Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Campari Group first quarter 2020 results presentation. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask and 0 on their telephone.
At this time, I would like to turn the conference over to Mr. Bob Kunze Concewitz, Chief Executive Officer of the Campari Group Please go ahead.
A quick recap of our highlights. As you'll see throughout the presentation, a combination of resilient pockets of growth, in a very challenging environment. Net sales, and this is sad to say because we started the year very positively in the 1st 2 months, with strong growth. Net sales organically registered a decline of 5.3% in a small quarter, again, also against a tough comp base. You'll recall that last year, we had a very strong Q1 where we were up by 9.6%.
This change in the performance throughout the quarter was largely due to the restrictive measures, which were imposed on the Italian market combat the pandemic and that offset resilient growth in Northern Europe, the U. S, Canada and Australia. Looking at it by brand, global priorities declined by 4% with a flat performance of the IP IT, Apella and Campari, which, is obviously due to the Italian market, well Turkey economy and Skryvarca decline offsetting growth in the Jamaican runs. And we'll look more into detail by geography how these different brands are done. Regional priorities were down 7.9% with declines across the brand cluster apart from growth Espolon as well as Forti Creek.
Local priorities on the other hand were down 10.2% overall due to double digit declines again due to Italy with the single serve up ERCs particularly. By geography, resilient growth in our European markets, in Australia, but this was offset by declines in Kenya due to Italy, France, which is a one off factor, and global travel retail, which was impacted by COVID-nineteen as well. The Americas decline mainly driven by Jamaica and South American countries, despite quite positive performance in Canada as well as in the U. S. The reported change of Nincale came in at minus 2.7%.
So It reflects also a positive perimeter effect of 1.9% and a positive ForEx effect of 0.7%. Looking at adjusted EBIT, it declined organically by 35.3 percent, representing a 620 basis points margin dilution, This is due to 3 factors. On the one hand, a tough comp base. Again, last year, we were very strong 15.4% and had 100 bps margin accretion in the first quarter. The second impact, obviously, is the COVID 19 impact.
Which hit, in particular, high margin VIP business in Italy, and that's, but not least, the lower absorption of fixed costs, for all costs learned, given the top line decline magnified in a small quarter, as Pete said, also, that the decline came in the in the last month of the quarter, so there wasn't much time to react to that stage. The reported change is 33.9% down reflecting a positive ForEx effect of $3,000,000 and a negative perimeter effect of $2,000,000. Pre tax profit on an adjusted basis reached 34,700,000, down 45.7 percent. Group pretax profit on a reported basis reached 30,600,000 around 51,600,000. Net debt at the end of the quarter stood at 887,100,000, which is an of $109,700,000, mainly due to the acquisition of Otis Pharmaceutical as well as a share buyback.
That leads us to a net debt to EBITDA adjusted ratio at one point 9 times at the end of the quarter. Moving on to, page number 6, you can see, graphically, the impact of Simeon, the overall group results, the Americas overall flat, the core U. S. Up 1.1%, which is quite encouraging based on a quite a tough comp. Senior down 24.4%.
And here, it was compounded by the GDPR decline as well as France and Spain. We've had some phasing effect in Nigeria, whereas South Africa's decline was programmed given the route to market change. Very nice and resilient performance overall in North Central And Eastern Europe, driven by Russia and the UK, while Austria also grew Germany was flat from a shipment standpoint. Asia Pacific good growth in Australia, but offsetting declines in both China and Japan, China as it was the first market to be hit by 2019, and Japan is because it's affected by the weaker market change. I will skip the priorities a bit and move quickly to page number 8.
To underline 2 factors, you see, the decline of Italy, which is now in first quarter represented 16% of our sales, that's an all time low, whereas the U. S. Reached an all time high reaching 33,800,000 And I think one piece of data, which is probably very important and interesting. The audience is our on premise versus off premise split. On a group basis, that amounted to 40 versus 60 in 2019.
So that puts us into perspective. Obviously, markets like Italy has a higher SKU to be on premise. Moving on to the following page and the Americas, the U. S, as I said, quite positive, up 1.1%. Last year, we were up by 11.2%.
And this, performance despite having also the initial negative effect of COVID in the numbers, as you know, the on premise to a large extent was also completely locked down in the U. S. And that in the U. S. Market, our given our plan portfolio, Jan represents roughly 30% of our net sales.
Espolon Aperol and Campari continue to grow. And SKYY Vodka had a very positive performance, up 8.5% and these offset declines in Harnell Me, largely due on the one side for a tough comparison base also because the brand is a skewed fifty-fifty between the two channels. Well, Turkey, on the other hand, was hit by destocking, which we were driving ahead of new packaging, which has been, postponed. I'm happy to say that if we look at sellout figures, they were actually, up in the double digits across both Nielsen as well as NAPCA. Moving on to Jamaica.
Jamaica is another market with a very heavy on premise queue, 70% of sales are in the on premise So it declined by 7.3%. Again, this effect was amplified by a very tough comp base which remains having a sterling quarter in 2019, up by 72.9%. Canada, which is largely an off premise market, grew very nicely, up 9.3% and this was driven by Core Forti Creek as well as absolute kind of stake, which is quite encouraging because We introduced at the beginning of the year the new range of Appleton with the new packaging, and it seems to have been very well received by consumers. Colani Atahol and Campari also grew, and that offset some declines in SkyWestka, which was penalized by the de listing last year of the liter 75 size, which seems to be going for all the rage in the Vaca category at the moment. Brazil is down 13.2%.
Again, this is an even smaller, quarter than most markets in Brazil because of the carnival. And bear in mind that last year, we had a very, very tough comparison base where we were up by 41.8%. The rest of the region was down 5.9%, Mexico, the opinion life down 14.1% due to the sky RTD. Encouragingly though after all remain positive, up double digits. And Argentina, again, this needs to be seen positive because they were hit by the COVID pandemic as well as their own macroeconomic issues, not only 1% with a nice and positive performance of Aperol of 2.3%.
