Good afternoon. This is the Chorus Call conference operator. Welcome. And thank you for joining the Campari Group 2018 1st Half Results. Should anyone need an assist need assistance during the conference call, they may signal an operator by press pressing star 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, sir.
Thank you very much. Good afternoon, and welcome to our half year call. If you have the presentation in front of you, I'd ask you to kindly move on to page number 4 so I can up with Alfreda Duetti highlights. As you can see, we've had, we generated the expected acceleration in top line growth in Q2, which led to a pretty solid organic growth over the first half and helped normalize trends across profit indicators. Focusing on net sales, we've had solid organic growth up 5.4% thanks to the acceleration we're talking about in Q2 where we're up 8% on an organic basis, helping us recover the phasing issues we had in Q1.
We've had a continuous improvement in sales mix, thanks to the consistent outperformance of our key high margin brands, again in the high margin core developed markets. Looking at it by brands, while the usual suspects, global priorities continue to outperform, up 8.7% in the first half, with an accelerated growth in Q2, up double digit 12 a half percent. Driven by Aperol Campari as well as our brown spirits. Our regional priorities were up by mid single digit, 4.7% in H1, improving in Q2, which was double digit, up 10.6%, driven by Espolon. On the other hand, the local priorities were down 4.2% and this is mostly due to a double digit decline in the lower margin Brazilian brands.
Looking at it by geography, we have solid growth, high margin developed markets, driven principally by the U. S. Western Europe and Australia, while softness in emerging markets continued due to essentially macro volatility and some tough comparison basis. The reported change overall of minus 4.7 percent reflects the negative perimeter effect of 3.7% and more importantly, the negative ForEx effect of 6.4%. Looking at EBIT and adjusted EBIT, we have an organic growth of 9.5% and this is clearly ahead of organic sales growth leading to an 80 bps margin accretion, driven by the strong organic gross margin expansion of 110 bps Again, clearly, this is driven by the positive sale mix by brand and market.
And this was part, partially, offset by some phasing of AMP, which is creating a dilution of 40 bps On a reported basis, we have a change of negative 1.7% and that takes into account the negative effects of the disposals. -5.8 percent as well as 4xor-5.4 percent. So almost recovered everything by organic growth. The EBIT overall growth was 13.7 percent after positive operating adjustments of 19,600,000 driven by the gain on the business disposal, the soft drinks essentially net out provisions for restructuring costs. Net profit, group net profit adjusted, rose to $104,400,000, up 11.6% and group net profit rose $247,200,000, up 35.5%.
Our net financial debt stood at $946,800,000 at the end of the period, down by $34,700,000 to a pretty positive free cash flow generation, as well as the proceeds of the Limon Sota Business Disposal, net of the Espied cognac acquisition, the dividend payment and the purchase of own shares. This leads us to a net debt to EBITDA ratio down from one 0.9 times. If we move on to, chart, on the page number 5, I'm not gonna go into details because we're gonna review both the regions as well as the brands. Just to say that all of our regions performed positively, which is quite good. And if we look at the different clusters, of brand groups with the exception of local priorities.
Again, we've had a pretty good progression. Page number 7, that saves results for first half, just to underline the impact of forex and perimeter, which more than compensated the organic top line growth of 5.4%. Chart number 8, just to underline the fact that with the weakness, in some emerging markets, particularly Russia and Brazil and Argentina. The emerging markets share the pie was reduced to 17%. So we're 83 to 17 SKU.
More importantly, though, let's delve into the results of the Americas which had a pretty good performance. Overall, organically up 4.6%, a pretty negative impact of ForEx here down 11.7% and the ferri meter mostly driven by carolines in the U. S. Down 3.1%. Talking about the U.
S, very nice growth of 5.9% and the strong first half performance was driven by an acceleration in Q2 where we're up 8 0.2%. The performance in this first half was driven by continued performance of Espolon, Aperon Campari, and all these three brands grew at strong, quite strong double digit rates, as well as sustained growth of Wild Turkey and the Jamaican rum portfolio. Gramani registered sound growth, but here shipments were more robust and underlying trends, and this is due to a favorable comparable base, in Q2 of 17, we had a pretty low shipment pace. And this helped, on the other hand, offset the decline in Sky, where weather reverse phenomenon where shipments are still performing behind sellout trends. Moving on to Jamaica, very solid growth, up 14.8% with strong double digit growth of our largest franchises, Campari, Raynephew Overproof And Appleton Estate.
The only, let's say, negative note here is, is Brazil down 27.2% where both political instability and macro weakness continue to impact, the market as well as large parts of our portfolio. We must also underline the fact that we have a tough comp pace here. We were up 29% and then our first half of 'seventeen. Nonetheless, if we look at the, main drivers of this performance, The decline was mostly driven by local brands, followed by Campari and Sky. And on the other hand, partly mitigated by very double digit growth of Aperol.
Argentina was down 5.8%. This negative performance was largely driven by our own impact and company credit policy. So we'll see our Argentina own proofing in the second half of the year. The decline in Campari as well as the local and agency brands here was positively mitigated by very nice trends behind Skye, Chinsano Chinal, and again, up at all. The rest of the region increased by 10.3% with a very strong performance in Mexico, up 16.1%, thanks to Sky Ready to Drink.
Sky, Aperol, and Espolon, while Canada was overall broadly flat due to some shipment phase. Moving on to Southern Europe, Middle East and Africa, up 4% on an organic basis, pretty flat on a ForEx basis, but down 6.9% on a perimeter. Obviously, the disposal of the Italian soft drinks has an impact here. This is performing very nicely, up 3.1% on a half year basis with a continued, very positive trend driven by After all, up 7.1% Campari, double digit, 12.1% and nice growth behind Chinav and Bravo, which helped offset some softness in Crodino Campari Soda and the Chinsano portfolio. If we look at the rest of the region, we're up 7.6% very solid growth in France, where Aperol, Riccardona, GlenGrant and Campari are outperforming by far the market Spain, where again Aperol and Campari are the drivers, Nigeria, Campari and Sky.
South Africa and the other had declined in H1, despite the strong growth in Q2, and this is due to the unfavorable comparison base, which we had in the first half of twenty seventeen. Which was fairly influenced by the start of the new distribution organization and stocks related to it. To close off this area, global travel retail grew at a pretty solid 15.3%. Again, thanks to Aperol Wild Turkey Bulldog Campari, Sanjay Rico, as well as Ouzo 12. Moving on to chart number 11, North Central Eastern Europe, a very nice 6.7 percent organic growth.
Some minimum, ForEx here down 2.5% and a little bit also on the perimeter due to the soft drinks, tails in some of the Central European markets. Germany had a very robust first half, with very strong growth in the 2nd quarter where we were up by 14.9%, which linked to an overall growth of 7.4% over the 1st 6 months. So we clearly recovered the weak start of the year. And this performance was driven by a very strong performance of Aperol, up 26.1% as well as Cinzano Bulldog Campari is a 12. The UK continues its very strong growth, up 17%, a sustained positive performance, driven by Aperol, the Jamaican rung Campari, Bulldog and China.
