Davide Campari-Milano N.V.

Good evening, this is the Coruscall conference operator. Welcome and thank you for joining the Campari Group 9 months 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Paolo Marchesini, Chief Financial and Operating Officer and Interim Co-CEO of Campari. On this call, there will be also Chiara Garavini presenting. I now hand you over to Mr. Marchesini. Please go ahead, sir.

Thank you for that. Good afternoon and good evening, everybody, and thank you for joining us today. Given the current circumstances, today with me we have Chiara, who will help me walk you through the presentation deck, which is, as you can see, quite thorough and long. But we'll do our best to keep it as short as possible to leave some room for the important Q&A sessions. In order to provide you with a comprehensive perspective of the many important messages contained in the presentation, including the ones relating to the company reorganization and the cost containment program, we have prepared at the beginning an executive summary, which you have to consider it as the of the presentation. So if you could follow me to page two of the deck, you see the three conceptual buckets of current year performance, key company initiatives, and outlook for year 2025 and beyond. Weiss continued to outperform the industry in key brand market combinations, mainly thanks to aperitifs and tequila, we have to say. Overall, nine-month strength reflects a challenging backdrop due to macroeconomic and sectorial and climactic factors, with a peak in the third quarter of the year. Looking into the rest of the year, cyclical macro headwinds are expected to persist. Full year profitability will also reflect impact of fixed structure costs and committed business investments, which would generate a drift in SG&A pattern in Q4 as it did in Q3. To fully exploit the long-term potential of our diversified portfolio, which has increased a lot following the many acquisitions we finalized, with an increasing share of aged premium spirits, our operating model will evolve towards an organization that combines on one end four newly created houses of brands, two in Europe, aperitifs and cognac and champagne, and two in the u.s tequila and whiskeys and rum on the other hand so on one hand we have the four newly created houses of brand and on the other hand those houses of brands would leverage the existing uh three regions of america's uh emea and an impact in addition We are envisaging an acceleration of portfolio streamlining, which means disposals of tail brands, which will enable to enhance focus on our key priorities, the brand sitting within the brand houses. So the combination of the above two initiatives, so the change in the operating model and the streamlining of the portfolio, together with a significant cost containment program, which we will talk through in coming charts, will allow us to achieve a more efficient cost of doing business, which is critical to support the AMP investments. Now, looking into 2025 and beyond, as the impact of the above cyclical factors fades away, We expect to continue to achieve sector outperformance, which is quite clear. We will go through the outperformance by market and particularly for Apero. With a gradual return in the medium term to a mid to high single digit organic growth in top line in a normalized macro environment. On the other hand, the profitability will be supported by accretion on gross margin that was there and will resume over time. creation of operating leverage you know part of it is also the cost containment program and increase efficiency in brand building spend which is one of the many outcomes of the change in the operating model now if you follow me to the following page three uh in nine months our organic net sales grew 2.1 percent driven by global priority brands primarily in the americas and in emea Notwithstanding, you know, many negative impacts, namely very poor weather conditions in spring and September, some pressure on disposable income from rising inflation, and reduced confidence both on consumer and distributor's end. In the third quarter, the organic net sales grew by 1.4%, reflecting the soft market context, despite the outperformance versus the industry in key brand market combinations. If you look at the three regions, in the Americas, we see, particularly in the U.S., persisting challenges in selected categories, and we'll go through those. An extraordinary impact of hurricane in Jamaica in Q3 leading to supply shortages of run portfolio both for the local Jamaican market as well as for the international markets. If we carve out impact of supply shortages, our net sales would be flattish in Q3. And those negative factors more than offset the ongoing growth in our aperitifs portfolio and on Espolon. In Europe, particularly in on-premise food markets such as Italy, the poor weather conditions at the beginning of spring, summer, as well as in September, coupled with the already mentioned softer than expected consumption led to below expectation reorders in the back end of Europe. the third quarter in the month of September. In APAC, net sales have been impacted by persisting challenges in macro, particularly in China and Australia, and also, you know, adverse trading conditions. The EBITS organically declined in nine months by 4.2% with a marginal 21.9% down 140 basis points versus a year ago. In the third quarter, the organic decline accounted for 18.2% and was mainly impacted by inefficient absorption of fixed costs, particularly both production as well as SG&A. In gross margin, you know, in nine months, we had a slightly dilutive effect of 10 basis points, which was entirely due to negative mixed effect from impact of poor weather and macro impacting the high-margin aperitifs in Europe, in EMEA. The positive pricing in the first nine months was fully offset by COX increase. And, you know, as said, both pricing and COX increase were mainly skewed in first quarter. And of course, you know, the negative impact of lower production volumes drove lack of absorption of the production cost. AMP with ongoing focus on brand building during summer, despite impact of lower activations due to, you know, poor weather, led to AMP on sales at 16% versus 15.9% in prior year. The SG&A has been impacted by continuation of planned investments, including route to