Moving on to Slide number 10. And Southern Europe, Middle East and Africa. As I underlined earlier on, it's already down 24.4%. It's quite a shame because we were growing double digits in the 1st 2 months of the year. But the progressive closing down of the Entre with the foreclosure in March obviously impacted significantly the numbers.
There were also limitations on customer traffic in the off trade with off trade retailers mostly concentrating also on the grocery at the expense of spirits. Yes, Prakis decline fairly due to their Hi, exposure to the on premise outlets. We were closed through March. And as you know, in equity, the on premise represents 70% of our consumption. On the other hand, though, we've seen a double digit growth in the Apparel scripts ready to drink.
This is a actually a format we've had on the market for a few years, which, to be honest, we never included it in the overall numbers, but it's going to become a very nice business, significant business actually. That's only available in Italy in a few selected European markets where the brand is not developed, but it's developing very, very nicely right now. The rest of the region was down 18.6%. As I said earlier, France declined by 41.6 percent, but this was mainly impacted by the 1 off sale of excessive cognac sales we did last year. When we bought Muske, we found the sellers with way too high a number of VS barrels.
So we saw them through the market and that impacted the comp base. Spain declined 6.7% where modest growth in Aperol and San Diego were offset by declines in Campari, Bulldog, Bulldog being very heavily focused on premise in that market. Within Africa, Nigeria grew mainly to shipment phasing and Campari well served in American Honey. And as we referred earlier, South Africa declined to their route to market range. Global travel retail, on the other hand, reacted very sharply to the fall in sharper traffic down by 18.9% especially within the Asian market, which was the first one hit by COVID-nineteen in February.
The channel logistics and growth in Campari, while Turkey was a 12 in Campari soda, but this was an angle to also deploy elsewhere, particularly in GlenGrant, which was the hero channel, for the age range. Moving on to a more positive picture on North Central And Eastern Europe, up 6.6 percent organically, Germany, flattish, slight decline, but actually very positive set of trends of placing shipments in the predominantly off premise market, in Germany. You see the opposite of Italy 70% of the market is actually off premise. In fact, fiber shipments in Aperol despite strong double digit sellout trends where we're trending at around 20%. And, this was combined with modest growth in IL12 Cimano sparkling wine, Santari and Bulldog, which helped to offset the declines in agency brands, as well as those specialty brands we have with a particular on premise SKUs such as alumni San Diego.
The UK continues very strongly, up 38.3%, very robust growth, driven by Ray Nexeo overproof rum, Magnum Sonic Wine, African Estate and Campari. This growth was able to offset declines in Bula, in Shenzhen, as well as some slight declines in Aperol, which was heavily impacted by temporary auto talks. Actually, Aperol has been very, very well in the UK. And it was interesting to see that on amazon.com, it was the 12th high selling grocery item and the 2nd best selling spirit item that even surpassed the toilet paper. So This is pretty encouraging.
Russia also a very nice quarter, up 30.4% despite a nice and tough comparison base last year. This is again a largely off premise market, so you can see it happening developing. With Mondoro after launch and downsparkling lines being very nicely and Espolon Wild Turkey and Campari continuing to grow. The rest of the region was flattish, Austria and Switzerland grew nicely, up 7.1% in Austria, 6.1% in in Switzerland, again, driven by Aperol, Belgium defined by 17.1% of growth in Biscidubuchai. Unable to offset the double digit declines in Campari and build up.
To close the regions, Asia Pacific on Slide number 12, up 3.5%. Australia, up a very strong 18.2% and this Australia had quite contrasted quarter with a weak start of the year due to the bush fires, which affected consumption. But the last part of the quarter, particularly the month of March, was very strong. And Australia continues to be strong, but we saw strong sales in the off premise channel, which in the case of this market represents 55% of our sales. Positive performance of Wild Turkey RPD double digit Well, Turkey Bourbon, American Honey and Campari in key quarter for the market.
The rest of the region was down 53.1%, Clearly here was impacted by China, which was mostly shut down, during that period. And, you know, China is an on premise market. And Japan, which declined by a little bit more than half as we programmed the destocking ahead of the route to market change, which will start pushing through the start of July this year. Moving on on net sales by brand. It's interesting to see that whilst the Aperol is flat at 90 point 2 percent, most of the performance is driven by double digit decline in core Italy, which in 2019, we presented 45% of the planned sales.
We're growing strongly in the off premise with apparel double digit, but it is so small and obviously cannot compensate for the on premise decline. On the other hand, though, should we, if we exclude it, Italy Aperol grew by 22.1%, that is it's maintaining it's a historical growth trend, very positive performances in core markets, Germany, Austria, Switzerland, Austria, Switzerland, and particularly we're encouraging in some markets like the U. S. In the U. S, if you look at the Nielsen for the middle up to the middle of April and those 6 weeks prior to that Aperol grew somewhere around 120%.
So very nice growth trajectory. And we see a similar performance on Campari. Campari was slightly up, Again, it was impacted by Italy. If we exclude Italy, it's growing by 9.3%, again, maintaining its historical growth rates or at least the growth rates for the past few years, with nice performances in the U. S.
Very similar to after all, if you look at the last 6 weeks leading to middle of April, it's growing over 100% nice in Germany as well. Nigeria, but clearly impacted by the closure of the on premise in Jamaica. Colombia on the other hand was impacted, was down 10 point 8%. This is a combination of, quite a tough comp take last year where the shipments were phased into the first half of the year, and particularly in Q1, where we were up by 15.3%. And the fact that the sales in the U.
S. Are split fifty-fifty between both channels. Obviously, the brand was impacted by the GTR channel as well. Moving on to Wild Turkey. If you look at it on a shipment side, as I said, we were driving the, some destocking on 101 as we were due to launch the new packaging at the middle of the year.
Unfortunately, we took COVID and the technical issues that imposes on plants and suppliers that has been pushed back. So the our shipments were down 12.7%. But I'm happy to say that, the Wild Turkey franchise actually grew double digit in terms of off premise fell out in that time period. If you look at the full quarter Q1, it was up 15.2% in Nielsen and 16.6% in Africa. So, again, very solid fundamentals on the brand.
