Davide Campari-Milano N.V. (CPR) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Campari Group 2019 full Year Results presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Bob Kunze-Concewitz, Chief Executive Officer of Campari. Please go ahead, sir.

Thank you very much. Good evening to all, and thank you very much for joining us on this call. We have quite a bit to cover today, so I'll jump straight into it with our full year results. If you can join me on Page #4 of our presentation, I'll kick off with the key highlights. As you can see from the numbers, we have a sustained, nice positive top line, enabling us to continue fueling investments also back into the business for future growth. Looking at the net sales on an organic side, we grew 5.9%, and this is despite some selective destocking in Japan as well as South Africa ahead of changes in route to market. We've had consistent outperformance of our key high-margin brands in core developed markets. Looking at it by brand cluster, our Global Priorities outperformed, they grew by 7.3%, mainly driven by Aperol and Campari. Our Regional Priorities are up 4.3%, thanks to Espolòn, whilst local priorities are up 1.8%, thanks to the single-serve aperitifs, Crodino and Campari in Italy as well as the Wild Turkey ready-to-drink in Australia. Looking at it by geography. We have a good performance in our high-margin markets, mostly driven by the U.S., Italy and the rest of Europe. We also have a recovery in South America and Russia, but as you know, this is quite a volatile environment. On a reported basis, our net sales grew by 7.6%, and this reflects a slight negative perimeter effect of minus 0.4%, but a nice positive foreign exchange effect of 2.1% or EUR 36 million and this is mostly due to a strengthened U.S. dollar versus the Euro. Moving on to EBIT and adjusted EBIT, on an organic basis, it grew by 6.7%. So this is slightly ahead of our organic sales growth, leading to 20 basis points of margin accretion. This, as you can imagine, is driven by the organic gross margin expansion of 60 basis points, thanks to the positive sales mix. And despite -- I must say, despite the agave headwinds and following reinvestments back into the business. A&P and SG&A together are dilutive by 40 bps. In Q4, organic gross margin was slightly accretive only 10 basis points, but this was largely hindered by a very tough comp base last year where we've grown it by 230 basis points. On a reported basis, we have a change of 7.7% which takes into account the negative perimeter of 0.7% and a positive FX of positive 1.7%. Net profit on an adjusted basis reached EUR 267.4 million, it's up by 7.3%. And on a reported basis, it reached EUR 308.4 million, up 4.1%. Cash flow, free cash flows generated -- stood at EUR 258.5 million, of which recurring free cash flow of EUR 267.3 million. So on the back of this, net debt came down to EUR 777.4 million which is a reduction of EUR 68.9 million versus previous year, driven by the positive cash flow, and it's obviously net of acquisitions as well as the real estate disposal and the incremental debt generated by the adoption of IFRS 16 leases. So this brings us to a net debt-to-EBITDA adjusted ratio of 1.6x at the end of last year. We have a few other important resolutions to share. First of all, on the dividend, where the Board is increasing a proposed full year dividend to EUR 0.055 per share. So in other words, an increase of 10% versus last year. And with regards to share buybacks, we'll have the continuation of a share buyback program, which will be implemented up to an increased amount of EUR 350 million in the next 12 months. Moving on to chart #5. That's a overview of the 5 past year -- 5 years and how we're delivering on strategy, and you can see some positive margin expansion, which is driven by the outperformance of the core high-margin brands and market combinations. The top of the chart, you see the outperformance of the Global Priorities versus the group average. On the bottom left, you see the gross margin improvement, which, on a cumulative basis over 5 years, reached 750 bps of which, important to say, 450 bps organic. And on the other side, the adjusted EBIT, cumulative increase of 300 basis points, of which 140 basis points organic. So the strong gross margin expansion, driven by our sales mix improvement, continued to fuel consistent reinvestments in brand building as well as strengthening our infrastructure for future growth. Moving on to Page #9, just to say that you can see there's a healthy balance between developed and emerging markets, 80 versus 20. The U.S. continuing to increase its share of the pie up to