Russia, as I mentioned earlier, is down 25.2% This is clearly influenced on the one hand by a very unfavorable comp base last year where Russia was up by close to under 12% in the first half of the year, as well as the impact of the price increase negotiations, which dragged down in the first quarter and impacted our trading of our largest customer. Nonetheless, we're returning to regular growth, so things should improve here in the second half of the year. If we look at, the rest of the region, again, up very solidly, almost 17%, 16.8% to be precise. With very nice performances across the regions in terms of markets and the main year over year, it's after all. To close off our regions, Asia Pacific, a very, very robust 14.6% growth, helped to a certain extent by a easy comp from last year where we were badly impacted by weather in the 1st few months of the year.
Australia, up 10.7%. Very nice growth in the 2nd quarter, 12.1%. Where the comp was actually not that easy. And we're consistently outperforming the local spirits market in all relevant categories. We also have very nice double digit growth in Wild Turkey RTD, the bourbon portfolio, and then the usual suspects, Aperol Campari.
Skye, Franjay, England, also round up the positive performance. The rest of the area is up double digit 24.1%. With a nice positive performance in Japan, driven by Wild Turkey. Skye ready to drink Skye, Callmani and Tinizano for a double digit growth in New Zealand, Thanks for the Karuba Ram, which is the local brand in Walter Keith Bourbon. On the other hand, China was broadly flat.
Moving on to Chart numbers for team. The only thing I'd like to underline is that not global priorities that come for 57% of our, total sales. That means that's an increase of 200 bps versus Q1 and, 300 bps versus the same period a year ago. Commenting on a brand by brand basis, you see that Apparel now is by far our largest brand. It's represent 17% of our sales growing at almost 25% on an organic basis, 24.7%.
What is very encouraging is we continued and sustained, very positive performance in the core markets into the Germany Auster and Switzerland. And on the other hand, having established solid foundations in the rest of the world, we're starting to see the brand build very nice momentum across a very wide range of markets, we're particularly pleased about the U. S, which is now the brand's 3rd largest market in value, and continuing to see our performances in France, Brazil, Russia, the UK, Australia, Spain, and GTR. But I could name a lot of other markets. Moving on to Campari, which continues to give us a lot of satisfaction, a very nice sustained growth rate up high single digits, 8%, with a very favorable mix in terms of markets.
Clearly, the double digit growth in the U. S. Is very welcome. Now the U. S.
Is the brand 2nd largest market in value. We're seeing double digit growth in the core market of Italy almost after 160 years and very positive performances in a series of markets across continents, North America, Africa, Europe, and so on and so forth. The only blotch on Campari's performance is 2 large volume markets. Brazil and Argentina where the brand declined. And, it's really kudos, I think, to how strongly the brand is performing in the rest of the geographies as it's able to compensate for those declines in South America.
Moving on to Sky. Sky is down overall organically 11.1%. Here, clearly, the issue remains the US market. However, I'd like to underline the fact that our, shipments are actually more negatives than our depletions who are also more negative than our consumption indicators, particularly if we look at Natka, it looks like we're stabilizing the brand and it's slightly positive. So our shipments are performing the sellout trend.
We'll see things. I think on a yearly basis, probably running closer to the underlying mid single digit decline. On the other hand, in international markets where we mixed, performance on the one hand, we have some markets, performing very solidly. Argentina, Japan, Mexico, and Jamaica. But on the other hand, there were some phasing issues for particular reasons.
In South Africa, Brazil, Canada and China, and we'd expect these to even up in the rest of the year. So we expect international to be nice and positive. Moving on to Grand Marnier on page number 15, you see? And Grand Marnier up 13.2%. Now I'm clearly here where the reverse effect to Sky.
We had quite a low comp base in terms of shipments in Q2 of last year in the U. S. So that, comparable clearly helps boosty and the organic growth. We'd expect the brand more or less to end up on a mid single digit, throughout the year. What's encouraging though is that, key European and Asian markets are starting to register nice growth, which means that having done the cleanup of last year.
The brand is starting to react. Moving on to the bourbon portfolio, overall up 6.8%. We've had quite a positive first step for the Wild Turkey brand up 9.9% with very nice performances. Across its core markets, as well as its potential markets, particularly Canada, travel retail, Japan, Germany, and Italy. Russell's Reserve, which is a very high margin brand, is registering nice double digit gains in its core U.
S. Market and Canada and Australia, clearly, if we had more volumes, we'd be able to extend this further, but it is what it is. On the other hand, American Honey was broadly flat with a slight decline in the core US market. But again, here, I've underlined that it's more on a shipment basis, whereas the brand is growing at a mid single digit, if we look at depletions. Moving on to our run portfolio, up 4.2% a strong second quarter, up 13.9%.
Wayne, nephew overproof, growing very nicely, high single digits, 9.7%. And this vibe is expanding beyond Jamaica to the U. S. And the UK. Appleton Estate on the other hand was slightly negative.
We have a very nice performances in the U. S. And Jamaica and in seeding markets, but these were offset by declines in Canada and Mexico, which were impacted by shipment phasing. Moving on to tequila's on page number 16, Espolon, which now accounts for 3% of our total sales, and this is a home based brand, so we're pretty happy about that. It is growing at a very sustained rate, up 34.3%.
Even better in its core market to U. S, and very nice trends in many international markets. Pulled up, slowed down to 6.4%. We had some temporary softness in Spain and Belgium where we weren't able to respond to local craft brands as we're waiting for the new advertising campaign to kick in in the last quarter of this year. On the other hand, we've continued solid growth in the rest of our market particularly UK, Germany, Brazil, Italy, as well as global travel retail.
Glen Brand, flattish down 0.8% despite a very strong Q2, 21.5% where the, the trends reflect the fact that we're contingenting volumes. We put many markets on allocations as we're aging the profile of the aging liquids and moving also to sell higher value, age products. So we'll see the run improving in the second half, but the contingentization will continue impacting a little bit longer. Forti Creek is slightly down 1.6% nice and positive in Canada, up mid single digit, on the other hand, but some declines in the U. S.
But we're starting to, things, fix things in the U. S. As well. The Amari portfolio is slightly down 1.6%. Most brands performing very nicely.
The main culprit here is Adena, where we took a very big price increase in Germany. And that is impacting sales in Japan's 2nd largest market, but we would expect things to normalize also. And improve in the second half of the year. Finsano overall down 5.8% despite an improvement in Q2, we have vermouth, which is in positive territory, as all of its core markets are doing well, Argentina, Germany, Russia, and Italy, On the other hand, Sparkling lines are down 11.4%, mostly due to phasing in core market of Russia linked to the price, increased negotiations. If we look at the other sparkling wines, Mondoro is down by 9.5% and this is linked to the Russian price increase issue.