Skyrock camp, down 4.7%. And despite a very nice growth in the U. S, up 5.3% with consumers returning to brands and no brands that are established, and it gives them comfort. So we're seeing a nice trend in the glass of sky right now. On the other hand, it was impacted by declines in the international markets, Germany, South Africa, which are related to market chain, China Canada and Brazil due to COVID.
Our loan business was up 3.7% when net new overproof had very strong growth, 10.1%. Very solid trends in core markets of the U S. Again, it's one of our four brands, which, in the U. S, looking at the last 6 weeks leading to middle of March through over 100% actually through 100 and 14%, nice performance in the UK as well. And so these export markets were able to offset the decline in Jamaica.
Appleton Estate overall was impacted by the transition to the new packaging and the new range. Overall down 1.8%. But again, positive trends in the U. S, the UK and Canada. Which, were offset by sluggish performance in Core Jamaica, as well as declines in GTR, Mexico and New Zealand.
Moving on to Espolon. Espolon, our shipment basis was up 10% driven by the core U. S. Again, if we look at both depletions and consumption, they're running way ahead of that number. Depletions were up 28% and our consumption data is up 48%.
So very nice underlying performance on the brand. And nice trends continuing in key international markets. Those are impacted by the on premise shutdowns, down 17.5% as well as by the lack of traffic in GTR, which is a key channel for the brand. GTR is also a key channel for GlenGrant, which was down by 33.1%. And it was impacted by, a change moved to market interest in South Africa.
On the other hand, happy to say that in France, the underlying medicines are, again, positive from a consumption standpoint. Forti Creek was up by 6.5% very nice overall performance with core Canada compensating weakness elsewhere. Nomari, penalized by Italy down double digit 14.2%. Clearly, they're skewed to the on premise. And continue to impact.
And we can see the same thing about them in the Central European markets. Moving on to Cinzano, down 7.7%. The move declined by double digit. Despite very positive growth in Russia and Australia. These were offset by some declines in Germany where we if we launched our old franchise behind a vermouth formula, which meant significantly increasing pricing.
So that had the listing at the end of last year. At the very large retailer in, in Germany. So we will have to go, through this cycle On the other hand, it doesn't really impact the bottom line. The rest of the Sparkling lines were around 15.2%. Very good performance in Mondoro, up double digit, and that's important in Russia, which has nice margins.
Whereas Ikedona was impacted negatively, mostly for strong shipment declines in France, the destocking ahead of the route to market change. To close it off with the, local brands, obviously, Gonzalesud and Cuadino pretty hit by the closures in Italy Council. So it got down almost 20%. Clodino a little bit, but that's 15.5% with positive results in Switzerland and Germany both during its trajectory. On the other hand, the RPD in Australia continues to do very nicely, up double digit 14%.
Moving on to the local Brazilian brands. Greer is actually performing nicely in a weak market, so it's helping mitigate the overall tickets and see how to discuss our brands. Ouzo 12, which is mostly an off premise brand in Germany and Greece also doing nice up 5.6%. And Cabo, again, was mostly off premise brand growing strongly 25.3% in the U. S.
This is it on the brand's update, and this is update. I cut you on the follow-up.
Thank you, Bob. If you follow me to page 21, we will we have, you know, the analysis of the group performance at the level of EBITDA adjusted EBITDA adjusted on a reported basis declined by 33.9% in value from 19.6% on net sales to 13.3% in, this year. In existing business, sir, the decline in value was worth 35.3 percent, showing 620 basis point margin dilution in the third, in the first quarter. We highlight 3 key factors of the a negative performance in value and a decline in functionality. The first one is, a very tough comp base, first quarter of this year when last year group grew EBITDA in value by 15.4 cent and margins went up by 100 basis points.
Secondly, we have a a triggering negative stage mix effect has, how did 'nineteen, particularly impacted the high margin, operative, the business in Italy. And thirdly, we have the absorption, a lower absorption of fixed cost in a very tiny quarter. Throughout all the cost lines that we've commenced in a second, with, the long time coinciding with the end of quarter, thus, leaving our ability to implement the mitigation actions that, of course, we're implementing, as we speak. ForEx and perimeter combined effect accounted for 1.4% in value correspond 10 basis point margin dilution. The perimeter effect actually in the first quarter was negative by 1,000,000 And this is due to basically 2 factors on an end determination of the tiny distribution agreements.
And secondly, the effects of the first time consolidation of, of France on F. Recently acquired, which was negatively impacted by those that the typical destocking that you have whenever you buy, a distributor. And secondly, the COVID effect, which also was negative here in France. EBIT adjusted on a reported basis was down by 24.7% in value to 18.7% of net sales with, a EBIT adjusted, organic decline of the 27.2 percent in value and point, margin dilution. If we move on to Page 22, we have, you know, the analysis as well of EBITDA through the different level of profitability, a gross profit level on a reported basis, the gross profit was down by 6.6 percent in value to 58% on net sales with 160 basis point margin dilution.
The organic change of gross profit accounted for a negative 9.2% in value and basis points in terms of margins, which was driven by a combination of unfavorable sales mix, as, as we said before. And secondly, the impact of these costs, what's going out the impact on a full year basis of fixed cost at the level of cost of goods sold is 25%. So, you know, 25% of our Here, the cost of goods sold is to be seen as fixed and compressible. AFP on a reported basis was down by 2 8% in value to 15.9% on sales and broadly, flattish and margin neutral versus a year ago. Or can you change, of the E and P accounted for a negative 5% in value, again, neutral margin?
Due to the wide phasing of some marketing initiatives due to COVID, particularly the shift of certain investments in the on trade, which was not, you know, a viable channel for us. ForEx and perimeter combined at Bancorp was a positive 2.2% in value and again, neutral margin. Again, with regards to the weight of the fixed cost within the A and P line, on a full year basis, it's about 10% of the A and P spend. G and A on a reported basis, we're up 12.2% in value, 2.8.9% of net sales, driving 7.80 basis points, margin dilutive In existing business, SG And A were after 8.7 percent in value, driving 370 basis point margin dilution, mainly driven by the initiatives, which were already planned to strengthen our commercial and distribution capabilities in Asia in particular. As well as the location of our head office, sir, Asian head office officer from Sydney to to Singapore.