market enhancements in a softer market content with muted safe performance leading to lower absorption of fixed costs. Free tax profit of 146.3 million euros was down by 5.6% on an adjusted basis, on a reported basis down 6.1%. If you turn page and we go to page four, We see the performance of our regions and our brands in one pager. So starting from America, which accounts for 45% of our global revenues, vis-a-vis pre-pandemic, year 2019, CAGR has been up, you know, double digit at 10%. In nine months, 2024, we're growing by 5% over a comp of last year of 7%. So, you know, quite a solid performance. In EMEA, which accounts for 48% of our revenues, since pre-pandemic, the CAGR accounted, again, double-digit for 11%. In first nine months, we're up 1%, but the comp is extremely tough at 12%. In APAC, again, double-digit CAGR, 11%. In nine months of 2024, we're down 10%, but the comp is even more challenging at 27% in nine months 2023. Now, moving on to brands that we clustered into global priorities, regional priorities, and local priorities. Global priorities were up 68%, so account for 68% of our total revenues. They were up over the five years horizon, 13% in CAGR. In nine months, they are up 3% over and above a comp of 13% of last year. Regional priorities that are now, you know, a smaller portion of the pie at 17%. They were up 8% on a CAGR basis. You know a decline of 2% in first nine months of this year versus an increase of 3% of last year. And local priorities then now account for 6% of total revenues. They were up mid single digit at 6% on a five year horizon. They are now down 1% but with high single digit companies of 7% in nine months 2023. If we move on to the Americas, 45% of our revenues, as said, you know, 5% in nine months, organic growth, 1% in Q3. Starting from the biggest market, the US, 28% of our revenues, CAGR at 10% since 2019, slight performance in Q3, 0%, resulting in 2% growth in nine months in a quite subdued market context. The performance in the third quarter was impacted by persisting challenges on three fronts. Sky, some softness in Wild Turkey and Grand Marnier that, you know, offset the continuing outperformance on our three, you know, star performers, Espolon, Aperol and Campari. Worth noting that Espolon in first nine months of this year is up 18%, over and beyond the comp of 40% of last year. Aperol is up in the U.S. 7% over and beyond the comp of 51% of last year. And Campari on the back of the Negroni week activation in Q3 is up 16%. Jamaica, 5% of our revenues, 10% CAGR since 2019. Q3 performance was badly impacted by the hurricane in July, which led to product availability constraints, as well as a softer local operating environment. The cumulative performance supported by price increases, both in Rams and Campari, was, you know, enough to offset the negative impact on volumes and in doing so achieving a plus 1% in nine months. Other markets in the Americas regions, they totally, in total account, 12% of group revenues. They've been up double digit 12% since 2019. Ongoing solid performance, mainly driven by double digit growth in Brazil, where Campari is growing quite quickly. And local Brazilian brands quite on a good trajectory. In Argentina, The positive trend, we started in Q2, accelerated further in Q3. You know, in Q1, we had a poor performance. Whilst also in Canada, we have a quite solid growth, mainly driven by both Aperol and Espolon, like in the U.S. Now, a little bit of, you know, perspective on the external, you know, sellout that I think is important for the largest market of America is the U.S., We can see that, you know, the read-across of this chart is that the group is outperforming the sector, particularly in the on-premise channel, which is, you know, strategic to our brand building model. And that is achieved while maintaining a very high pricing discipline. Now, if you look at the three channels, the news and off, NABCA, news and on, The value, which, you know, of course, as you know, comprises both volume and price mix, performance for Campari is 3% against a sector that is negative by 1%. So we have, you know, a bid to sector performance of 4% in the off-trade. In NAPCA, same, 4%, and Nielsen On were up 1% against, you know, market that is declining 6%, so a delta of 7%. Of course, on the back of, you know, reduced disposable income and reduced consumer confidence among the two channels, Off and On is the On that is currently suffering the most. If you look at price mix trajectory, talking to our pricing discipline, in nine months, we're up with our portfolio 3%. Market is up 2%, which means that we're growing prices 50% more than market. Same in NAPCA, whilst we're on par with market in on-trade. Now, if you look at still the U.S. market, if you follow me to page seven, this time around, you know, not by channel, but by brand, you'll see that it crosses solid ongoing performance in key accelerator brands, i.e. Aperol and Up and Espolon, which was partly offset by challenging trends in other categories, and we'll go through that. Now, if we start with Espolon, bologna will separate you know for each and any brand shipment from sellout performance and within sellout you see you know the three channels consistent with the prior chart shipments in first nine months have been up 18 percent against a very high base of 40 percent if you look to the right hand side there is a significant outperformance in sellout so In on-premise, you know, Esplanade is up 23% versus 8% of tequila, so, you know, delta of 15%. In NAPCA, up 27% versus market 7%, delta of 20%. And on-prem, again, we're up 13% versus a negative on-prem performance of tequila of 2%, so a delta of 15%. Of course, the Espolon volumes are mainly, you know, increase, sorry, the Espolon performance is mainly driven by volume performance. But also on price mix, you know, the brand is performing quite nicely. If you take the third quarter in isolation, the price mix on Espolon is a 3% versus a 2% of the category. So we're performing better than the category. If we take Aperol, same, you know, picture, the shipments in nine months are up 7%, but against a very high comp base of 51%. If you look at the sell-out data, again, very positive trends with strong outperformance in key strategic on-premise channels. And actually, as you can see, you know, in on-trade, we're beating market