close to 27%, 26.9% to be exact, and Italy our second market at 19.9%. Moving on to our first region, the Americas. Overall a nice organic growth of 5.8% -- excuse me, 1 second. The U.S. grew by 5.3% which is overall quite positive, double-digit growth on Aperol, up 33.9% in shipments, but actually, our depletions were up by 50%. So that shows you the momentum of the brand. Espolòn up 34.4%, Russell's also double-digit at 18.1%. We've also had positive performance of the Campari, Wild Turkey, Wray & Nephew Overproof and Grand Marnier, Cynar and Averna also registered positive growth, quite strong growth but off a small base. And as you can expect SKYY declined due to both the competitive pressures in flavors but mostly due to also the destocking we've done on that sub-range of the brand. Moving on to Jamaica. Jamaica had a very strong year, up 17.6% and as you know this is quite a sizable subsidiary for us. Very good performance, consistent and on the right brands, driving the mix with core Wray & Nephew Overproof growing 22.2%, Appleton Estate growing by 50%, Magnum Tonic Wine 26.4% and Campari 8.8%. Canada up 2.6%, overall positive. Thanks to very strong double-digit growth of Aperol, Espolòn, and Campari, which mitigated a slight decline on Appleton Estate as well as Forty Creek. Brazil came back, grew by 3.3% driven the circumstances overall satisfactory growth. But clearly, the environment remains volatile. So rest of the region grew by 1% with Mexico leading the pack and that's about it I think, not much more to go into. Moving on to the following page, Southern Europe, Middle East & Africa, again a very solid performance growing by 5.3% organically. A very strong performance in Italy, up 5.8% and this was in a context of a market which is flattish. It really shows the great performance of our aperitifs portfolio, where we're continuing to take share off-road across other beverage categories, while double-digit growth of Aperol, 16 years in a row, up 12.8%, very nice growth of Campari 8.3%. So this year we'll be celebrating 160 years of Campari and we will reach an all-time high which is pretty nice to have. And a very nice return to growth, although aren't low-single digits on the large local aperitifs such as Crodino and Campari Soda. The rest of the region grew by 3.9%. France which hopefully will become a wholly-owned subsidiary by the end of this month, grew by 14.2%, again thanks to the double-digit growth of Aperol and Riccadonna, while Spain declined overall 1.4% as positive growth in Aperol and Cinzano was offset by weakness in Bulldog as well as the fact that one key retailer actually decided to delist all branded spirits. Looking into the African markets, Nigeria did very nicely growing behind Campari, American Honey. On the other hand in South Africa, we basically destocked the market in certain parts of the market ahead of route to market change. Global Travel Retail was up 4.1%, again with a strong growth of Aperol, Campari, and GlenGrant. Moving on to North Central Eastern New York, up a very strong 8.8%, Germany up 3.3%, here we have a very strong double-digit growth of Aperol. This despite it being a pretty poor summer, Aperol was up 18.2% and we're continuing to leverage new consumption occasions as well as the seasonalization on this key brand. We have positive trends in Ouzo, Averna, SKYY, Crodino, Frangelico, and GlenGrant. So overall a nice picture. What is a little bit depressing it, is the higher volume Cinzano brand, that again to a certain extent is a reflection of the improved sales mix in what we're driving. The U.K. has another very positive year up almost 40%, 39.6%, an accelerated trend, very sustained by the growth of Aperol, up 23% as well as the Jamaican brands portfolio which grew by 42% largely Wray & Nephew Overproof and Magnum Tonic. From a small base but again its important because the brand is growing across markets Espolòn also did quite well in the U.K. Russia came back growing almost 12%, 11.9% but this is clearly often easy comparison base, you recall that in '18 we were down 11.4%. The market is showing signs of recovery, remains volatile but we have very positive trend behind Aperol, and particularly on our higher marginality sparkling wine such as Mondoro. The rest of the region was up a healthy 6.5% evenly spread across all of our key markets, again driven by Aperol and Campari. Moving on to our last region, Asia Pacific, up 0.8%. Australia up 2% on a shipment basis, but actually, if you look at consumption data and depletion data, we grew at 3x that rate. Clearly, there were changes in one of our largest retail customers, which impacted stocks