Aperitifs. If you look at the IRI data, we're the ones moving the needle. It's Campari and it's Aperol. It's not anything else. We're coming from a very low base in Italy. Positive, encouraging. I do think that the on-premise will continue to be the channel impacting and moving the needles and the dials in Italy going forward.
Okay. Thank you very much.
Thank you.
The next question is from Ryan Fintan of JP Morgan. Please go ahead, Ryan.
Good afternoon, gentlemen. Just one question from me, please, just around the balance sheet and free cash generally. Just wondering if you could walk us through some of the moving parts that we should expect into the second half of the year, particularly around working capital and CapEx. Also, could you confirm whether Campari is continuing with the rest of the EUR 350 million share buyback for the balance of the year?
Yeah, I will take this question. With regards to t he share buyback. In Q3, we have acquired 7.7 million shares in the context of the withdrawal mechanism, accounting for roughly EUR 65 million. That has to be added as a cash outlay with an overall, let's call it negative carry, not cost, because it will not be recognized in the P&L. It will be recognized in the equity of EUR 3.4 million, based on the difference between the withdrawal price of 8.376 and the price of the settlement date. That's one. With regards to the CapEx, as you may remember, we've cut our CapEx spend by EUR 10 million, but on the other end, we have incremental CapEx due to the newly acquired businesses in Mexico and Martinique, B BS, which in aggregate will account for EUR 6 million.
For the full year, we're still confirming our CapEx guidance of about EUR 90 million, nine zero. Yes, with regards to the operating working capital, there is a part of the operating working capital that is not compressible. That is the aging liquid, which at June end accounted for roughly EUR 380 million. The rest of the operating working capital will basically float according to top line trends. I mean, payable, receivable, and the rest of the inventory. If you take as a benchmark last year, the rest of the operating working capital that is not excluding maturing inventory accounted for 17.9% of top line of net sales. We're not expecting or being equal major drifts in operating working capital.
Yeah, thank you. It's very clear.
The next question comes from Marco Baccaglio of Kepler. Please go ahead, sir.
Yes, good afternoon. A clarification on the corporate governance. If I have understood well, in 2028, the shareholders who will have matured and asked for the 10 votes for one share will be able immediately to go to 20 votes for one shares or to 30 votes for one share, and from when?
Twenty.
To 20 immediately, basically. They go from five to 20, basically.
No, for those who are entitled to SVS class C, so they already have the 10 voting rights.
They can convert the SVS class C plus the relevant ordinary share that is linked to the SVS class C into one special ordinary share, giving 20 votes.
Okay, your share capital will be unchanged. It's only about voting shares. Okay.
You do not have to add the 10+ 20. It's 20 in total.
Okay, thank you.
The next question is from Pinar Ergun of Morgan Stanley. Please go ahead.
Hi. Thank you for taking my question. I have three quick ones. Bob, I was quite intrigued about some of the things you said. The first one is longer term. With more people consuming your products at home, do you think that might lead to any changes in consumer behavior in the future? For example, could this change consumers' willingness to pay what they used to pay in the on-premise now that they're more accustomed to easily preparing Aperol Spritz at home? The second one is, I also found it interesting to hear that you don't expect restocking. Could you please elaborate a little bit on that? Finally, a quick one on gross margins. Given the strong negative mix impact, actually, I thought the decline in gross margin was not too bad. In terms of moving parts, were there any positive offsets? Thank you.
Well, I'll take the first two questions. With regards to the first one, consumer behavior and how will they react, will they be willing to pay what they used to pay in the on-premise? Frankly, I don't have any crystal ball at this stage, and we haven't been able to gather any insights out of that. I think time will tell. Clearly, one thing has happened, and it's the consumer has identified that they can actually make themselves rather good cocktails at home. The off-premise opportunity for cocktails taking share from beer will continue going forward. With regards to the restocking, why we think we don't expect any restocking, given the economic environment and also the fact that quite a few on-premise outlets haven't reopened. Depending on the market, we're talking from 20%-30%.