by 17%. We're up 15% versus a negative 2. In NAPCA, which contains on, we're up 17% versus a positive 1 of the market, so a delta of 16. But also in OFF, which is not, you know, the primary driver of our upper brand development strategy, we're still up 10% versus a market that is up 1%. Wild Turkey in carbon category shipments are negative and negative 6%. And those are, you know, the trend is impacted by soft category dynamics. You know, the overall Wild Turkey franchise also has been negatively impacted by temporary shortages on Russell Reserve, which anyway, you know, now represents 17% of the Wild Turkey portfolio. You know, worth, you know, signaling that, you know, Russell Reserve is a brand that is extremely successful. You know, since the pre-pandemic, the brand grew two times in volumes and four times in value. And, you know, a brand that, you know, last year, sorry, this year, we managed to reposition at about, you know, $55 per bottle, taking, you know, five to 10 price points increase this year in a very challenging market. So, you know, this is why, you know, volumes are, seems to be, you know, softer than the category. So, you know, on pricing, price mix is clearly, you know, in the context of increasing and intensifying competition in Bourbon, you know, we're doing quite well. On Grand Marnier, the shipment grew in nine months 10% of a low comparison base of a negative 34% due to the fact that we're cycling through last year, the stocking of Grand Marnier. The sellout is marginally below category trends, and that was entirely driven by volume, as the price mix on Grand Marnier in the first nine months is pretty flat. You know, clearly, you know, we've taken actions to improve the performance in coming quarters with a focused AMP approach, including the partnership with 2Chains. Of course, if you look at the, you know, trading backdrop, you know, we're noticing in in the sector, you know, increasing and intensifying pricing pressure from competition. If you look at Sky, you know, the nine months results are negative 13%, which are, you know, below, you know, the sellout trend and continues to be under pressure, but in line with other major players in the categories. Um, in a category, uh, any needs particular needs of premise, uh, you know, uh, channel, uh, going forward, you know, the, the, the gameplay is to, um, stabilize volumes via limited AMP investments and focus on, uh, on, uh, on innovation. If you move to onto, uh, page eight, uh, uh, EMEA, uh, which has said is 40% of group revenues in nine months is up 1%. with, you know, a small decline of 2% in Q3, starting from Italy, 16% of revenues. Still, in a very large market, since 2019, we've delivered 7% CAGR. The third quarter has been impacted by significantly, as said before, below expectations reorders in the back end of the quarter. with the impact of very adverse weather conditions, both at the start of the spring summer season as well as in the month of September. Just to mention, in Milan, we had the highest rainfall in 250 years, particularly in the northern part of Italy. leading to lower wholesaler appetite to hold stocks. So, you know, the wholesale channel is critical in the Italian market is at the moment that is talking. On the other hand, you know, we've regularly checked, you know, the key brand health indicators, KPIs, and on our portfolio, particularly in the aperitifs, you know, the brands are extremely strong. So, you know, the, the issue that we're seeing is, you know, more macro, you know, and, you know, related and it's definitely not, you know, uh, brand health related. In Germany, that is a 9% of our revenues. You know, again, a double-digit CAGR since pandemic, 13%. Third quarter performance impacted by high, very high base, 39% in Q3 of last year due to the releasing of Apero in the second quarter of 2023 following, you know, commercial disruptions. Aferol remains in Germany the clear market leader with strong brand health. Whilst this is the good news, you know, the launch, the recent launch of Sarti Rosa is taking, you know, quite a good traction. It's now 6% of German revenues, and we're expanding the brand in neighboring markets. So, you know, Austria, Switzerland, Belgium, and so forth. Clearly, it's... It competes in the spritz category, but it addresses more female consumers who definitely prefer sweet products as opposed to bitter ones. Moving on to France, 5% of our revenues. you know, very strong, very strong CAGR since pre-pandemic, 83%, a decline of 8% in Q3 in a very challenging operating environment, which is primarily impacting, you know, how promo intensity categories like whiskey and rum, and clearly we're not following that avenue of deep discounting and increasing promo frequency, whilst the aperitif portfolio remains in France, you know, quite resilient. resilient now in france of course we also distribute third-party brands if we excluded the performance of agency brands in nine months we would be flattish as opposed to negative three percent in the uk which is three percent of our revenues the kager since pre-pandemic is 16 percent and it's you know relatively uh stable uh across you know the performance is relatively stable across most of the portfolio in a quite challenging operating environment, as in France and in Italy, with negative impact due to weather, particularly in the second quarter. And, you know, the resilient performance of the rest of the portfolio has been offset by weakness in the Jamaican ramp and in manutonic due to the supply constraints from Jamaica, which I've alluded to before. In other EMEA markets that account for 15% of group revenues, we achieved in five years a very strong performance, 10% CAGR, with double-digit growth driven by, sorry, nine months driven by positive contribution from most markets, and in particular GTR that is registered within EMEA as it's managed out of here, with nine-month performance of 23% up. but also, you know, other markets like Spain, Austria, as well as the recently established, you know, Greek in-market company. They are all performing extremely well. I think, you know, the launch, the creation of our in-market company in Greece has been extremely successful, and we do see the acceleration of Aperol and Campari in this market. It is crucial to developing the brands because it's not only local consumers, but it's