across the industry. So having said that, very satisfactory performance. You need to bear in mind also the tough comp base, we were up 10.5% the previous year. And again, the bush fires didn't really help. The rest of the region is down 1.8%. This overall decline clearly is driven by the Japanese market, where we're destocking ahead of route to market change, and I'll take you more through the details of this at the end of the presentation. China on the back of SKYY, Cinzano and Aperol did quite well as well as New Zealand. Moving on to the following page, it's good to see that our Global Priorities are continuing to grow their weight over the overall portfolio, up by 100 basis points versus previous year. Moving on to our largest brand on Page #15, Aperol, 18% of our sales, up 20.5%, and it's nice to see this solid double-digit growth across all of our key markets. On a 5-year average, we've been growing the brand by 19.7%. And as I said, very good momentum, both in established, high potential markets as well as seeding markets. Moving on to the analysis by the types of markets and the core established had previously taken you through the Italian numbers, up 12.8%. It's very important to reflect that this is the 16th year in a row and clearly, our strategies are working and bode well for the future in other markets. Germany grew also by 18.2%, and we've also had very strong double-digit growth behind Austria and Switzerland. Looking at high potential markets, solid shipments in the U.S., 33.9%. But as I said, depletions were up by a stronger 50%. And this clearly also on the back of a quite tough comp base as the brand had grown by almost 74% the previous year. Canada also solid double digits, up 54%. Russia actually becoming the fourth largest market, growing by almost 63%. We talked about the U.K. previously, very nice, strong double-digit growth in France, up 42%, Spain, 18%, travel retail by 23%, in Australia, 23%. So you can see that the brand is really firing on all its cylinders across all of our markets and growing much faster than those previously announced numbers in all of our leading markets. Moving on to Campari. Campari is our second-largest brand, 10% of sales, it grew by 4.6%. Now if we factored -- taking into account the destocking, which we drove in Japan, the real underlying growth rate of the brand through in the year was 60% on an organic basis. The year was also hindered by a soft performance in the third-largest market, Germany, where we took a substantial price increase at the beginning of the year in January. And that, clearly -- the price increase created quite a bit of interest in the brand in Q4 2018 ahead of the price repositioning. So we paid that back the following year. Looking at it on a region basis, Southern Europe, Middle East, Africa, core Italy growing 8.3%. What's driving this is our easy -- both the classic cocktails, particularly the Negroni as well as our easy mixes such as the Campari Spritz and the Campari & Tonic. North Central and Eastern Europe. I described what happened in Germany earlier. We've got nice traction in the rest of the region. In the Americas, the U.S. is clearly doing very well. Shipments grew by 9.6%. Actually, depletions grew double-digit in this case as well. The U.S. is our second market in terms of value terms. So having that momentum, obviously, is great. And we're also extending the range of the drinks going beyond the Negroni as well to the Americano and the Boulevardier. Argentina recovered from an easier comp base. Brazil also and in those mainly Brazil, practically, we registered a double-digit growth rate. Solid growth in Jamaica and Canada. And in Asia Pacific, clearly, the overall number was impacted by the destocking in Japan. Moving on to SKYY. SKYY, 8% of our total, down 3.8%. Clearly, this is largely driven by the core U.S. by the destocking activity we conducted in this market, particularly on the SKYY infusions range, and this lasted till the end of the third quarter with some tail-end effects in Q4 of the year. International markets, which account for 27% of the value were flattish because the destocking in South Africa impacted the overall positive growth in the other markets. Now looking into the detail of the international markets, we have a good growth in Argentina, which is the fifth-largest double-digit growth in Mexico, some weakness in Brazil, where it's only very, very cheap vodkas, which are performing at the moment. Within Southern Europe, Middle East, Africa, growth in GTR was unable to offset some slight declines in Italy and Spain. Again, South Africa is the one which moved the needle in this area. North