And secondly, to a lower this was due to a lower absorption of fixed cost in a quite a small quarter. Negatively impacted by significant top line decline. Again, with regards to SG And A, worthwhile calling out that on on year, on a yearly basis, the fixed components of our SG and A line accounts for 80% of the SG and A spend. If you move on to page 23, we can see a negative operating adjustment, the one offs account for 1,000,000, including the, restructuring initiatives, you know, tail end effect of the restructuring initiatives were implemented last year, as well as the €2,000,000 of donations made to combat the COVID-nineteen emergency. Net financial charges, like, I mean, you know, higher than expected at the 1,000,000 Euro, despite the lower average indebtedness, And that was due to a negative, charge of 1,000,000, primarily attributable to negative exchange rate differences as well negative effect on the current valuation of certain financial assets.
The increase of, you know, excluding those non recurring costs, the increase of the average cost of land bank, is, is worth, 1% from 3.7% to 4.7% reflecting the increase in the already significant negative care. Group of pretax prostate. I mean, at 30,600,000. The balance is 1.6% and, pretax profit, adjusted spend, came in at 1,000,000, down by 45.7% on a, on a comparable basis. If you move to Page 35, analysis of, net financial position, net financial position, net at the the back end of March came in at €887,000,000 after €109,700,000,000.
Versus end of last year due to, 1st and foremost, the acquisition of our French distributor, RSA, accounting for a sum of 1,000,000. And secondly, the partial completion of already announced the 350,000,000 share buyback program for a consideration of 1,000,000 at the end of March. The leverage ratio and debt to EBITDA came in at one point nine times, sir, at the back end of March. We we do want to highlight at the at the group at the moment relies on, EUR 500,000,000 of existing credit lines. As we've already announced, we, we finalized an additional, terminal facility for an amount of 600 1,000,000.
And then of course, we can also rely on an existing excess cash, accounting for 693 1,000,000, as you can see in the table, in in the table of the next financial position. So the combined the combined amount of the available liquidity, liquidity lines, new loans, 18 excess of 1,900,000,000. And the last but not least, we highlight the absence of any financial covenants on our outstanding debts. I think this is on the numbers or would I back to Bob for
Yeah. Thanks, Pablo. Before moving on to the Q and A, a brief overview of our marketing initiatives, it was conclusions and outlook. Page number 27, you see that as soon as the pandemic hit, We were pretty active on a corporate basis, making donations to the, health sector in Italy and a few other markets as well, as well as to the on premise, team in the U. S.
We were also quite active throughout all of our communities and either producing sanitizing gel or doing anything alcohol or doing a combination of both as well as, leveraging our brands to raise money for charity. For instance, on Aperol, we had a concert with 12200 decision to participate in a live Zoom session. Call together, we can, which raised over EUR 100,000, again, for the healthcare system in Italy. We're also very happy to say that our brands are continuing to receive their well deserved accolades Espolon continues to go from strength to strength. 4th year in a row, it is awarded the impact top trend of the year award, And clearly, that makes a lot of sense, the brand, which has a lot of momentum.
As I said earlier on, if we look at its sellout rates, that's going at around 48% right now. So very nice performance. Forty Creek brand in Canada also keeps on scooping all of the awards, every year. And again, we can see that quality of the liquids of the brand reflected in the performance market. We were able to proceed with some relaunches and new expressions.
These had been finalized before the lockdowns brought by COVID. We introduced a new premium and age on GlenGrant, which depending on the market increases the pricing of the unaged offering from 30% to 50%. So quite nice going forward. We completely restaged the Appleton Estate brand, both from a packaging standpoint as well as partially a liquid standpoint, introducing an eight year old. And at the same time, started delisting in all the markets, the Appleton special and white, the mixing rums so that Appleton Estate remains a pristine super premium brand.
And we replaced that with a new brand called Kingston 6 to honoring the data of independence of Jamaica. Clearly, pandemic had a big impact on the landscape for our marketeers and our sales people. There have been channel shifts online and e commerce, online for marketing, e commerce from sales standpoint accelerated quite a bit. Clearly an occasional shift in consumption, moving from, out of home consumption to at home consumption impacting also offerings in terms of Pumble tax. So clearly, our marketeers and our sales force had to work very, very quickly, be very agile and reformulate rework.
All of our, marketing and sales activity and they managed to do that within the space of a few in 10 weeks and I'm pretty proud about that. And I think this will have a big impact also on marketing and sales going forward. Clearly, one side benefit of this pandemic is the very rapid digitization of our activities. We've had to reassess and adapt our media plans due to obviously the new consumer media diets and shifting to digital experiences. With digital PR support, checking the at home location, and social media campaigns, from apparel at 6 in Australia, cocktails, or in other markets, apparel at home.
We reviewed the tonality as well as the engaging on the global campaign delivered completely new digital assets and started very intensively working on advocacy programs with local bartenders, obviously, trying to contribute assets to the local bartending community. At the same time, trying to increase the, knowledge of our consumers at home and how to do our hero cocktails. So many achievements do it yourself tutorials some of our really top end bartenders. And we also associated us quite a bit with cooking classes, which seemed to be one of the biggest hits. During the lockdown period.
In the off premise, again, we looked at approaching promotions in a different way and had more federalization, accelerate our e commerce agenda as well as offer where possible combo pack. So Aperol and Proseco class wear for the Approximate Campari Buzog and Cinzano for the Negroni. And this has led to, I think, quite satisfactory, engagement at the consumer level. We've had very good returns Consumer sentiment is actually increasing significantly, as well as, mentioned, just in the past week, mentions increased by 55% and there were overwhelmingly positive. And I'm also happy to say that we're seeing that in the trending of our brands, in all key bad market combinations or they're growing double digits from a news and or IRI standpoint.
And growing much faster than their relevant market. So that's custom money both for consumers love our brands as well as the impact of the actions we undertook very, very rapidly. And on Page 34, you can see also So we brought that thinking to the point of sale, where again, leading to, entertainment and offering combo packages, as well as eduthenix. So in terms of conclusion and outlook, I think It is quite clear that we're leveraging the knowns. We took very rapid actions with the 3 key strategic focus on our strengths.