Although it's normalizing, on the other hand, we cut down as the brand is tied very closely. To the face of, aperol in France mostly, but also in Peru and Chile is moving very, very positively. To round it up with our local priorities, Campari Soda, slightly down 1.9%. We'd expect it to be flattish on a full year basis. Crudino was impacted by pipeline on innovation last year, down by 1.5%.
On the other hand, we're very pleased with the performance of our RTDs in Australia where vastly outperforming the market. The one blockchain, this is something which will improve, but will remain negative on a full year basis is the, local brands and priority brands in Brazil, Brea and Tagativa, which were down 33% in the first half of this year. Wuzo was impacted by some shipment phasing in Greece. Having said that, the brand is performing exactly in line with expectations. So it will have a nice and positive full year, growth.
Last but not least, Cabo, where you see a weak performance, which doesn't reflect depletions or consumption were down 8.6%. And this is due to a very tough comp base on a shipment basis. Where we were up by 25% in the first half of last year. This is the, quick overview of performance by brands, and now we're 12
Thank you, Bob. If you follow me to page 20, we have the analysis of face and EBITDA by region. As we can see, you know, the Americas still remain the group largest region with 42.8% of group's net sales and 41% of group ceded, notwithstanding the decline in South America and most notably the negative impact of FX on the regional performance. Worthwhile mentioning the outperformance of the high margin North Central Eastern European region which capitalize on the very strong performance of Aperon, which was in the first half, up twenty six percent, leading to a 28.6 percent EBIT contribution to the overall group profits. Moving on to Page 21.
We have analysis of Americas. As you can see on a reported basis, the net sales declined by 10.2% in EBITDA declined by 9.9.4 percent, totally driven by perimeter, the the disposal of car loans and FX. Whilst looking at Giovanni performance, net sales were up 4.6% and EBITDA was up 9.6% leading to 90 basis point EBIT margin expansion in existing business. With regards to top line, the 4.6% net sales increase, was driven by positive growth across the North American region, which more than offset the weakness in South America markets. Gross profit, benefited from a very positive, sales mix driving 110 basis points accretion.
And particularly in the high margin North American market, the expansion of, gross profit have compensated adverse highway price impact, which, you know, by the way, is to become more impact fully in incoming quarters in, in Q2, in Q3 and Q4 of the €12,000,000 negative coming from agave in in the first half with, already recognized 4,000,000. So, you know, still €8,000,000 negative hit in the second half of this year.
With regards to A and P,
a slight increase to support the brand building investments, A and P was up 5.3% in value with an basis points dilution. On the other hand, SG and A in the region grew in line with the top line. In existing business, so there's no impact on margins. The EBIT margin overall came in at 19.7% from 19.6 percent of last year with 20 basis points accretion, where the organic accretion of 90 basis points more than offset combined dilutive impact of perimeter and FX, which accounted for 70 basis points. If you move on to the CEMEA region, page 22, overall, on a reported basis, we had a decline of top line of 3% and flattish EBIT, actually, minus 0.3%.
Again, driven by, by perimeter. As you can see in, in existing business, net sales grew by 4% and EBIT by 4.7% leading to a minor, organic change in margin of EBIT margin of 10 basis points. Top line clearly benefited from the good performance of high margin, of the high margin Italian markets with regards to to to gross profit. We had an improvement in semi had an improvement in margin rate of 90 basis points. As to the solid performance of the high margin operative portfolio across the region.
The investment, in A and P, it grew faster than the top line at 7% increase year on year in value terms due to phasing, of brand building investments, particularly behind you know, the operative portfolio as well as, to support a number of initiatives in DGTR channel. SG and A grew in value by 6.5.5 percent in existing businesses, thus leading to 40 basis points dilution due to the strengthening of on premise capabilities in selected markets, as well as investments in the global travel retail chain. Channel. With regards to FX and perimeter, effects, almost entirely attributable to the disposal of low margin businesses in Minnesota and determination of agency brands, you know, the down form of portfolio. They had overall a negative impact in value terms, but positive impact of margins over 40 basis points.
EBIT margin for the semi region was up, to 18.6% on sales from 18.1%. 50 basis points, driven by the effect of the organic growth, coupled with the, positive perimeter and FX impact that I referred to. Before. Moving on to the Northern Century Eastern European market. On a reported basis, the region was up 3% on, net sales line and 5.4% on the on the EBIT line.
In existing business, I've heard a performance that was even more robust with the top line up 6.7% and EBIT up 9.1%. And again, also in this region, we have an organic expansion of the EBIT margin of 70 basis points, totally driven by gross margin expansion after existing business, 210 basis points, driven by the strong sales mix improvement, thanks to the positive performance of the high margin operating of volume. Part of the 200 basis point, 210 basis point gross margin expansion has been reinvested in A and P, to support the high margin global priorities and that, drove 140 basis point dilution from the from the AP line, on sales. SG And A grew in value by 7.2% in, in existing business. Thus leading to 10 basis points of dilution on the on the EBIT margin line.
Overall, the, you know, the EBIT margin, was up to 29.8 percent from 29.1 percent of last year, with, you know, 70 basis points entirely attributable to the accretive effect of the organic growth. Moving on to APAC, page 2024. We had, you know, very solid results with the reported increase in net sales of 4.6% and reported increase in the in EBITDA of 58 enter. Looking at the organic performance, yeah, that was even stronger with the top line growing 14.6% and bottom line, growing 83.6%. That's, driving 350 basis points EBIT margin expansion in existing business, of which 90 basis points came from gross margin expansion.
And again, here is, particularly, you know, the very robust performance of the, of the Australian market, coupled with, you know, investments in A And P, which in value term, what, up 11%, but, you know, at the moderate pace vis a vis top line, with a 40 basis points, EBIT margin expansion and a very moderate increase in SG and A up 4.2% in value term worth 220 basis point EBIT margin expansion. On a reported basis, EBIT margin was up to 8.7 percent from 5.8% showing 100 basis point expansion, margin expansion on sales. If we move on to the consolidated results, let's give SaI 26 and look at Slide 2020 7. Gross profit on a on a reported basis came in at 471,900,000, down 1.1 same team value, but up to 60.6 percent on sales or 120 basis points accretion. Of which 110 basis points gross margin expansion is coming from organic gross profit growth.
Which in value was up 7.5 percent. The organic growth of gross profit in existing business was ahead of the top line, thanks to the favorable sales mix by brand, as we saw before end markets, were high margin global and regional priorities, performed quite nicely in core developed markets where, you know, margins are higher. And thus, we managed to offset the dilutive effect of the adverse agave price which, became, progressively more impactful in, in Q, in Q2. You know, in the first quarter, we had 150 basis point Gross profit expansion in the 2nd quarter neutral on margins. A and P mean at 1,000,000, up to 0.4% in value to 17.3% on sales with 90 basis points dilution.