Central and Eastern Europe, very nice double-digit growth in Germany, which is a very profitable market for us, but some weakness in the U.K. In Asia Pac did very nicely in China as well as in Australia. Moving on to Wild Turkey. Also, 8% of our sales, up 2.9% on an organic basis, and this is after some declines in the fourth quarter, where we had some phasing effects in the core U.S. market, where actually our depletions were double-digit. Then our Wild Turkey bourbon grew by 0.4%, and this is quite a bit affected by the destocking in Japan. Russell's Reserves, which is our premium offering, grew very solidly, up 16.7%. American Honey also up 6%, and that's driven by the U.S. market as well as in Nigeria. If we look at that on a market basis, what we're seeing is in the U.S., we are premiumizing our offering with premium extensions such as Long Branch, Russell's Reserve and Masters Keep continuing to grow at very strong double digits. Overall positive performance of 1.4% and this is -- was affected by a slowdown on Wild Turkey 101, which was hurt by price repositioning. But we have clear very strong plans behind that expression this year. So we expect to see it to regain traction. Overall, the brand is pursuing very nicely in its quest of becoming a top choice for high-end mixologists and connoisseurs, and we're clearly leveraging in a very positive manner on our long-running association with Matthew McConaughey. In International markets, which, obviously, if you exclude Japan and Australia, they're very much seeding markets. We're doing very, very nicely in Germany, Italy, and Austria. Japan declined by double digits due to destocking ahead of the route to market changes. And Australia was slightly down due to the impact of some decisions taken by one retailer. Moving on to Grand Marnier was slightly down 0.9%, overall flattish performance, where, clearly, there was a reversal in Q4, driven by the U.S., which where we were up 8.1%. We're continuing to do the right things on the brand growing it for the long term with the right strategy, premiumizing it with the Cuvees and with a very clear drinking strategy. In the U.S., the brand grew nicely 2.2%. Unfortunately, second market, Canada was flat because we took a significant price repositioning in its largest province, Québec, which was long due. Clearly, this is something which we will cycle and improve upon this year. Very nicely growing behind the Grand Margarita in Mexico. Southern Europe made a -- well, let's say, Europe and Asia Pacific. Overall, a soft performance because what we decided to do was essentially delist the 1 liter so that we could reserve it exclusively. So we delisted it from the off-premise. And kept it exclusive to GTR as well as the on-premise. Obviously, this has a short-term impact on the brand. Moving on to the Jamaican rums on Page #25, doing very nicely, up 7.5%, very positive outperformance of Wray & Nephew Overproof, which is a specialty brand. On the other hand, Appleton Estate was impacted by temporary decline in some core North American markets in Q4 as we prepare some important changes on the brand this year. Wray & Nephew Overproof grew 15.1%. It's becoming a mixologist's darling and expanding beyond its heartland of Jamaica into the U.S., Canada, and the U.K. Appleton Estate, on the other hand, declined by 1.7%. This despite a very strong performance in Jamaica. Again, we're preparing the future on this brand. Looking at it by region, I think it's quite clear what we -- what happened in the Americas. Looking at the rest of the world, very nice performance in the U.K. where we're going beyond the Jamaican diaspora. And positive progression in all of our seeding markets. Moving on to the -- our regional priorities. On Page #27, you can see that Espolòn is continuing to do very, very nicely. It's clearly outperforming the category, growing by 32.4%. Bulldog is being challenged in its core markets, Spain and Belgium, where the category overall has been invaded by a plethora of innovations. So net-in-net, the brand is down 3.2%. GlenGrant is in line with expectations. The premiumization strategy is working. As you know, we are limiting the volumes so that we can create a inventory of a really aged expressions. Having said that, those expressions we're putting into GTR doing extremely well as the brand is growing double digits in that channel. So it's proving that the strategy is on track. Forty Creek, down 4.2%, impacted mostly by Canada where we had, on the one hand, a very, very tough comp base, previous year, up 12.4% and also some execution issues in its secondary provinces outside of Ontario. Our Cognac Bisquit & Dubouche grew 6.7% from a small basis. You can see that we have almost a 35% decline in Q4, and that is basically we're phasing out the previous packaging and the range as we relaunch it in Q1 of this year. Looking at the Italian bitters and liqueurs, overall flattish, what we see some soft performance, mostly in the Frangelico brand as well as the bitters in Italy, whereas, again, we're improving the mix from a country perspective, by growing very nicely in Germany and the U.S. Cinzano is down by 6.9%. The key driver here was vermouth. What we did was we relaunched the vermouth this year, changing the formulation going from a wine-based formulation to a spirit-based formulation. So making it a traditional vermouth again. This obviously had a big increase in pricing, and this is something will cycle through, but we think it's the right thing to do for the brand as we see vermouth becoming -- real vermouth becoming an exciting category again. Moving on to our sparkling wines, Mondoro and Riccadonna, nice growth of 8.5%, and this is clearly the performance of Mondoro, which is a higher margin brand in Russia. And the Aperol Spritz fueling the growth of Riccadonna in International markets. To close off with our local priorities, very happy to see Campari Soda and Crodino, returning to positive growth up 1.6%, on soda, 2.4%. The organic change in Q4 was expected. So it's not meant to be seen as an inversion of the trend on the brands. We're outperforming in bourbon RTDs in Australia, up 5%. The only notes -- negative notes on the local portfolio and weighing quite a bit because of their size is -- are our Brazilian brands, which were down 5.1%. Ouzo is doing nicely, driven by Germany as well as some signs of vitality in the U.S. and U.K., growing overall by 3% and Cabo Wabo growing by 3.7%. Again, this is below the depletions, which grew high single-digit. I will skip all the pretty pictures, and then over to Paolo.

Thank you, Bob. If you follow me to then to Page 35. Segment reporting Americas region. As we can see on a reported basis, net sales were up 10.3% and EBITDA was up 6.1% in value. Most importantly, in existing business, what we call an organic change, net sales were up 5.8% and EBIT up 2.5% in value, driving 70 basis point dilution. In existing business, gross profit was up in value of 5.4%, slightly behind the top line growth, leading to a 20 basis point margin dilution, where a very positive sales mix in high-margin markets, like the U.S. was more than offset by the increasingly negative impact of agave, which at group level accounted for 30 basis points of negative impact on gross profit and EBITDA as well as the dilutive impact of the recovery in certain emerging markets in this region, Brazil and Argentina, which together with other emerging markets accounted at group level for 30 basis points of gross profit and EBIT dilution. Advertising and promotion, growth in value was 9.6% ahead of top line, driving 70 basis points of dilution due to the increased brand-building investments, particularly behind certain brands like Aperol, Campari, Grand Marnier and Espolòn, which is, as we saw before, growing double-digit. The SA (sic) [ SG&A ] increase was in value of 4.7%, below top line driving 20 basis points of margin accretion, thanks to the efforts of our South American management to downsize their local structure and contain the -- their costs. Moving on to Page 36, SEMEA. On a reported basis, net sales were up 3.9%, and EBIT was up 5.5%. In existing business, net sales were up 5.3% and EBIT 8.4%, driving 60 basis points of EBIT margin expansion. And this very strong performance was achieved despite a lower contribution in the South African market due to the destocking ahead of the already anticipated route to market change. In existing business, gross profit grew in value by 6.9%, driving 100 basis points of margin accretion. Thanks to a very solid performance of high-margin brands like Aperol and Campari across the whole region, I would say. A&P in value was up 6.4%, ahead of top line, driving 20 basis point margin dilution. Again, also in this region due to the stepped-up investment behind our global priority portfolio in Aperol -- in particular the Aperol brand. SG&A were up in value by 6.4%, ahead of the top line, leading to a 30 basis point margin dilution. And this was due primarily due to the strengthening of our central structures. Page 37, we have the analysis of the Northern and Central Eastern Europe region. The reported change in net sales accounted for 9.7%, EBIT on a reported basis was up 15.5%. In existing business, the performance was quite strong, with the top line up 8.8% and