We have a very strong financial profile, very solid balance sheet. The recently success we secured additional financing further strengthened the group's traditional, very solid financial sector as well as our flexibility, moving into Q1, Q2, we clearly started working very fast on cost containment and cash management tests actively taking all necessary actions to manage costs as well as preserve liquidity, including postponing or canceling discretionary spending, We're accelerating our programs in digital transformation and e Commerce. You know, Sanlam do, we're doing very well in the life Drisley in the U. S. Or Amazon in the UK, and we're further strengthening our digital capabilities across the organization in those particularly across marketing.
And we're driving focus on selected innovation to adapt to the fast changes across other markets. So we're looking size changes and RTD formats were applicable. So we're combining flexibility with the high quality and continued execution. From an M and A standpoint, we're continuing with our focus M and A strategy, effectively today, we announced the signing of the acquisition of Champagne Aali. The consideration to be paid is 21,800,000, That's for 80% of the share capital of the target and obviously is subject to customary price adjustments.
The consideration will be financed to be through available resources and will be paid using cash. The net financial position of the target is a negative 21.2 And with this acquisition, we'll continue on enhancing the premiumness of our portfolio as well as building critical mass in the on premise. As well as in the strategic benchmarking. Some quick update on the integration of AIC, despite that nobody can travel and we're all locked down and work remote from home. The integration is proceeding very, very well.
We're maintaining all the timing objectives we set ourselves. So, we will get the benefits in the mid to long term. Of that very important asset for us. Looking forward, I think it's fair to say that there's uncertainty in the short term but high confidence for the long term. In the short run, the pandemic, as you can expect, is generating high level of uncertainty including on its progression and duration, which is varying by country, as well as the scale and the impact of the measures taken by governments, as well as impact on consumer habits.
So this is quite a complex puzzle, which limits our visibility. And talking about visibility, for those reasons, the group's financial performance for the current year, really cannot be precisely assessed at this stage. However, most of its key markets being affected by COVID-nineteen, We expect our business performance to be more impacted as you could expect in the second quarter and the beginning of the third quarter, which happened to be the peak season for the high margin and highly oncom Institute of the IT business. And with the gradual lifting of the restrictive measures across markets, the negative impact is expected to lessen throughout the remainder of the year based on our current visibility. Longer term, the group remains confident of the launch and consumption trends and growth opportunities.
We will continue to leverage the strength and resilience of our brands, and we continue to strengthen resilience by a strong double digit growth rate in the off premise, and that's a testament to our business model and our strategy. Ensuring that we're strongly positioned and ready to accelerate the group will as soon as consumer demand returns to normal. We're committed and long term brand builders We will remain focused on highly engaged in the on premise opportunity with our very distinctive brand portfolio. We are effectively firmly convinced that the out of home social experience and community will remain essential to consumers' lifestyle. I think, honestly, in a few years time, we'll go back at this period, we realized that 2020 was a transition year, was a year where we thought a little bit, but that thanks to the strength of our brands, and our agility, and as I think the new situation is at night and a significant rebound in 2021.
So that is our current outlook is to stage and very happy to take your questions. We assume there'll be quite a few.
Excuse me, this is a Chorus Call conference operator. We will now begin the question and answer session.
Please
pick up the receiver when asking The first question is from Mr. Trevor Sterling of Bernstein. Please go ahead, sir.
Hi, Bob and Paulo. I have a
few questions from my side. So the first one, I appreciate it's really impossible to predict what the shape of the even if the lockdown will be, and hence what the q 2 trajectory or top line might be. Could you give us some indication of what the sales trends have been in April so far? And second question, I suppose linked to that, then in the U. S, We've seen the lease numbers very, very strong in the off trade.
I gather some of that was showed up in March, but is that showing up for your portfolio to go through April as well? The third question, again, I would appreciate a very difficult one to answer. We saw the just over 600 bps of negative margin, in Q1. Looking into Q2, we've got the cost mitigation, which would be positive, but in the negative ramp possibly a full quarter of lock on trade lockdown. Certainly, the longer on trade lockdown we had in Q1.
Any sense of whether we're likely looking at more margin pressure, net margin pressure in Q2 or less?
I'll take the first question, Trevor. Now what we saw was essentially at the beginning when the lockdown came in, there was a period of you know, consumers going crazy and holding themselves up and pantry stuff in and after that lull, but then we saw a very nice return and reaction to our marketing actions across all markets. We actually moved to buying weekly consumption data as opposed to monthly or bimonthly And we've been able to verify this with a very nice trend continuing in the second half of March as well as through the month of April. I mean, in Anglo Saxon markets, which are mostly off, off premise skewed, we've had fantastic performance. I mean, a justification point in the U.
S. And those famous last 6 weeks ending for 18th April, where total spirits were up 37.9%. We were up 55.1%. In that same period, we were the 2nd fastest growing supplier in the U. S.
Market after 5th generation, with Tecos. So very good momentum spread really across all of the brands, with the exception of Bulldog, all of them growing double digit, And as I said, there's some highlights with Campari growing the 117%, up around 122%. Espolon 113%. Very nicely over 215%. Sky in that period grew by, 33% in line with the category.
So very nice, trends there. And we can see similar things in the off premise across the market. Obviously, the on premise softness continues. I mean, in those markets where there's a lockdown, there is a lockdown. There's not much we can do about that.
And having said that, in the off premise, certain markets, are wholesalers as well as our, as the retail trade have been slow at reacting to the very strong growth, which probably for them than unexpected in our brands.
With regard to the 3rd question, probably as missing the second one. The 3rd question is around, Trevor, the the margin trends in the second quarter, it's, as you said, it's very difficult to predict we have a very low visibility. Just to give you a sense of things, we've moved from a monthly forecasting cycle to a weekly forecasting cycle to make sure that, you know, 1st and foremost, you know, aside of financial disability, we keep, you know, the market in sync with our supply shape. This is another primary purpose of what we're trying to achieve in the current environment. So in a nutshell, you know, I can't give you, you know, a precise answer.