Looking at the existing business, the organic growth of A and P was a 7.9% in value. With 40 basis point, dilution, different primarily driven by by phasing of our marketing initiatives with a with a stronger skewing in first half this year, to support the developmental brands such as Campari Aperol and Grand Marnier. Yes, Janney. Came in at 100 and 76.5000000 euros, on a reported basis down 1.6% in values to 22.7% on sales. Down 70 basis points on sales.
Looking at the organic trend of SG And A, we had a moderate increase in the 1st half in value, 5.3 percent, slightly lower than the top line growth and the 4, neutral on, on, on margin. EBIT adjusted came
in at
€160,500,000 on a reported basis, down 1.7% in value to 20.6 percent of sales, showing 60 basis point, margin, margin accretion. Looking at the organic performance, The bottom line performance was, was quite robust in the first half with an increase in value of EBIT adjusted of 9.4% delivering 80 basis point, margin accretion. Page 28, more importantly, we had a breakdown of the EBIT adjusted, performance, by organic perimeter and effect effects impact. As we can see, you know, in existing business, as I said before, Organic growth of EBIT was in value 9.5 percent with 80 basis points organic accretion, totally driven by gross margin expansion of 110 basis, business point on a year to date basis, sir. More than offsetting the step up in, in A and P spend over 40 basis perimeter had the negative impact on on the EBIT of 5.8 percent or 9,500,000 driving 40 basis points dilution, to assess the disposal on noncore businesses.
The effects had a negative impact in value of 5.4 percent or 1,000,000 with 40 basis points, accretion. If we move on to, to the following page of page 29, we have new analysis of the financial financial charges. The net financial charges came in at 1,000,000, down, versus last year by 8 point 1,000,000, thanks to the positive effect of the liability management transactions that were successfully completed at
the back end of last year.
Average cost of net debt came in at 3% in line with H1 last year. And then we had, you know, small positive financial adjustment of 1,600,000 new roles related to some minor financial assets uh-uh disposal. To move on to page 30, the analysis of tax rate, thanks to the, as already highlighted, the reduction of the U. S. Corporate tax rate.
The recurring effective tax rate, came down from 3.2, 32.1 percent last year to 27.9 at least, you know, this year. On a recurring cash tax rate basis, the rate is now 32.3 percent from 33.5 percent of last year. And also the good deferred on cash taxes and now down to €8,000,000 versus €12,000,000 of last year. We have, to highlight some good news on the on the paper box, this year, you know, in the first half, we recognized 14.8000000 euros, thanks a little better than expected patent box benefit, both on prior year and the current year. We have, you know, a, you know, a positive effect on prior years of, 1,000,000.
And, you know, the, you know, the guidance of 1,000,000 to be lifted up to €21,000,000 on a recurring basis. So we got all, you know, the prior year, benefit of 4 to subclass the the the 21, we will end up with a positive impact this year of 25,000,000 from Patent Box, wise than that, as you see on the last bullet, 2019 will be the last year for for that inbox and we will, and we will, bank €21,000,000. Moving on to the analysis of not recurring adjustments, sir, page uh-uh, 30, 31, basically, you know, in the first versus guidance that we've given at the back end of last year, versus, you know, in the first half, we're recognizing total operating adjustments of 19,600,000. Small financial adjustments of, 1,600,000 and, you know, the effects of, the patent box as well as the physical effects on, you know, the operating and financial adjustments totaling $21,600,000 the total bottom line impact of those adjustments in the first half of this year of a positive 42 point a 1,000,000. If you move on to page 33, we have, you know, the analysis of cash of cash flows.
Free cash flow came in at €110,900,000 on a on a reported basis, up to €41,000,000 versus last year. On a on a recurring free cash flow basis, who generated around 1,000,000 at 4 7,100,000. Key drivers, you know, listed below below, we have, you know, slight decrease in EBITDA, 3.9 €1,000,000. Other charge charges mainly related to provision and other non cash items, with, you know, a not recurring negative impact of, just 2 point, positive impact of just €2,600,000. Taxes paid of 24,200,000 on a reported basis, of which 12.4 attributable to recurring cash flows.
With, notably, in comparison to last year, first half, recurring taxes paid of 1,000,000 implies a shift of tax payments in the second half of this year of about 1,000,000. Changing, operating working capital, 1,000,000, as we will see in the in the following slide. And then, you know, the other big item is the CapEx line where, on a recurring basis, you know, we'll 10,000,001,000,000 and 18,800,000 on a reported basis. If we move down to page 34 operating working capital, as a percentage of net sales, it came in at 37.2 percent versus, versus 33.3 percent of December last year. But if we exclude the 1,000,000 euros perimeter impact on operating working capital, the ratio of operating working capital on on net sales would, would be 54.7%.
Actually, the organic increase in, you know, operating working capital accounted for 21.1 €1,000,000 and Forex had impact of a negative 1,000,000 on working capital. Moving on to Page 35, where the analysis of the net financial debt which, as Bob said, decreased by 34,700,000. The format that 2, that, 946,800,000. Thanks to the positive free cash flow generation of €110,900,000 that we've analyzed before. The proceeds from the sale of Delano Salada that you can see in the footnote, €80,000,000.
The cash outlay for the acquisition of the squeeze accounting for €52,000,000. The dividend payment for 1,000,000 and purchase of 1 shares of about 1,000,000. On the back of that, the net debt to be the pro form a ratio, the client to 1.9 times, from the to time to the back end of last year. Page 36, in closing the dry maturity profile, quite a very solid position worth, gross, long term gross which, you know, exceeds the the net debt. We have the €1,300,000,000 of bonds and loans, and we currently have 1,000,000 of excess cash which is more than enough to repay the 1st branch of, of, term loan expiring in 2019 for total consideration of about including other finance about 150,000,000 in one of euros.
I think this is it from numbers, Bob, or, you know, hand you over the the floor. Thank you, Paulo.
Before closing up with the conclusion and opening up to your questions, just a few words on our seeing activities where we're firing on all cylinders, you'll see that on after all, our events and our ability to scaled up events and making them more engaging is improving significantly. I mean, you might have seen some in London. In the late spring, early summer. On the other hand, we even had an event as large as, we're seventy thousand people enables with the concert. And, these things are really terrific for engaging with our consumers and getting liquid to lift and conquering them.
And Campari, also very, very successful in the growing week. I think this is probably one of the biggest drivers behind the consistent growth of, of the brand where food and Negroni were, recruiting a lot of new consumers, It's an event which started with about 100 bars 5 years ago. This year, we fully, again, full visibility, events, activation in 10,000 bars across 69 countries, So this thing has a lot of legs and clearly sends a message to everyone, including to some of our peers, if there's no Negroni without Campari. What I'd like to attract your attention to is, to the new campaigns, which we launched on Sky in June of this year. It's a new integrated marketing campaign, which we call Proudly American, and it celebrates, the spirit of today's bold and optimistic Americans.