EBIT up 14.3%, driving a very healthy 160 basis point margin accretion in the region. In existing business, gross profit was up in value ahead of top line by 11.4%, driving 150 basis point margin accretion due to a very strong sales mix evolution by both brand and market with a very positive performance of high-margin brands like Aperol, and more broadly, the whole aperitifs portfolio in core high-margin markets, such as Germany, the U.K., Switzerland, and Austria. The A&P was up in value by 7.5%, which is a remarkable increase in A&P, but below the top line leading to 20 basis points accretion. And the SG&A were up 9% in value due to the step-up investments on our commercial capabilities, as you know, overall, neutral on margins. Moving on to Page 38. We have the analysis of the Asia Pac region. The smaller region for us was on a reported basis, top line flattish and bottom line declining by 16.5%, which basically mirrors the results of our organic performance with flattish top line. Slightly up 0.8% and a declining EBITDA of 12.5%, driving 240 basis point EBIT margin dilution in the region. Gross profit in value was up 2.4% ahead of top line, driving 70 basis point margin accretion, thanks to a very positive sales mix in the biggest market for the region, which is Australia, which helped us compensate the negative impact of the destocking in the Japanese market, which negatively affected the performance, as we saw before of the Campari and Wild Turkey brand. The A&P was flattish year-on-year, driving 10 basis points margin accretion. While the SG&A were up in a significant manner, 16.2% in value, well above the top line, driving a 170 basis point margin dilution. The significant increase in SG&A in the region was due to, on one hand, they are a lower absorption of fixed cost due to the contained top line growth, but most notably and importantly, the increase in cost was due to the enhancement of the regional -- of the region's commercial structure and moreover, the provisions in connection with the transfer of the regional headquarter from Sydney to Singapore. Moving on to the analysis of our consolidated results. Page 40 and focus on Page 41. As you can see, EBITDA adjusted on a reported basis was up 7.7% in value, stable at 22.1% on sales, in line with last year, with an EBIT adjusted organic growth of 6.7% in value above top line, driving 20 basis points margin accretion. And this was due to a solid organic gross margin accretion, and which more than compensated in the stepped-up investment in marketing and commercial capability and commercial capabilities. The adoption of the IFRS 16 accounted at EBITDA level for a tiny, EUR 1.4 million. EBIT adjusted on a reported basis, was up 10.9% in value to 26% of net sales worthwhile highlighting the fact that the disproportionate increase in EBITDA adjusted in value vis-a-vis the EBIT adjusted increase is due to the impact of the IFRS 16, of which accounted for EUR 50 million in 2019. Page 42. Gross profit on a reported basis was up 9.1% in value to 60.9% on sales with 80 basis point accretion. The organic growth accounted for 7% in value, 60 basis point margin expansion after the negative impact of agave, which I said before, accounted for 30 basis points. The negative impact of the recovery of emerging markets, which accounted for the 30 basis point topped up by the negative impact of the destocking ahead of route to market change in Japan. So the underlying 120 basis point gross margin expansion was basically offset by 60 basis points of combined [indiscernible] agave and emerging market recovery. A&P on a reported basis was up 10.6% in value with a 50 basis point dilution in existing business. A&P increase accounted for 7.7% in value leading to 30 basis point margin dilution. And again, as I said before, is due to the stepped-up investments behind key brands like Aperol, Campari, the overall Jamaica rum portfolio as well as selected the Regional Priority brands such as Espolòn. The SG&A on a reported basis were up 9.2% in value with a 30 basis point dilution to 21.3% on net sales in existing business. SG&A were up 6.8% in value, leading to a 20 basis point margin dilution. Page 43. The negative operating adjustments, which we've already highlighted in prior calls, accounted for EUR 21.7 million in 2019. Net financial charges came in at EUR 33 million, in line with the prior year benefiting from, on one hand, lower average indebtedness due to the very healthy cash flow generation, which was partly compensated by the effect of the reclass for IFRS 16 of EUR 3.4 million of additional interest charges. The average cost of net debt grew from 3.3% to 