That is obviously creating quite some pressure on the working capital of wholesalers and on the credit which they've extended to their customers. So w e don't see them restocking within that overall environment.
Talking to the gross margin trend and more broadly to the operating leverage, being it positive or negative, as we have already highlighted, basically, under the current circumstances, our P&L is negatively impacted by two key factors. Number one is the short-term negative sales mix. As you may remember, we were under a long-term gross margin expansion trend driven by positive sales mix prior to COVID-19. What we're seeing now is the effect of a situation where the high margin global priorities, and particularly the aperitifs, are badly hit by the restrictions in the on-trade channel in multiple markets. That's one. Secondly is the negative operating leverage that is driven to the fact that if you look at our P&L overall, 35%-40% of our spending is fixed.
Talking to the gross margin with the cost of goods sold, actually one quarter of it, 25%, is fixed. Whenever you have a top-line decline, you basically have the double whammy of having negative sales mix plus a negative operating leverage. 10% of the A&P spend is fixed, and 80% of our SG&A are fixed. If, as we do, you do not want to implement drastic reorganizations which will compromise the ability of the group to bounce back once the business gets to its normality mode. That's the key driver of the gross margin trend. Of course, we've implemented some measures to contain those negative effects. When you have such negative sales mix and deleverage, there's steadfast you can do.
What we can say is that we remain fairly confident and bullish vis-à-vis the ability of the group to get back to its trend of gross margin expansion in the midterm, as soon as the market conditions do stabilize. That's something which is there to stay. For the short term, we need just to navigate through the storm.
Thank you.
The next question, Marion Boucheron of MainFirst. Please go ahead, madam.
Hi. Good afternoon, everyone. I have two questions. One on the sugar business. I just wanted to make sure I understood correctly, do you mean that now you might be looking to exit it or not operate it yourself after consultation and the impact and social consequences? If so, could you remind us what was the drag to gross profit from that business? My second question would be on the emerging markets. How do you see trends evolving there and sell in, sell out playing out? Mainly thinking about Latin America. Thank you.
With regards to the, clearly, discussions with the unions and the relevant stakeholders are occurring as we speak. We cannot anticipate much. What we can say is that our operations in Jamaica can be basically, logically divided into three pieces. If you have the first piece, that is the sugarcane fields, the operations. The second one is the sugar mill. The third one is the distilling and bottling. The last piece is untouched. Distilling and bottling, it works. Where we're incurring insignificant losses is the first two pieces. The agricultural operations and the sugar mill. In aggregate, in prior years, the losses that we've generated following the macro changes in the sugar market accounted for roughly $12 million a year. With a run rate of a million a month. Clearly, the COVID pandemic has exacerbated the losses.
We felt it was time to intervene and stop the bleeding, as the first two pieces were not sustainable. We're clearly trying to find the best possible solution for the two pieces. Again, we will have some negative one-offs in the second part of the year, which we've not yet quantified and disclosed in isolation on a stand-alone basis. There will be efficiencies that will highly depend on the outcome of the discussions with the relevant stakeholders. It's a little bit premature to give you a sense of the magnitude of the efficiencies that we'll be able to also the loss containment that we'll be able to achieve. We believe, by year-end, we'll be in a position of giving more color once the options, the unions will be finalized.
With regards to trends in emerging markets, I think the rule of how dependent is the market on the on versus the off, which we've seen in the Western markets, also impacted in one way or another, trading in emerging markets. Now, if your specific question is South America, we've also seen consumers down trading in the off-premise to better value brands.
Okay, thank you. Just one follow-up on the sugar business, the one offered this year, they're included in the EUR 25 million incremental you've mentioned in the release?
Yes, they are.
Okay. Thank you.
You're welcome.
We have a follow-up question from Mr. Ryan Fintan of JP Morgan. Please go ahead.