The campaign juxtaposes famous phrases from American history, such as home of the brave, were very powerful, as you can see from the top up, to the right, and vivid imagery, featuring people who really do shine brightly in the face of adversity. We celebrate diversity and I'm proud to inspire today's articulation of being So this is quite a, important campaign. I think it will be very, very distinctive and make the mark for the for the brand. On the other hand, also very positive as we launched a new, infusion, watermelon, that they did so well. It went out of stock, so it hasn't happened for quite a while.
At least a little bit more optimistic for the performance of the infusions line. This year. Lastly, to close out, you can see that we're really focusing on driving, value with more premium line extensions across our portfolio as well as in our innovation. We just launched the very successfully, although on a small base, a Italian gin on Dina based on the basil, It's had a very, very good start in Italy and the UK and we'll roll it in Spain, in the second half of the year. So this is a brand and will nurture probably in the next 10 years to come.
Last but not least, conclusion and outlook. I think you've seen that we've had a pretty solid organic growth in the first half of this year, reflecting the very nice acceleration top line in Q2, which helped recover as expected the Q1 phasing issues. As well as help normalize the trends across profit indicators. Our sales mix continues to be quite favorable thanks to the consistent outperformance of our high margin brands and core high margin developed markets. On a reported basis, the first half, shows positive underlying trends, which unfortunately were impacted by the expected negative ForEx and perimeter effect.
Nonetheless, looking at the remainder of the year, our outlook remains broadly balanced in terms of risks as well as opportunities. Looking at organic sales growth, we expect it to continue to be driven by the outperformance of our high margin global and regional priorities in our core developed markets. The one exception will be Skye, where we'll continue to destock the brand in its core market, the U. S. Geographically, we expect the core developed markets to continue driving the growth, while slower margin emerging markets we'll continue to suffer from the overall environments.
We will have improvements in the second half, but overall, we expect them to be weaker than last year. Looking at organic trend and gross margin, we expect gross margin organic expansion to continue to be driven by a favorable sales mix. Which will help overcome the adverse significant adverse agave price impact. In particular, the gradual increase of the average purchase price of Agave as Paolo mentioned during the financial review is expected to accelerate in the remainder of the year. Generating clearly in the second half a greater dilutive effect than in the first half.
Looking at adjusted EBIT, the potential upside from a less adverse forex impact, especially U. S. Dollar versus euro, will be reinvested in accelerated brand building initiatives behind our key global brands, particularly Aperol, as well as to some selective strengthening of on premise capabilities as well as the creation of central capabilities for Branthouse's development. So with regard to the key underlying business indicators, we remain quite confident in delivering a positive performance in the full year 2018. This is it.
And we look forward to your questions.
Thank you, sir. Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer session. Please pick up the receiver when asking questions.
The first question comes from Mr. Edward Mundy of Jefferies. Please go ahead, sir.
Afternoon, Bob. I'm asking Paolo. Two questions, please. The first is on April. No signs have slowed down at all.
If anything is accelerating, How do you think about the opportunity for Aperol to be produced locally? Is that something you're thinking about? And what would the margin implication of that be? Second, a question for you, Paolo, on margins. I think at Q1, you were guiding to gross margin expansion about 60 bps.
For the year. I was wondering whether you could provide an update on your margin expectations, I mean, through the P and L growth gross margin A and P SG and A and EBIT for the year. And then finally, just one on Campari CASK tails. Are you able to talk a little bit more about the products and the thinking behind it? Is it something that is scalable, and something that could help premiumize the Campari brand or is it something predominantly being used for brand building at this stage?
Okay. I'll take the first and the third question first. I I mean, with regards to the questions on Aperol, I mean, Aperol is performing perfectly in line with its, with our expectations. I mean, the free stages model and having the markets in different parts of that model clearly, leads us to believe that we've got plenty of room to grow the brand. Now I assume the question is probably indirectly asked on, what happens is potentially customs duties in the U.
S. We would reluctantly, I mean, technically, not that difficult to produce a aperol outside of Italy. We could do that relatively quickly. On the other hand, we would do it reluctantly because we think that made an to the is quite important. On the margin side, yes, there could be a small improvement, but it's not what gonna change the destiny of the brand.
We think that the fact that Aperol is the number one cocktail in Italy, and that it is producing Italy is clearly part of the core proposition. On Campari cast sales, at the moment, we're still viewing it as a brand building tool. Canopy scales up technically it can. It's a very young initiative, and I think we'll make the call, next year. We'll see how it is, but it's definitely a great brand building tool.
It's really helping premiumize the brand.
Yes. On the margin front, you know, basically you know, let's let's try and and recap where where we are on the on the on the guidance. So, you know, I need to, you know, to break down the you know, the guidance into the 3 factors, organic perimeter and forex. You know, 1st and foremost, let's start from last year. I restated following, you know, the IFRS free class.
2017 on a restated basis, deliver 57.7% gross margin on sales. You know, A and P on sales came in at 16% and SG and A on sales came in at 20.1 percent with EBIT adjusted margin on sales of 21.7%. So this is, you know, last year. And maybe the point we made, last time we we had the call was, the business fundamentally is delivering, you know, on a on a sustainable basis, 120 spine gross margin expansion that is, partly, impacted by the, increase in the aggregate price. That is costing us 1,000,000 of roughly 60 basis points.
So in existing business, we were seeing, 60 basis points gross margin expansion and clearly 60 basis point EBIT adjusted expansion with no major swings in A and P and and A. Now what we're saying is, and then we would discuss, you know, a second later at the later stage of the Forex, you know, on the Forex, we have, you know, the positive impact, you know, I'll put it this way, you know, less negative impact of the U. S. Dollar. And so that is freeing up some resources that we will reinvest in, in A and P and SG and A, you know, If we wanted to quantify the impact at this stage of the year, we can say roughly 40 basis point, even if split between A and P and SG and A is 20 basis point risk between between the 2.
Then, you know, we have, you know, perimeter, as we all know, this is, you know, There is no change to guidance. We've disposed businesses that were in gross margin on sales, and this is driving about 130 basis point gross margin expansion on a reported basis. But on the other hand, these businesses were were low, A and P intensive. And so this is leading to 60 basis point dilution. And clearly, there is an impact of SG And A on sales as, basically, the supporting functions and the sales organization and the marketing teams were not reduced following the disposal of these businesses.
And this is leading to about 70 basis points as an address. So, you know, it's basically perimeter on EBIT level, was guided as neutral and remains basically neutral. With regards to to Forrest, and this is the good news. So here, we have, you know, a double effect. You know, the guidance we gave is, It was based on a on a forties of 1.25 on a euro per eurodollar basis.
Basically, we're running our numbers based on a simulation of 1.19. So we have, you know, some, positive impact. It is partly offset by further deterioration of emerging emerging emerging market currencies. You know, the the the reason of positive element in the in the effects in terms of in terms of marginality. So the transactional impact that is, caused by the devaluation of the dollar versus the euro that we've quantified in 30 basis points in EBITA in EBITA terms, 30 basis points on sale is now no longer there.