also exposed to international tourists. The share of Greece on the total group is now at 1%, so, you know, quite satisfactory results. Now, if you look at, you know, what is happening, you know, outside of the group, you know, in sell-out data, a few more, you know, data sets for European market, both, you know, channels as well as then markets. Europe off-trade... So in value, we've been up 4% in a market that is declining 1%, so a delta performance of 5%, with, again, a solid bid on price mix front, 3% versus 2% of the sector. Now, if you look at the performance in Europe today, Index 100 being pre-pandemic, year 2019. The market in Europe overall grew by 11%, so index 111. We delivered, you know, a growth of 73%, 133 indexes. With the only exception in Italy, and I'll come to that in a second, you know, in all other markets, you know, we're clearly beating, you know, the reference market. In Italy, we actually are index 117 versus a market of 125. But this is due to the fact that, you know, this is off-trade performance, and clearly, you know, the brands, you know, the aperitif brands in Italy, they are consumed in on-trade. That is where we're gaining market share and we're doing better, or at least in line with the market. In Germany, we're indexed 167 versus market 104. In France, 277, market 103. In the UK, 299, market 113. In Spain, 253, market 130. So the real across is that in markets where we've established our own in-market company, recently, France, UK, and Spain, you know, we're performing way better than the market because we leverage the infrastructure investment to accelerate, you know, our portfolio, particularly the aperitifs in Europe. And the second, you know, key takeaway of this chart is that if you look at the market share of Campari in Italy and Germany, what we have, you know, fairly established, um, you know, business and where. you know, the penetration of Apero and the Aperitif is already at a very, you know, good level, although, you know, plenty of opportunities there. In other markets like France, UK, and Spain, we're between 1% and 3% market share. So there is plenty of opportunity to extract further growth out of these markets. Now, looking at the sell-out performance on a market-by-market basis, if you look at the Europe, you know, the lead across is that there is some softness across the board in sell-out, and this is clearly, as already highlighted, triggered by weather and consumption patterns. But within that context, the company group is outperforming everywhere. So if you start from Italy... Left-hand side, we have shipments. We are down 6%, I said, due to poor weather in both spring and September, and softer macro leading to China's stocking. Now, you have to understand that Italy is, you know, a highly fragmented on-trade environment, and the go-to trade, go-to on-premise, is via a multi-layered wholesaler structure, so it's quite a long distribution chain. And so, you know, this is where we're seeing, you know, the big, you know, the shrink as, you know, wholesalers are trying to reduce, you know, the capital invested. And on top of that, you know, the shipment performance has also been negatively impacted by a commercial dispute with a certain retailer, which is extremely strong in C-stores. a convenience source where, you know, it's clearly the channel where we build, you know, the Aperol and the aperitifs at home consumption. So, you know, the shipment doesn't reflect the sellout that is, of course, negative, 1% in Italy, as a Campari, in line with sector. So, you know, the shipment performance is way above, you know, the market trend. If you move on to Germany, we have a negative 6% shipment performance, but worth noting that the positive 5% shipment performance, but over and above a 25% nine-month performance in shipments. And in Q3, you see the 6% decline over and above a con base of 39% in Germany. So clearly, you know, the performance is good. And this is, you know, the last year performance is due to the relisting of Aperol in one of the retailers. If you look at the sellout, actually nine months, Campari Germany is growing 13% versus a market that is up 1%. So we have a debt of 12 points. In France, The shipments are negatively impacted by soft sector backdrop, a negative 3%. You know, the subdued sector sell-out trends shows, you know, a company performance that is slightly below the sector, slightly below, negative 5 versus negative 3, due to the two categories that I've mentioned, rams and whiskey, whilst, you know, the aperitifs, you know, keep on growing in France. And actually, even considering the rams and whiskeys, the overall Q3 sell-out is trending better than the sector, still negative, but better than the sector, driven by the acceleration of our aperitif portfolio. In the UK, the shipments are showing negative trends, negative 8%. This is mainly due to the already mentioned supply constraints, the negative impact in both Jamaica rams and Magnum tonic. If you look at the external sellout data, the sector is soft, is a negative 1%. Although, you know, we see some signs of our performance improvement in the Q3. We're up 6% against the market that is still negative 1%. If you look at the rest of the European markets, the shipment performance is quite strong, you know, 12%, a double digit as it did as it performed last year. And the growth that is extremely sustained is across all seeding European countries. And this is clearly mainly driven by our operative portfolio. If you move on to APAC, which is just 7% of our revenues. I said in nine months we're down 10% and 8% in Q3. Actually, Australia, which is 3% of our revenue since pre-pandemic is up 5% on CAGR basis. The performance has been impacted by challenging macro in a very competitive environment, impacting particularly the Y30 portfolio. On the other hand, Aperol and Campari, they show double disease growth momentum in Australia. And this is extremely encouraging because we're getting, as we speak, to the peak season for aperitif with a very good trajectory. in uh in australia espalon as well although of a small base is growing uh double digit also thanks to the newly launched espalon rtd you know clearly now that espon is no longer constrained in terms of liquids we're pushing you know the brand in every single market as we see you know a lot of potential on tequila in