What I can tell you is that clearly Q2 is a big season for, for the operating portfolio. And therefore, you know, consider that the imperatives have, you know, higher than average, you know, gross margin. Directionally, I would rather say that the dilution is expected to increase in the second quarter. Whilst, again, you seem to be able to say that is expected to decline in Q3 and Q4 as the business standardizes.
Super. Thanks very much Tom and Bob. Thank you.
The next question is from Edward Mundy of Jefferies. Please go ahead, sir.
Good afternoon, Bob. Two questions, please. I'm following up with Trevor's question on margin. Appreciate that at this stage, it's very limited visibility. So I was wondering whether you're able to provide any real as to what 1% on top line net means organic EBIT growth, are you able to drop through from top line into operating leverage?
Second question is, on the slide 31 to 35, I think assessments have strong. You've been activating on brands such as uphaul on Amazon, but that's used to any sort of early indications on on on brand health, and utilities keep the momentum
in your the purchase business occasion.
And then the third is on Italy, and selling it to our system. It's gonna be opening up on the 1st June, albeit with some social distancing. Not that it fits any guidance, but, you know, would love to get any color that you're hearing on the ground from customers, hope so as, you know, borrowing us, you know, and what they expect as some of these containment that you've got listed?
Yes. And I'll take the second question, which is on the Aperol brand, how I mean, we're monitoring this constantly. We're monitoring consumer sentiment, and it's very, very positive actually across all of our markets. We are seeing more and more retailers actually asking to list the burn, including in the UK. We had one major listing from today.
We're running also online surveys and again, seeing consumers giving us very, very positive feedback But the most important feedback is to see, how they react to it. And we see a lot of folks in Instagram, etcetera, virtual IPITs across, countries, regions, continent. And, people are voting with their wallet I mean, if you exclude Italy, you see the brand growing double digit in the rest of the world with actually the, our shipments numbers not reflecting the underlying consumption growth. With regards to Reciti, yes, the on premise is due to opening June, but we were still not sure under what form it's going to be and how tough the restrictions are going to be. We don't know if it's going to be one size suits at all across the different regions in Italy, which is sounds a little bit crazy, but I mean, in South And Italy, there are many regions where you don't have any COVID cases right now.
So, we don't understand why the government isn't, opening those any earlier. And we don't know exactly what it's coming in terms of them allowing, on premise outlets, bigger tariffs So really, there are a lot of question marks on this. We'll see how it is, actually, I've been asked by, to give my input to one of the committees researching into that. So you can understand that it's not exactly a top of a list at this stage.
With regards to margin science, again, and sensitivity, it is very difficult to say exactly 1% metrics for which impact can have on the bottom line. You know, the way I would approach it, you know, it's more, you know, and formula would speak, you know, the P and L in fixed and variable costs, you know, as I've tried to you know, to, to, to say during the presentation, you know, being aware that, you know, about 25% of costs 10% of A and P and 80% of SG and A are fixed. So, you know, you were basically end up based on 2019 numbers with about 37 percent of costs that are not compressible at all. And you end up with 60 3 percent of costs that are actually really variable. And then when it comes to accessing the sensitivity, I would rather look into the brands and clearly see the brands that are more forced to be on trade, which, you know, in my point of view, in the end, is a big strength, but you know, in the short term, is, is is a point of, you know, weakness for this quite half year.
And clearly, you know, those brands have clearly the Campari Aperol, It's, you know, these are probably the Brazilian brand, but you know, in terms of profitability very negligible. So those brands are, you know, the ones that can really make a difference depending on the different scenarios of down and reduction of consumption in the entire trade.
Okay. Thanks so much.
The next question is from Lauren Wyatt of Barclays. Please go ahead, madam.
Thanks very much for the questions. 3
regarding the, on sale actually. Katie, could you let us know, what you think the current stock levels are in the on trade, whether they people pick up a lot I had a lockdown going in or whether you think that that has been in good health. And it's definitely on the health of the Enphase, with the current situation could cause some economic problem for a number of your customers. Could you let us know what you think your current health hours are? And where you've been, helping out financially.
And then with that shift from on trade to off trade, What's that, what does that mean for the price mix of the product you've been selling? Has there been a significant shift, upgrading or downgrading and whether that's changed fill out the lockdown situations and understand that, you know, companies like Italy has been a lockdown for a very long time, Have you seen any shift from, say, cheaper products for the more expensive products or treating themselves? Thank you very much.
Now on trade stock levels, I would say they're pretty normal. We're probably always tending to our a lifetime because we've had very good sell out across markets in the entree. And well, in much more, over the years, moved into a pull mode as opposed to push mode. So not a big issue there. The health can help on the entree is probably potentially looking forward an issue I mean, we would expect, a number of, off on premise outlets not to reopen both in the U.
S. As well as in Italy. And everybody has some sort of an estimate for that. I wouldn't know what it would be, but I wouldn't be surprised if, a sizable number of outlet not open. Obviously, in the U.
S, they can then be replaced by new openings. I wouldn't expect that to happen in Italy. Having said that, you know, we are very strict on credit policy, and we work in all of our markets where the intermediary are very solid and long term wholesale partners based in the U. S. Into the U.
Or anywhere else. So we're not expecting any negative surprises from there. In terms of shift, Anibal, we're not seeing a huge shift in terms of the make out of the brand. With the exception of an acceleration in Sky Broadka in the U. S.
With the consumers positively recovering that brand. So I think that will be positive or going forward. Obviously, with the growth in vodka, you see a stronger growth in the larger sizes and the weaker 75 of this world and a little bit of that also across the rest of the portfolio. But bear in mind, it's very limited, and we're very disciplined on that.
Thank you. And just to follow-up on the last one, has there been any shift throughout this sort of 4 to 6 week period, or has it been largely similar is it too early to see any changes?
No. We've seen it pretty steady. I mean, the, we've seeing that the growth rates actually across the portfolio accelerate once we came out of that in March low.
Excellent. Thank you very much.
The next question is from Chris Pitcher of Redburn. Please go ahead.