Because it's basically fully absorbed by the further deterioration of the emerging market occurrences. That, you know, are basically, hitting, low margin markets. So basically, of the 40 basis points, dilution of EBIT margin driven by step up investments in AP and SG and A, we do basically recover 30 basis from, from currencies. So basically, you know, the point is, you know, in value terms, we don't see any change, you know, we're probably slightly changed the impact of the 3 factors organic and Forex visavisprius prior guidance.
The next question is from Andrea Pistacchi of Deutsche Bank. Please go ahead.
Yes. Hi, Bob. Hi, Paulo. I also have 2 or 3 questions, please. The firstly, just to clarify and a little more granularity, please, on the margin.
In particular, on the gross margin, you were saying earlier there quite a they've been quite a swing from Q1 where gross margin was up 250 basis points in Q2 where you said it was neutral. You said that Agave, cost pressures have intensified. I think you said €4,000,000 for H1. If I assume that the 4,000,000 was all in Q2, that would be, I think, about a 100 basis points of of gross margin. So there is still quite a swing between Q1 and Q2.
Now looking at the shape of your top line, strong growth of Aperol U. S. Weak performance in Brazil and Russia would appear that mix benefits are still very strong. So I was trying to understand really what is the delta in gross margin performance between, between Q1 and Q2. And then on the SG and A, just to clarify your comment on G and A and A and P and the impact on EBIT.
Did you say that, because at Q1, you were saying that SGNA and, and A and P would be organically approximately flat year on year. Are you now saying if I understood that they will probably be up about 40 basis points, but this will be offset by the FX benefit. And finally, if you could possibly quantify the effect, what what you'd expect the in in euro terms, the effects impact on EBIT to be for the for the full year, assuming, as you said, the euro dollar 1.19. Thank you.
Okay. With regards to the gross margin, you know, there is, you know, the the the agro effect that is, you know, causing that, you know, 1,000,000 and 8,000,000 to come in, in H2. You know, I, I suspect that also in terms of, of, salesmen we, we had, you know, a negative impact from, local priorities, Corbinina, Campakasada, which in
the quarter, you know, were,
you know, softer than Then last year, thus, you know, guaranteeing the further denting the the gross margin in the in the second half. Now these brands are So I'll start also, you know, the performance of this brand is also driven by promotional activity. So as you phase into the different quarters, the A and P, the promo activities, you may have swings Sometimes that are, you know, quite quite profitable and can, can, can make the difference. With regards to the, to the SG and A and P on sales, yeah, it's it's correct. And there, you know, we we're currently envisaging 20 basis points step up in existing business on A and P.
And 20 basis points to step up on on the Azure and the SG and A line. So in terms of AMP on sales, you know, if you bundle the 20 basis points organic that I just referred to plus the 60 basis points, that are coming from perimeter. We are basically targeting A and P on sales of about 16.8%. So that's, you know, the target and the, and then we have, you know, the 20 business points on the SG and A line. With, with regards to the effects, the opportunity that we're currently seeing is about is about 6, 6, 7, €1,000,000.
So, you know, the the the the the the prior guidance was, 24,000,000, so it could be, you know, you know, €18,000,001,000,000 negative to the to the bottom line.
Perfect. Thank you.
The next question is from Simon Hales of Citigroup. Please go ahead, sir.
Thank you. Just a couple of questions, please, sort of Bob, when you talk a little bit about the forms of Grand Marnier, are the underlying perhaps depletion trends you're seeing, you know, the big performance, you know, a little bit by geography. And also where are you with regards to the HQ move in the US? In fact, you have to now have you managed to move all the people and key personnel across, that you want to do with that or stay in the throes of,
in a good to that process? Okay. Now with Grand Marnier, if you look at it on a global basis, the underlining right now trend is somewhere between low to mid single digit. The U. S.
Is currently running at, overall closer to mid single digit. And it's the largest part of the pie. And this takes into consideration, obviously, all the discontinuations and all of those things. Which are flushing out of the system. Now what's important is that we're starting to see the brand react positively in markets, which are outside of the U.
S. So there are the actions we took particularly on ending discounts, etcetera. We're a lot harsher last year than anything we've done elsewhere. So it's good to see the brand reacting. With regard to the headquarter move, I'm very pleased to say that it is complete and I sense that, all the people are now in, in New York.
They haven't moved into the final offices where the refurbishment will probably take about end of October. They're in temporary offices, but all of the positions are filled And, we've had some excellent local recruits. So we're in a very good position. I mean, obviously, this was a major move could have created a lot of disruption in kudos to our U. S.
Management team for handling such a large move in such a smooth way. Brilliant. Thank you. And can I just ask us
going back to Carla, your comments around sort of A and P spend and a slightly greater level of investment that we're now seeing for this year compared to perhaps what you were guiding to at the Q1? How do we think about the phasing of that through the second half in terms Q3 versus Q4 in terms of the big programs that you potentially got coming down the pipeline?
Yes, the current school is, heavier on 2 3 than, versus
last year. Okay.
Thank you.
The next question is from Javier Gonzalez of Berenberg. Please go ahead.
Couple of questions. Firstly, I wonder if you would be able to share with us what the average gross margin of the regional priorities is. And also another number I'm after is the, growth rate in the US business excluding Sky. If you could, give us your views as to what you think it's running at. And lastly, very simple question for you, Bob, probably, but I I would be very interested to hear from you what do you think is the biggest challenger to the Approw brand or biggest competitor.
Thank you.
Well, I'll start with the last one. I don't think, you know, the success of the Apparel spreads is convincing many of our peers to somehow turn some of their existing clients into spreads brands. Most of them really don't have the credibility for that. There's some me too activity, again, that has short term impacts but then they wash through the system because they're not able to duplicate our our quality. I think if you really think about it, our source of business is beer.
So clearly beer is a competitor. And to a large extent, also the phenomenon of, ginantonics Yeah. That was the last question. Sorry, I forgot the first one.
Yeah. The first one is, if you could share with us what the average gross margin of the regional priority brands is.
No, unfortunately, we don't disclose that, but I mean, clearly, the spirits brands have a much higher gross margin than the, sparkling lines and the vermouth. And, you know, some of our regional SpiritS brands have gross margins very similar to the global priority brands.
Okay.
And the question on the US business, the growth rate excluding Sky?
I'd have to get back to you on that, but, I mean, we can go through them individually. I mean, if you look at it, you know, the bourbons are growing high single digit, mid to high single digit on the runs. Takeda is going at a very strong double digit, the FPA chiefs, as well. I mean, Aperol is almost doubling Campari is growing in the 15% ranges. So net net, quite robust growth.
And if I come one very last question, you've mentioned in the past the different stages, at which you might be with the when you log launch after all into into new markets. And I wonder, the efforts, you make in, in moments, your markets did deseasonalize the brand just wonder whether you could give us some color in terms of how successful you've been at that, maybe in terms of, you know, flacking it out, or this, let's say making the sales throughout the year more consistent.