international markets So in Australia, we also, you know, our business is not only selling, you know, our own products. We also have, you know, a fairly significant co-packing business, which is negative. So it's bustling of, you know, RTDs for third parties. So if we carve out the poor performance of co-packing business, Q3 would be up 8% and the year-to-date performance a negative 3 versus a reported negative 9%. You know, in the other markets of APAC that account 3% of global revenues, the performance since pandemic is quite strong, 20% CAGR. In nine months, the performance, you know, the shipment performance has been mainly impacted by India, South Korea, and China. That, you know, more than offset the ongoing growth in Japan. And Japan is also leveraging the recently successful launch of the Wild Turkey highball ready to drink. In South Korea, in Q2 and Q3, we're benefiting from easier comp. You know, we had a poor performance in Q1, but this is South Korea we think is a very promising market, very high gross margin as a percentage of revenues, very important brown spirit market. So it's a market that we intend to nurture in coming years. And of course, both China and India have been negatively impacted by change in route to market. And in China, that change in route to market impact was coupled with a very challenging macro backdrop. We'll see whether the announced stimulus measures will help improve the consumption patterns in coming quarters in China. If you move on to the analysis of brand performance, starting from our leading brand, Apero, 26% of our revenues, 17% compound average growth rate since 2019. The growth of 3% in nine months on a TAF comp base, 23% in nine months, 2023, was impacted by phasing of shipments and poor weather, as said, particularly in Italy. But if you look at Americas, we've registered on Apple a strong growth in all markets, U.S., Canada, and city markets, also, as I said, in Brazil and Mexico. But also in APAC and in Australia, we had, you know, very good growth. And in Europe, you know, the most successful markets in nine months have been Greece and GTR. Now, if you exclude Italy and Germany for, you know, cyclical, you know, factors I've alluded to, the growth would be in nine months, 9% as opposed to 3%. Campari, which accounts for 11% of our revenues, was up 14% on an annual basis versus 2019. The nine months ongoing growth, was quite solid, 8%, and was led by Americas, particularly Brazil, as said, but also, you know, Greece, ETR, and France. In the U.S., specifically, Campari grew by 16% in the third quarter and, you know, was supported by the Negroni Weeks activation in the month of September. At Poland, 9% of our revenues, you know, 32% annual growth since 2019. Double-digit growth on a very high comp base of last year, nine months, 2023, 38%. The performance was led by the biggest market in the U.S., growing double-digit, but also, you know, in all seeding markets, Australia, Italy, GTR, you know, they are growing, you know, nicely. While Turkey, 7% of our revenues, up 8% on an annual basis since 2008. 2019. In Q3, we had a soft performance driven by CoreUS across the portfolio. As said before, you know, Rasa Reserve was flat in nine months with impact on volumes. And that, you know, impact on volumes due to supply constraints was offset by price repositioning, you know, as said, you know, at Q3. know five to ten price point price repositioning in a backdrop of intensive fan competition particularly in super premium uh uh burbans in uh in japan where we see an ongoing double gd growth also in canada and in other european markets although of a relatively small base the jamaican rams up 10% on one basis since 2019. Of course, the performance of both Q3 and as a consequence of that nine months have been negatively impacted by the hurricane and the product shortages. And so this is something that we have to factor in. But, you know, we believe we'll come to a resolution of the supply chain issues by the back end of this year. So we believe by December, you know, this, you know, supply constraint situation will be fixed. Grand Marnier up 1%, 5% of group revenues up 1% since 2019. You know, of course, in nine months, you know, the brand is up 6% by the pace of growth. is slowing down as we cycle through, you know, the easier combates of the first six months. You know, the category is highly competitive. And this, you know, clearly offsetting the progress that we're making on Grand Barnier in other geographies outside of the U.S. Sky 4%, now the sky is just down to 4% of our revenues is negative. Kager, 4% since pre-pandemic. The negative performance is driven by Core US, in line with other major players in the vodka category. And, you know, the growth in the rest of America and in other international markets outside of the U.S. is not enough to upset the decline in the U.S. If you look at, you know, drill down on Aperol, I think it's an important brand. Again, here we have, you know, sell-out data. The read-across is that Aperol is outperforming the category in all core European markets, except Italy, due to the cyclical factors that I have, and the one-offs that I've, you know, mentioned. But, you know, it's still enjoying a very strong double-digit growth in Sydney market and is delivering on strategy. So starting from Italy, where we have, you know, 8% shipment, negative 8% shipment performance, you know, this, you know, shipment performance is not reflecting the sellout, which is negative by 1%. And this, you know, due to the stocking, the commercial dispute that I have, you know, alluded to. You know, the nine months in sell-out performance has been, of course, you know, negatively impacted by weather, consumption pattern. But, you know, the brand, you know, is performing in line with the category, you know, because, you know, the brand is mostly the category. In Germany, in the first nine months, the shipments were up 3% against a very tough comp of 34%. In the third quarter, you see a decline of 17%. But of course, you have to measure that performance against the plus 44% of last year that followed the releasing of Aperol after the commercial disruptions. You know, Aperol in sellout, you know, in Germany is quite strong, 22% up. So you see Shippen 3 sellout 22%. The aperitifs overall are up 16%. So there is a data performance positive of 6%. In