Thanks very much. A couple of questions. On the cash flow side of the business, can you give us an update on what your expecting in terms of capital investment, investments in maturing stocks. And what you're doing with regard to your operating working capital and the payment days and and receivables. And then on the bulk cognac sale, that you disclosed, it was at about 3,000,000.
And can you say what sort of margin impact that was. And then finally, thank you very much for the really detailed run through how you're changing the A
and P plans for for Apple
as you sort of shift to more of a and at home consumption. What what should we think of in terms of A and P over the the summer? You mentioned, I think 90% of it is variable. Is it a direct transfer of the same level of expenditure, or can you save quite a bit on
A and P, marketing at home rather than at festivals and so forth? I'll take the on the cash flow, on the cash flow side, starting from a CapEx, which was your first question. As we've announced, the guidance for current year was the total amount of CapEx of 1,000,000 of which 64 were meant to be maintenance CapEx. And then those were topped up by extraordinary CapEx accounting for 1,000,000 total, 94. So basically, with cash versus this 94 about €10,000,000 of CapEx.
But on the other hand, you know, even the recent acquisitions of, you know, the change in perimeter. We have an additional 1,000,000 of CapEx attributable to perimeter. Which, you know, at this stage, you know, we cannot confirm, you know, these are approved, but, you know, we're not sure we'd be able to finalize those of the remainder of the CapEx by year end. So but if that happens, we will land at 1,000,000 net CapEx including the maintenance and extraordinary agreement. With regarding to the other one was maturing inventory, So, you know, if we take, last year as a reference, you know, lending of last year, operating working capital came in at €195,000,000, of which, H And D Food was a €365,000,000 decision of fixed and not compressible.
So we're not on purpose selling aging liquid because we think that fundamentally that these is very solid. And, you know, in the short term, it will be recovered over the years. So, you know, we're not foreseeing any meaningful or any reduction in Asian liquid. What's the rest, $30,000,000 based on last year. This is pure variable CapEx.
At this stage, we're not considering any drift in that, to variable component about what operating working capital. But clearly, you know, we're still, you know, we, you know, it's an ongoing to go through to your end and, you know, for sure, there's tension on the receivable front because customer are trying to expand payment terms. Of course, we're very disciplined. And, you know, we maintain our tight policy because we don't believe that, you know, in terms of our our timing, it's a corporate work spend credit lines and take unnecessary credit premium. So I think.
And then the other one was on the on the E and P line.
I I can't take that. I mean, on AMP, only about 10% of the annual budgets are fixed. I think that's mostly royalties, etcetera, research, Asian feeds. And the rest is variable. I mean, what we've done is we've really reworked very much in-depth very quickly.
All of the budgets across all of the brands and in the market. We've canceled the off line media on premise activities, big events, and then move everything into variable digital. Very quickly. And we're monitoring it really week by week, so I can't give
you much of a,
I think indication for a full year basis. But We are reacting very quickly. We're putting something on there, seeing how people react to it. If it's very positive, we invest more behind it. If it's not, we move on to the next thing.
So on and so forth. So it's very, very dynamic at the moment.
Thank you.
The next question is from Simon Hale of Citi. Please go ahead.
Thank you. Good afternoon, Bob Hassane, Paolo. Just a couple for me, please. Bob, you've talked a lot about the the strength of the the recent Nielsen data that we've seen, you know, across your business, particularly in the US. And I think, you know, we've seen this across a number you know, for other spirits businesses as well, but perhaps not quite as strong as some of the numbers you quoted on your brands.
When I talked to some of the companies, they're saying that, that data that you're seeing in terms of sell out trends is not a complete representation of what you're selling in at. And then perhaps there is a little bit of a retailer destocking going on. Is that what you're seeing as well, or do you actually think the Nielsen growth rates that you're reporting and have seen over the last several new weeks are a real idea of the run rate that you're seeing from your shipment standpoint
And then just secondly, just back on costs.
I mean, you flagged in the presentation, Paolo, around the SG and A being increased in the first quarter due to the shift of the HQ from Sydney to Singapore. What's the full year cost implication of that already felt in the first quarter?
Let me, let me talk about the, our decision versus Nielsen numbers. I mean, our Nielsen are if you take the full Q1 from January to end of March, are on a company basis, we were up 13% on Nielsen. 12.9% of Nat Cat, so pretty, consistent between the 2, and our depletions were up 5.5%. So clearly, you're seeing, I think it's there are some supply chain inefficiencies there. And probably some customers are taking the opportunity to destock and to generate more cash, for themselves.
So that's, that's a fair you, and that's pretty much what we're seeing in many, many markets. But for us, the most important thing is to see really underlying consumption growth trends as well as a very positive consumer sentiment.
Yes, with regards to the SG and A trend, the the transfer of the corporate at the Asian headquarters from CNA to to Singapore, as accord, most of the costs have already been in court. So in Q2, there might be a tiny tail land, not big, but overall, that tiny tail end of those costs will be more than offset by the cost cutting initiatives. So starting from Q2, SG and A will start moving into negative territory. Got it. Perfect.
Thanks very
The next question comes from Paulo Carboni of Equita. Please go ahead, madam.
I'm surprised it's here.
Yes. Hi. Good afternoon, everybody. I have three questions actually. The first one is on your fixed cost.
You quantified the portion of stock fixed cost on your different cost lines. But really indicating that in Q2, for example, SG And A may turn to negative trend. So can you share with us, how much degree of flexibility do you think to be able to, to achieve, in this particular year also on fixed costs. So how much are you ready to reduce also what is usually your fixed cost of data on the different lines. 2nd point, is on the off trade channel.
If you can, comment a bit on current, I mean, the perception you have clearly on, how resilient this channel in the improving in particular, sorry, about the, the, I mean, sorry.
I
probably you you'll give her here and there's no you pay her here and there's an indication but, to focus in particular on the off trade, the channel, in the last few weeks, if you have any insights in this respect, and, what could you, you, do you imagine that, how how these can evolve? And, last point, any recent interview, Bobby, you mentioned that, if I got it right, that you, were fast in anticipating the some stock. So I was wondering the what were you referring to, with that, and what was that about? Thank you.