Yeah. I mean, if you look at some of the original markets such as, you know, the 2 oldest ones, Italy, and, and Austria, I mean, our seasonality would be close to that of the year. We've been pretty successful going into skiing resorts, running events activations in key cities in the fall as well as in the, early spring. So, that's working quite well. Germany, we're starting to get there as well as Switzerland.
The the other ones are more at the the other markets are more at the beginning. But the most important thing is that we see that the growth models, which we apply in Italy, which is really our laboratory. End up working out in all the other markets. It's just a question of time.
The next question is from Chris Pitcher of Redburn. Please go ahead.
Thank you. Good afternoon everyone. A few questions just to follow-up on the the Grand Marnier shipment phasing, and looking at the first half, would would the first half be a more normal seasonal sales profile? Such that we should expect, you know, a modest negative in Grand Marnier in the second half as you sort of rebalanced to get to that sort of mid single for for the full year. Then, secondly, on the sky, destocking.
Could you give us a bit more color behind that? Because because the brand that it is in decline, you would expect to see a natural destocking by wholesale sort of keep ahead of the declines was there's something more fundamental, behind that. And then thirdly, I appreciate it's small, but you mentioned China was flat. Could you could you update on how the new relationship with Camu is going in China and whether that caused any disruption because other players in China are reporting obviously better growth currently. Thanks.
Yeah. I mean, bear in mind, the China numbers which you see are our shipments to come in. So they they don't reflect the underlying depletions in the market, which are positive. So you'll have swings and facing effects from when they order product from us and when we ship it to them. I wouldn't read anything into that.
Now if you look at your first question on Galvani, I think mathematically you're correct. The brand is running more than mid single digit. So we'll balance out, throughout the second half of the year. And with regards to Skye, it's, actually us, deciding to keep a certain number of days of stock on hand at our distribution partners, particularly the largest one representing about 80% of our sales. There's nothing more than that.
It's just the right way of doing business. And we'll adjust when we see the brand stabilizing, which it looks like starting to do, particularly as I said earlier in the Natka markets. Obviously, that's turning slightly positive on consumption terms.
So if you're it's very much your decision on on your mathematics, it
should normalize by the end of the year. Yes.
Okay. Thanks so much.
The next question is from Maureen Buschiro of Raymond James. Please go ahead, ma'am.
Hi. Good morning. Just going back to the gross margin,
Hello?
Yes, we're here. Yes,
yes, sorry. Just going back to the gross margin, in the full year, I was wondering how do you see the impact from scope and for X, impacting H2. So at H1, it was, fairly positive. I would see it as remaining over H2. And then second question, there was a lot of markets rebounded in in Q3 quite shortly.
How do you see these markets evolving, I mean, throughout the year? And, also, she could give us some color on more got the emerging markets like Brazil or Russia?
Oh, let me take the first question. As I said earlier, the market hardest hit in which will be hardest hit on a full year basis is Brazil. I mean, we're down significantly on the local brands in the first half of this year, they will start improving in the second half. But overall, we would expect Brazil to be down in the high single digits on a full year basis. On the other hand, remaining in the geography, we'd expect Argentina to swing around, and to actually grow in the high single digits on a full year basis.
A lot of what happened in Argentina is as being very tight on credit offered to customers, whereas the locations of our clients is is pretty healthy given the market context. Now moving into Russia, we've had that bump, let's call it that way, on a trajectory in Q1 where the discussions with our largest customer on price increases let us know where we didn't ship anything to them in Q1, started resuming shipments in Q2. As you know, the seasonality of our largest, you know, products are very much, in Q4, on Christmas New Years, where the sparkling lines so we expect to recover to certain extent. But the most positive thing is to see how our mix is changing in Russia. Particularly driven by Aperitis with again, very strong performance by Aperol and Campari as well, and tequila So we feel good about the Russian business.
You know, if I got you correctly to to gross margin trend for the, for the second half of the year, you know, it's, it will be, you know, overall, positive, you know, gross margin expansion also in the in the second half as well, you know, not not clearly as strong as, the first half, which deliver 110 basis points organic expansion of of, of gross margin. This is clearly, impacted by, you know, by by the Agaveen, which is, you know, costing gas you know, €8,800,000, €8,000,000, and it is, you know, we need to run the math, but, you know, it could be, you know, I, as probably 90 basis points, something like that in the second half.
Okay. And on the parameter and FX impact, you expect it to be lower than what it was in H1. I mean, lower than the 100 bps margin expansion is triggers on gross margin.
Right. Perimeter FX in the second half is, is still negative. But this is not, you know, as negative as in the first half. And perimeter, you know, perimeter is, you know, the impact is is evenly split between H1 and H2 and on our major differences, you know, more or less, more or less
is the same.
Thank you.
The next question is from Emma Lester of RBC. Please go ahead, ma'am.
Hi. Just one question from me. Wondering if you could quantify the gross margin impact from improving sales mix in the first half. Just so I can get an idea of how significant other factors such as promotional activity were.
The, you know, the gross margin, 110 business points is entire expansion is entirely driven by improvement, but we offset by the, by the other. So, you know, other input costs are fairly neutral on in of other input costs, having neutral on on gross profit. As we managed to increase, net sales, you know, prices in line with, with our plans. So, you know, as I said, you know, Tequila is, is a 4,000,000. So it's probably in the first half, fifty basis points.
The next question is from Paulo Carboni of Equita. Please go ahead, madam. Hello?
Yes. Hi, Fala. Where are you?
Good afternoon, everybody. So a few questions for me, just to or some something you you said also, in particular, can you comment again about your, new, indication for SG and A I got the the previous, in guidance of, no strings in organic terms. It's now going to, minus 20 bps. If I understood correctly, but then you mentioned the €6, €7,000,000 opportunity. So I I got confused.
Sorry about that. If you can repeat. And then, ForEx, if you can share with us what the absolute impact would be with your assumption of the one point 19 for the US dollar. This was already asked, but, probably, the answer was missed. Then, I was interested in your, for a company, so that in the Crodino considering that today might be, an an a driver for a a profitability.
And also, sorry if you have, any indication or help, about how long it might take for a a Sky to stabilize both in terms of sellout in the US and of Celine. So how much father month of destocking are you on diesel gins? Thank you very much.
Yes, I'll take the last one, Paolo, if the way we've planned it, it's a gradual destocking throughout the year, so that we'll finish at the end of this calendar year.
Hey, Pamela. My comments on, on, on organic changing, margin guidance is, you know, on, you know, we're, we're basically saying that, you know, we've guided towards 60 basis point EBITDA margin expansion in existing business driven by gross margin expansion of 60 basis points.
Mhmm.
And so
now we're saying that, you know, we will lift in existing business. So A and P on sales by 20 point and SG and A on sales by 20 basis points, totaling 40 basis points. This is an investment that is offset by, you know, some some positive news on on the effects. That, you know, we've quantified in about, you know, €6, €7,000,000 from from USD. Partly offset by deterioration of other cars associated with such as 5.