the last week, that is, you know, not just this year, but it's a recurring thing. And now Aperol has achieved the number one spot, the number one spot as a spirit brand and most order spirit brand as in Italy. So, you know, quite a remarkable achievement. And as I said, all, you know, the brand health indicators are extremely, you know, strong in Germany on Aperol. The U.S., you know, shipments were up 7% against a very tough con base of 51%. In sell-out, you know, we have clearly an ongoing outperformance also in this market. You know, quarters are up 1%, upper is up 10%. So, you know, the delta versus market is a healthy 9%. And additionally, if you look at, you know, this is, you know, sell-out. If you look at the on-trade, the means that on-prem is the brander, Our key channel is up in nine months, 15%, driven by increased rotation in core cities. Then, you know, maybe we can elaborate on our, you know, expansion strategy in terms of penetration of Aperol in the U.S., but, you know, clearly, you know, Aperol is in a very good footing in all the, you know, our markets and particularly in the U.S. In the U.S., Aperol is the most popular cocktail in the U.S. If you look at France, you know, where shipments are, you know, flat as a pancake, 0%, where positive sell-out, 5%, beating, you know, market that is up 1%. You know, it is, trend is decelerating due to the subdued sector backdrop. But, you know, clearly the outperformance is still there. If you look at France, You know, brand health indicators. Now, you know, Aperol is the most improved brand by consideration. It means that, of course, in France, you know, the brand is taking, you know, traction. In the U.S., sorry, in the U.K., shipments are down 2% over and beyond a comp of a positive 26%. In sell-out, you know, the brand is down 2%, but, you know, the market is down 13%. So, you know, there is a positive delta of 11%, and the category, you know, decline is totally attributable to the very poor weather condition in the second quarter of this year. Now, if you look at the performance... In the third quarter, you know the brand is up 15% so you know coming back to positive territory. Again, also in the UK, if you look at the brand health indicator, one of those, Aperol Spritz is the number one cocktail in London and the number three cocktail nationally, which means that it's no longer just London, but is taking traction globally in the UK. In the other European markets, again, you know, shipments and consumption is quite healthy at a plus 13% in all markets, and in particular, as mentioned, Spain, Greece, GDR, and also Australia. You know, regional priorities, you know, I will, you know, go quickly through those other specialties up 10% in nine months, mainly impacted by Magnum Tonic, you know, supply constraints. But, you know, other brands like Frangelico, Aperol Spritz and Pecan, you know, they are growing nicely. Sparkling wines and vermouth, they've been up 13% since 2019. In nine months, they're up 10%, driven by Champagne L'Allier, but also the sparkling wines. Cordino, which is just 2% of our revenues, you know, a moderate growth since pre-pandemic, but it's a brand that is getting, you know, very strong momentum and solid double digit growth in international, in all international markets, you know, not only in the Netherlands, Germany, Greece, and Switzerland and UK, but, you know, it's a brand, you know, non-arch is definitely there in Italy, you know, um, the brand, uh, you know, suffer from the streamlining of the offer, you know, of the offering. So, you know, we've discontinued certain Crodino variants and that is, you know, impacting the Italian performance. But if we excluded the discontinued SKUs in nine months, we would be up 5% globally. Other whiskeys have been up 3%, but the performance has been impacted by the softer category trends across all markets. South Korea has said we need to keep an eye on this market because it's quite promising for our bronze spirit portfolio. On local priorities, Campari Soda, you know, 6% up since 2019. You know, solid performance in the core Italian market. You know, it's, you know, recovering following the poor weather condition in second quarter. So year to date in a month is negative three. And then you can see, you know, on other, you know, brands, you know, Wild Turkey, RTD, Uzo 12, we have, you know, solid performance here. And, you know, the only one that in nine months is in negative territory, although up 4% since pre-pandemic is Sky RTD in the highly competitive core Mexican market. A little bit of update now on Courvoisier. I think it's, you know, important to be underlined. So far, we made some good progress on both the integration of the brand as well as on the development of our strategy. So in terms of investments, we've strengthened our sales and commercial capabilities in core markets, namely the US, the UK, the two biggest markets, as well as in China. you know, that the brand has, you know, high exposure to African-Americans and Hispanic, and, you know, clearly it's not, you know, core target of our portfolio. So we've hired, you know, salespeople with, you know, clearly have, you know, filled the head of, you know, cognac and champagne brand house with, you with Cognac Veteran. We are taking commercial actions to clear the trade channels. Probably there is a little bit excess stock, particularly in China, we have to say. We are realigning the pricing structure. So, you know, we are negotiating commercial agreements virtually in all markets as we sense that, you know, the price position of the brand is not yet the one that it deserves. And we've started the brand building investments. We have reopened the Maison Courvoisier in Germac after a multi-year restoration project, which costed, you know, significant amount of money to the sellers. And the brand strategic assessment and way forward will be ready by the end of 2024 for a launch and rollout in January 2025. Now, clearly, you know, there are some, you know, improvements that we need to achieve. You know, first and foremost, we need to go through a structural reset of the brand health And also, you know, as a consequence of that, the profitability of the brand to make sure that we improve its gross margin following the negative impact of the transition, of the brand transition from the sellers to Campari. So