Yeah. Thanks for the opportunity to follow up. Just following on from a previous question around sort of changing consumption patterns, short-term, but what the long-term implications could be. I know you mentioned that you've put a lot more of your A&P spend in terms of e-commerce, particularly given the Tannico minority stake that you've taken. Could you give us a sense of how big e-commerce sales are of your mix currently? How they grew during the first half of the second quarter, particularly during the COVID-19 crisis? If you have, give any color in terms of your long-term ambitions for e-commerce sales, maybe how they can vary between different markets, U.K., Europe versus North America. Thank you.
Well, with regards to e-commerce, what we've seen is basically triple-digit growth, but from a very low base across markets. Very strong growth, the base is very different. The most advanced market is the U.K., where currently it probably accounts around 5% of our sales. Whereas in the U.S., depending on the month, it's between 1% and 2%. I would say the rest of the world is closer to the U.S. than to the U.K. Clearly, this is an area which will develop itself, but I think it's not only interesting from a commerce standpoint, but also from a brand-building standpoint. This is something we're looking into very seriously. With regards to also clarifying, clearly in this moment, there's more action in the off-premise and consumers have overcome their hang-ups with regard to making cocktails at home.
I think this generation will be impacted by that. We also think that mid to long-term, there's absolutely no reason why the on-premise shouldn't come back. If you look at the Spanish flu, the on-premise came back. If you look at the Hong Kong flu in the '60, '70s, the on-premise came back. Any of the major global financial crises, the on-premise came back. It will come back, and I think it will be much more dependent on progress science does in the area of really medical relief and vaccines.
Great. Thanks for that. Just to follow up, and so the Tannico investment you made, is that just a sort of a one-off for the Italian market, or would you consider similar partnerships elsewhere in the world?
We would consider them, but obviously the regulatory environment is very different from country to country.
Okay. Thank you.
The next question is from Mr. Alessandro Tortora of Mediobanca. Please go ahead.
Yes, thanks. Good morning to everybody. I have two question, very quick question, if I may. The first one is on the agave prices. I would like to understand if you have any evidence of stabilization of the price of agave, as I recently heard from another competitor. The second question is on the dynamics on the EBIT margin side. I know that there are a lot of moving parts. What I would like to understand is, if only for the perimeter effect, change perimeter, you can give us an idea of the full year impact, considering all the companies entering your perimeter. Thanks.
Yes. With regards to the agave, the very good news that we have is that actually, notwithstanding the significant increase in the tequila category in the U.S., the price that is unexpected in a way or another, the price is not negatively reacting to the increased request and demand from the industry. The price remains stable. Notwithstanding, the double-digit increase in demand, which bodes very well for 2021. We believe that if the demand stabilizes at the current level, it's potentially more likely that the agave price will start falling. At the moment, basically we're still buying at the same price as we were buying a quarter, three months ago. We're not seeing yet the decline in agave price. We're more confident now that things should go better going forward.
With regards to the full year expect perimeter impact, actually, we will have a dilutive effect due to the fact that the acquisition of RFD, our French distributor, occurred in a very unfortunate period of time with COVID impacting the market. On top of that, we had to destock the distributor ahead of and f ollowing the acquisition. Whenever you have a first time consolidation of an acquired business, the stock that is sitting at distributor level is reclassified as your own stock. You're impairing a portion of your shipments to distributor.
For the full year perimeter, is expected to come in at about EUR 40 million, with about, overall, a loss of EUR 5 million-EUR 6 million, including the negative impact of termination of certain distributor, distribution agreements, and the effects of consolidation of RFD, Rhumantilles, and Ancho Reyes, and Montelobos, both brands highly skewed to the on-trade channel. They will not generate profits this year. That's the visibility that we have at the moment.
Okay, thanks.
Mr. Kunze-Concewitz, at this time, sir, there are no questions registered.
Well, thank you very much for joining us. We wish you a very nice August, nice summer. Stay safe, stay well, and grant yourself some little luxuries like Aperol Spritzes and Negronis. Look forward to sooner than later getting to meet in person. Thanks. Bye-bye.
Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.