So from from €20, €24,000,000 negative each on the, on the on the effects that the EBIT level will now probably expecting to have a negative impact in the EBIT line from products of about 1,000,000. 18, 19,000,000. So that's the the comment. You know, the whole, you know, the whole, you know, the whole assumption, the underlying assumption is assuming that we will manage to heat an average USD effect a USD your effects of 1.19. Versus 1.25, which was, you know, the underlying assumption for prior guidance.
The next question is from Nicole Von Stackelberg of Liberum. Please go ahead.
Hi guys, you're well aware of the moderation trends going on in the spirits industry. So for example, Diageo seed lip or an old card came out cedar. And in fact, Diageo are are further extending this. They have Gordon's as a ready to drink as a low ABB. And also Peddle 1 Botanicals, which is also a lower ABB spirit.
So what are you doing in this space? What's the plan? Just curious, how you guys are seeing that?
Well, you know, our view on, you know, regular ABV brands is to not to play around with ABV. We think that playing around with ABV on existing brands is really very dangerous in the mid to long term for the brands. So we're not going to do any of that. And we're not also all that keen on doing ready to drinks and all of those things. We have them in a few selected markets for its market practice, but that's where we're keeping things.
But if you're looking at the nonalcoholic opportunity, I mean, frankly, we have a gym in our hands with, the Caribbean range. We started in the past 2 years to start testing it in various central European markets. It's doing very, very well. So We will build up on that.
Okay. That that's good to hear
because I've been wondering about Cardino. My, my so are are you guys considered bringing Cardino to,
you
know, to to, for example, like the US or maybe just to further develop its its exposure here in the UK. And then, also as sort of, like, a adding on to that, you know, you you also have built some gems pretty much out of nowhere with the Kokano, and I'm thrilled to pronounce it. But, Georgina, just wondering, if if those could be expanded further into, other markets maybe for FY19. Thanks.
Yeah. I mean, our overall philosophy is to establish solid foundation to our brands, and develop growth models in selected markets. And after a few years, then we expand them into other markets. So you know, we take mid to long term view to this. There's no need to rush things.
We're not taking quarterly numbers. We're doing brand building. So, yes, eventually, I'll have those brands will spread on a global basis, but we'll take our time.
Yes. Go ahead, sir.
Ah, one last question If
we have a final question from Edward Mundy of Jefferies. Please go ahead. Yes,
we can have a Campari conference call, they're asking the M and A question. So I was wondering whether you could could possibly provide any granularity or any color at all on on how the pipelines are looking and sort of appetites, and readiness for M and A.
Oh, the appetite and readiness is there, but, you know, we have stringent criteria. So it doesn't mean that just because something pops up on the market, we're gonna go after it. I would say the pipeline is maybe a little bit, softer than usual, but, I mean, there are always very interesting leads we're working upon. You never know.
Great. Thank you.
We have a follow-up question also from Paola Carboni at Equita. Please go ahead, ma'am.
Yes, sir. Just a follow-up question. I don't know if there is already an answer on that, but I would appreciate do you have any indication on how your portfolio breaks down, in terms of, the case? Pronunciation, we can say. So, clearly, we have a breakdown by global priorities by brand and so on and so forth, but considering that, you are pushing more and more premiumization strategy, and going toward kind of, I think part of your portfolio is going towards the kind of luxury offering we can say, especially for a speed.
It's, I don't know if you have already any kind of indication of, how, actually, you're offering this changing and this back, in terms of price brackets, for example.
Thank you very much. Yes. Thanks.
It's a good question, Pavel. It's not something which we're actively tracking because the definition of what is premium. Multi premium is very much related to individual markets. So if you mix up all the numbers, you'll get a end up with an omelet. This is something we do on a market by market basis.
And clearly, the focus is much more on the, in the U. S. And our core European markets at this stage.
We have a follow-up question from Andrea Pistacchi of Deutsche Bank. Please go ahead.
Yes, thanks. I've got 2 more quick, quick questions, please. First one, on Aperol in the U. S. You've been, I mean, you've recently been recently taken into new cities in the in the U.
S. If you have any sort of early feedback on how on how that is going, whether in some places it's working better better than than swear. And then the second one for for Paolo on, on CapEx, and I think the number was particularly low in this H1 I imagine this was a I I don't know if this was a bit of a bit of a one off. Whether, for for for the year, there should be a higher number.
Yeah. Andrea, with regard to Aperol in the U. S, we're in the thick of it at this moment. I mean, everything is going in line with plan. So we feel good about it, but, you know, I'd rather wait, until the end of the year, at least the end of the Q3 to pass judgment on how things have worked.
I mean, it's very encouraging. I don't know if you caught it, but, you know, the likes of the New York Times have called Aperol the drink of the summer 2018. So obviously, you know, quite a few people are picking up those wonderful, glowing orange wine glasses.
Yeah. With, with regards to CapEx, you know, guidance is, basically unchanged you know, we we were shooting for €72,000,000 of overall CapEx, including the €1500,000,000 of extraordinary CapEx, and it's €7,000,000 of maintenance CapEx. So the life to go is, is quite big. We have about, you know, if €54,000,000 to to go for for the rest of the year,
of which, you
know, 40 maintenance and and 14 in extra ordinary.
The next question is from Mitch Colette of Goldman Please go ahead.
Hello. I just wanted to get a bit more color perhaps on on top line growth for the full year, but there's a few puts and takes, I guess, in the first half and between the first and second quarter. What do you see as a better guide to the full year growth rate for your top line? Would it be the the second quarter or the first half. And then one, unrelated follow-up, you had an 11,000,000 increase in aging liquid during the first half, which is a bit of a step up on the run rate from last year.
And can you give us some color on which brands you are your investment in aging stock? Thanks.
Yes. Overall, I wouldn't get too hung up by quarters Q1, Q2. I would look at the half year results. And, especially on the Aperitifs and the key global, brands see it as more indicative with the exception of Sky and Kaumangier, which will, even out during the year, because there are very inverse trends between Deficience and shipments
Okay. And the and the reversion for those 2, broadly nets each other out. Is that right? So Okay. And then are you in stock?
Well, on stock, I think, are you talking on an organic basis or overall? Because overall, clearly, what the inclusion the age liquid to which came with the, whiskey acquisition.
Okay. Understood. Thank you.
The next question is a follow-up from Mr. Nico Von Stackelberg of Liberum. Please go ahead, sir. Sorry. The next question is from Chris Pitcher of Redburn.
Please go ahead, sir.
Yeah. I think, Mitch's question, obviously, the one that I was going for, to confirm, I I'm trying to get the shipment movement on Sky and Grand Marnier in the half, and they almost exactly match each other about €8,000,000. Is that the right way? To think about it one positive or one negative. They're looking forward to Q1 next year.
They they even out that, that just to confirm that.
There are no more questions registered, sir.
Well, thank you very much for joining us. We're a few hours away from vacation So
we wish you
hold on a second. We, we wish you a great summer and, enjoy all those wonderful orange and red glasses. Thank you. Bye bye.
Bye. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.