we need to clear, you know, the prior tactical price discounting. So we need to reestablish the proper price positioning. And, of course, we need to cycle through the very high cost of the ODV that we're currently using as, you know, those have been, you know, built four, six years ago during COVID at very high, you know, prices. And on top of that, the given, you know, cognac in its biggest market in the U.S., where the brand is most exposed, you know, suffered, you know, since, uh, you know, uh, 2023 and volumes for the category and for who was years where are lower than they used to be. There is an element of making sure that we have a full absorption of production fees cost in our, uh, who was a plant that is, you know, further, you know, diluting the gross margin. In terms of, you know, way forward in the two biggest markets, clearly with the approach that we're taking is that we would focus on BS in the US that is, you know, the key, you know, SKU on the IR marks in APAC. We will go through, you know, portfolio premiumization in all markets, also via innovation and simplification. You know, in innovation, you know, clearly As you know, you know, the offering is, you know, goes through, you know, typically the S, the SOP, XO, and in between you have variants. So, you know, this is clearly an opportunity that we have to tap into the, you know, intermediates. And, you know, in terms of simplification at the upper end of our offering over and beyond XO, you know, it has to be, you know, probably, you know, not probably, it has to be cleaned up. If you look at the performance and contribution, you know, the sellout trends in Q3 are showing, of course, weakness, as I said, in the U.S., driven by value volumes, while, you know, the price mix is negative one versus a category that is down 4% driven, of course, by the market incumbent in the U.S. While in the UK, the stable trend in the category, you know, flattish, on the other hand, Courvoisier is performing quite nicely with a positive 8%. Contribution to nine months in terms of net sales accounts for 35 million euros for the period May to September. It's primarily, you know, achieved in the US and UK with... a quite tiny impact on EBIT due to the already mentioned, you know, in investments. A little bit, you know, update on activation. So on Campari Film Festival, from the pictures you can see the fifth consecutive year celebrating the Locarno Film Festival as official partner. The seventh year as a main sponsor of the Venice International Film Festival. and the debut partnership at the Toronto International Film Fest. So, you know, the film festival platform is clearly key to activate, you know, our company brand internationally. But also, you know, the Negroni Week this year was celebrating through a series of initiatives and experiences across now 93 markets and across almost 14,000 venues. In terms of reach, In terms of number of markets, we're up 18% versus prior years. And in terms of venues, up 16% versus last year. So, you know, quite successful. On Acherol, you know, clearly you see the U.S. Open partnership, which is, you know, second time this year with further expansion of its presence on location. So we're taking, you know, bigger share of the U.S. Open pie. We also collaborated with the actress Ashley Parker from Emily in Paris series across multiple channels, including media and social media. With that said, I happily leave the floor to Chiara, who will help us go through the numbers.

Thank you, Paolo, and everyone. So on page 20, we analyze EBIT adjustments, which amounted to $499 million, down organically by 40%, and generating a margin dilution of 140 basis points, reaching a margin of 21.9% on sales. As we mentioned already, this trend was driven by lower absorption of fixed costs across P&L lines in a softer market context, given that net sales organic change was up by 2.1% in the nine months. This effect was amplified in the third quarter as the organic change inhibit adjusted was negative by 18.2%. showing a margin dilution of 370 basis points, given NETSA's organic change of 1.4% negative. In terms of the key drivers, so we focused first on gross profit, which was up by 1.9%, generating a dilution of 10 basis points. This result was due to mixed effect, mainly in Q2 and September. generated by the impact of poor weather conditions and also macro conditions on high-margin apparatus in EMEA, as well as a rapid growth of espalon, which was up 19% in the nine months. With regards to the other drivers of gross margin, we had a positive pricing impact, which was fully offset by COGS, both many skewed into Q1. So as we mentioned earlier, pricing was driven by carryover effect from the previous year, and COGS inflation was driven by carryforward effect of high-cost inventory from the last year, which we depleted since beginning of 2024. Focusing on the third quarter, the gross margin was accreted by 10 basis points, mainly impacted by inefficient absorption of fixed production costs due to lower production volume, whilst we continued to remain disciplined from the viewpoint of pricing. Looking into Q4, from gross margin, we expect unfavorable seismics and lack of absorption of fixed production costs due to lower production volume, and that is despite benefits on ingredients, including agave and glass. So combined, we expect that this effect to drive and overall dilution, which is also driven by a very challenging comparison base in Q4 2023 when gross margin was up by 160 basis point. So as a result, on a full year basis, We expect the positive pricing effect, as we guided for the year 2024, a positive pricing effect, no more than 1% to 2%. So, positive pricing effect to be more than offset by COGS headwinds, as well as unfavorable sales mix effect. In terms of COGS headwinds, we expect this effect to be generated by the inflation, combined with stock effect. lower absorption of fixed cost, higher depreciation, partly offset by positive benefit in ingredients, particularly agave and glass. Particularly with regards to agave, we are confirming our expectation for 20 million euros on a FULIA basis as a benefit, plus other packaging materials as well as logistics. Moving on to AMP, AMP was up by 3.7% in the nine months with 30 basis point margin dilution, with ongoing focus on brand building during the summer season, despite