Okay. Let me take the last questions. Now, what I was referring to in the interview is that, when the first case has, hit it to the, we were it very quickly. We focused, clearly first on the safety of our people and make sure that everybody went, on smart working. 2 weeks before the government made that a law.
At the same time, we introduce new safety protocols in our plants. But to be on the safe side, we had our plants work build inventory and all of our key brands and make sure that we actually ship them out to all of our key markets because we do want to run not having any visibility on the intensity of the lockdown, any other impact, our plants are not reduced inventory. Which I think was very good that we did because obviously in some markets, we're seeing very, very nice trends in the off premise. But at the same time, any inventory we built there is not anything we cannot manage over a full year period. Now referring to our performance in the off premise, I mean, as I said earlier, I mean, what is really reassuring is that we actually have double digit growth rates across our brands, across our market.
Obviously, some are even stronger. For instance, those U. S. Numbers. But what we're seeing is a pattern where in those markets where you have established consumer tradition of consuming at home.
So it's mostly the Anglo Saxon Markets, U. S, Canada, Australia, the UK, Northern Europe, as well as Eastern Europe, we're seeing very sustained growth in the off premise in those channels. And in certain cases, like saw in Canada, was able to more than compensate in Canada as well as in Australia, more than able to compensate for weakness in, in the on premise. Having said that, even in Italy, we're seeing strong growth rates in the off premise, but obviously, we'll never be able compensate what we're losing and beyond.
With regards to the the fixed cost component and what we will tend to do. They are basically nothing is the answer because we believe 2020 is a transition year. Fundamentally, we do need to structurally downsize the business at of what's happening as we believe in 2021 will be the capital. So the measures that we're taking are primarily the very cyclical ones the hiring freeze where you, you know, you go on a, on a post, more for a while. You know, you contain the Q and A, you know, period, our impact coming from reduction of STI MTI payouts.
And then started prioritizing and streamlining all the development projects that were scheduled for this year. So typical things that you can do without hurting the strength of the company percent, which is not what we tend to do, not in structural cost not in the A and P. So we, we believe, it's a way to to, you know, to bridge, you know, couple of quarters and then, you know, we'll be, you know, back up.
Okay. Sorry. I forgot. Just one. Can you give us kind of update on the withdrawal ride, and your path to move, to move to to Ashland?
We're still accounting the withdrawal. So position of giving any update. I believe that possibly a week or so we should be in a position of confirming the precise number. And thereafter, there is the whole process that we've already highlighted starting from the offering option interaction, that is required by law and that lasted for, for a month. And then we're not going to approve an update.
You know, you need to have a little bit of patience, but depending on us, we rely on the 34 level of service from Colliers. And so we're stating that there's, like, after 3 weeks from the expiry date. To take everything into consideration to give, you know, a clear and correct picture of the amount of return shares prior to making the announcement.
The next question is from Ryan Finpan of JP Morgan. Please go ahead.
Hi, good afternoon. It's Ryan here from JP Morgan. And just two questions please in terms of your gross margin. Just in terms of your global priority brands, I know that you said historically, you can make over 70% gross margin on those products. If you can within, I appreciate the the mix in terms of the the weakness in the priority sports logo.
Even within some of your brands like Campari and alcohol, is there much of a different much of a differential in the gross margin achieved between the on trade and the off trade typically? How does that lead through to the EBIT margins for those global priority brands? And then secondly, just in terms of the raw material has there been any change in terms of what you've seen before in terms inflation for agave or another input cost in the year?
So with regards to to gross margin, if you guys have, you know, higher than average, So gross margin within those brands clearly, you know, and probably after all, and and I'm working
to have, you know, higher than
than average gross margin would be in the dollar price against the marketer. But with regards to on an offer, you know, that the the difference in math, you know, it is, not meaningful, you know, what can make make what can really make the difference is, you know, the brand mix and the geographic mix as opposed to channel mix. As well, you know, period, that might be, you know, any differences that would be often generally more profitable being off than the off, but not a bigger stance. With regards to all the materials, no change in guidance. It's, for sure, all the time, I would expect it on certain materials, we will see less pressure over time.
For example, class that is, if you component a lot, a bit of material is index to to Microsoft of energy. So that's potentially an opportunity. The other one is agave. Where, at the moment, spot price is still where it used to be. We cannot exclude the car and, you know, executive, you know, environment, you know, might accelerate the the the decline in the hybrid price, but, you know, so far, So we cannot confirm that because we've not seen it.
But no major, in a nutshell, no major changes in guidance when we put calls for current year. We need to achieve, you know, how long the current situation will last, which on one end will potentially negatively impact the revenues and the company profitability, but the only one that I have to be more benign on cost, expectations.
Thank you. And just following on, if you're on the gathering point on the Mexican market, so Mexican sales declined midteens in Q1. How do you expect those to trend for the rest of the year? And is this just a start a stock destock effect, or are you seeing fundamental market weakness there?
Well, currently, the Mexican market is in full lockdowns. So and we don't have much visibility in how long it's going to last. But clearly, I mean, it's a lot to keep our market that 2nd largest in the world. So that potentially could have an impact.
The next question is from Sanjeet Alujva of Credit Suisse. Please go ahead.
Hi there. So your balance sheet is quite strong, going into this downturn. Can you anticipate a material step up in industry consolidation? Through through the downturn and how how how ready are you to, to participate in that or is the immediate focus just on really showing up the balance sheet?
Well, I think we're ready to participate. As nobody has a crystal ball. I mean, probably, mid to smaller size players will be more impacted by the crisis than the larger players. So there might be opportunities at that end of the range. Have
your questions been answered, sir?
For any further
questions, Yes, sir. Excuse me. For any further questions, please press star and 1 on your telephone. Mr. Country Country, there are no questions.
Well, thanks for joining us and My recommendation of this day is the Buddha Valdier with Wild Turkey-one hundred and one, Campari and Cinzano 1757. Enjoy it. See you soon. Thank you. Bye bye.
Ladies and gentlemen, thank you for joining. The conference is now open. Any may disconnect your tele