the impact of lower activations in connection with the pool weather, particularly in spring and September. AMP two sales were 16%, so relatively stable versus nine months 2023 when it was 15.9% on sales. Focusing on the third quarter, AMP was up by 6.6% with a dilution of 140 basis point impacted by soft sales. It reached 17.7% on sales versus 16.8% in Q3 2023. looking into q4 we expect to keep amp broadly in line with q3 as a percentage of net sales so as a result a 2024 level on a full year basis for amp we expect this cost line to remain slightly below 20 23 levels of 16 0.9%, but also clearly depending on the trend in that state. So AMP on a full year basis might be from neutral to slightly accretive overall. In terms of SG&A, SG&A grew 7.6% in the nine months with 110 basis points, impacted by the continuation of planned investment, including our strengthening of route to market, both in Asia with carryover effect from last year investment, plus the setup of the new market in massive company in China. in Greece, and that was in a market context of softer sales. So that led to lower absorption of fixed costs. As we explained, our SG&A fixed portion is about 75% of total cost line. Q3, SG&A grew by 10.9%, generating a dilution of a 200 basis point, mainly driven by muted sales at minus 1.4. Looking into Q4, the trend will be driven by ongoing completion of committed business investments. Therefore, Q4 SG&A organic growth trajectory is expected to be similar to Q3. And so that means that it is expected to generate a dilution on a full year basis. Meanwhile, we define a roadmap ahead with initiatives in place to ensure growth and profitability in the medium term, and Paolo will focus on that in a couple of slides. Overall EBIT adjusted reported was negative by 4.1%. Perimeter was slightly positive on EBIT 0.4 percent or 2.2 million euros resulting from the impact of a courvoisier and other business partly upset by the termination of some agency brands in in france as we explained courvoisier is generating a contained impact on EBIT in this first transition year, also given investment in commercial and marketing teams, which occurred in Q3 and which will continue into Q4. So on a full year basis, with regards to perimeter, we expect a contained contribution combining and also the effects from determination of agency brands. The effect was slightly negative, 0.3%, or 1.7 million euros, and that was generated by positive impact on costs. of U.S. dollar and pound depreciation. In Q3, we benefited from favorable trend in the Mexican peso. And in Q4, we still expect a slightly positive effect or a positive basis effect. EBITDA adjusted was 591 million euros down by 1.8%, of which 2% organic. Just a quick mention to depreciation. Depreciation increased by 11.6% or 9.4 million euros in the nine months as a result of CAPEX plan, which will continue in Q4. In terms of group pre-tax profit on the next chart, so we had total operating adjustments of €30.9 million negative, mainly driven by the Courvoisier deal. related costs plus some more restructuring initiatives. In terms of the financial expenses, the interest overall amounted to 57.7 million, increasing by 7.2 million versus nine months 2023. Line is composed by two items, exchange losses amounting to 2.1 million euros, mostly unrealized, versus negative at 12.1 in 9 March 2023, benefiting from less unfavorable or less volatile trend in exchange rates in 2024. Excluding these effects, financial expenses were 55.6 million euros with an increase of 17.2, driven by higher average net debt, 2.1 billion this year versus 1.7 last year, mainly due to the currency acquisition, and as well as by higher interest average cost of refinancing in the nine months. These two effects were partially upset by the benefit of temporary higher cash position ahead of Courvoisier closing at the end of April. Average cost of net debt was 3.7%. This is 3% in the nine months. And looking into Q4, we expect an amount of net interest in value terms to be slightly higher than Q3, reflecting the impact on available cash from certain corporate transactions, including capping the acquisition of the minority stake, as well as the acquisition of the remaining minority in the Mexican companies, as well as our continuous commitment to extraordinary CapEx plan. That is, of course, part of the positive cash flow generation. Then hyperinflation effect and amount remeasurement were 9.6 million euros, mainly due to Argentina. And then we had overall pre-tax profit adjusted over 446. Pre-tax profit at group level was 426. 3 million euros after a non-controlling interest of 5.8 negative. Moving on into the next chart on analysis of net debt. Net debt was 2.6 billion. at the end of September, up 710.5 million versus last year. And that amount reflects the net impact of the acquisition, 477 net of the capital increase, the acquisition of the minority stake in Cape Vine for a total amount of 83 million euros, extraordinary capex investment of approximately 200 million euros, the dividend payment of 78, and all this partly offset by the positive cash generation in the nine months. Just a quick reference to CAPEX. We confirm our plan for overall 500, 550 extraordinary investments for 2024 and 2025. with about two-thirds of the program to be completed by 2024 and one-third to be completed in 2025, which means that in Q4 we will still have a little bit more than 100 million euros of CAPEX to go. With regards to cash position, we need also to remind the impact on 46 million euros for the acquisition of the remaining 49% in the company owner of Anchor IS and Montelobos, bearing in mind that this transaction has no impact on the net financial position as it was already included in the estimated put option and earn out. Overall, liabilities for put option and earn out reflected first the earn out in connection with the currency acquisition, and then the effect of the reduction from the earn out in connection with the acquisition of the minority stake in Altra Reyes and Nitalod. EBITDA ratio, so net debt to EBITDA ratio was 3.4 times on a pro forma basis considering it could impact only for five months and that would correspond to 3.6 times with an annual estimated effects for courvoisier, and that compares with 2.5 times at the end of December 2023. So that's it for my side, and I hand you back to you.