4.1%, again, due to the reclass of the interest charges relating to the IFRS 16. Pretax profit came in at EUR 354.6 million, up 1.1%, but most importantly, before one-offs, before adjustments, the group pretax profit came in at EUR 370.4 million, up 6.7% in value in 2019. Page 44. Group net profit adjusted came in at EUR 267.4 million, up 7.3% year-on-year, excluding all the one-offs, with a recurring effective tax rate of 27.8%, down from 28.2% of prior year with a cash tax rate, which came in at 23.5%, in line with the prior year. Reported tax rate came in at 13%, reflecting the total net adjustments of EUR 41 million that you can see in the -- you can see above was the relative breakdown into operating adjustments, financial adjustments and all the tax adjustments, including the patent box, which accounted for EUR 25.4 million for a total benefit across the period 2014 to 2019 of EUR 96.2 million. Recurring effective tax rate over the period 2016 to 2019 came down from 32.6% and 27.8%, so 4.8%. Page 46, analysis of free cash flow. On a reported basis, free cash flow came in at EUR 258.5 million, up EUR 22.9 million versus 2018 with recurring free cash flow at EUR 267 million, unchanged versus prior year. In terms of key changes on the recurring free cash flow, we highlight an increase in EBITDA year-on-year of EUR 47.2 million. That is partly compensated by higher taxes on a recurring basis of EUR 8.6 million with recurring taxes at EUR 81.1 million. Change in working capital of -- on a recurring basis, EUR 29.6 million, higher by EUR 4.1 million versus prior year. Financial expenses at EUR 27.9 million, higher by EUR 5.1 million versus prior year on a recurring basis. CapEx on -- maintenance CapEx came in at EUR 61.1 million, up EUR 11.4 million versus prior year. And then we have a delta of EUR 15.4 million on other noncash items. And as a consequence of the increase of EBITDA adjusted and free cash flow that is basically unchanged at EUR 267.3 million of free cash flow and EBITDA, which is still very healthy, came in at 55.7% below prior year when it accounted for 61.9%. Page 47, analysis of operating working capital. As you can see, we have an increase of EUR 58.8 million, year-on-year, of which 29.6% are coming from organic increase of working capital and EUR 10.5 million from ForEx and EUR 18.8 million from perimeter, operating working capital, as a percentage of net sales came in at EUR 37.7 million. But if we carve out the impact of acquisitions on a pro forma basis, operating working capital as a percentage of net sales came in at 36.7% well below the 37.2% of the prior year. So 50 basis point operating working capital on sales compression. Page 48, CapEx. The lending amount of CapEx for fiscal year 2019 is overall EUR 82.4 million, of which EUR 61 million in maintenance CapEx and EUR 21 million in extraordinary CapEx on projects, brand houses and increase of production capacity. For 2020, we're envisaging a total amount of CapEx in the area of EUR 94 million, with basically unchanged maintenance CapEx at EUR 64 million and further EUR 30 million of extraordinary CapEx, reflecting investments on extra projects, including, again, brand houses and other projects. Page 49, we have the analysis of the free cash flow and the net debt initial and lending, EUR 258 million of reported free cash flow, EUR 28.9 million of the net value from disposals and acquisitions, which were partly offset by dividends for EUR 57 million, a purchase of own shares for EUR 47 million, the impact of the IFRS 16 application, that accounted for EUR 90 million and some other movements accounting for EUR 23.5 million. Lending indebtedness at EUR 777 million. With regards to the debt maturity, still a very healthy picture with long-term gross debt, which stood at EUR 600 million following the reclass of the Eurobond that is expiring in September 2020 into short-term debt or talking of EUR 581 million. Cost of debt, the coupon on the long-term debt accounts for 1.6% and fairly safe and hedged position with fixed interest rates accounting for 58% of the overall long-term gross debt. Bob, I think this is it on numbers. I will hand back to you on new initiatives and outlook.

Okay. Before the outlook, I'd like to take you through 2 very important new initiatives, starting with the first one regarding business development in Asia. As you know, Asia Pac is our smallest region, but looking forward, with the change in consumer taste and habits, we see very good opportunity to accelerate our growth there. Today, most of our business is actually in Australia and in New Zealand, but we see very, very good opportunity brought about by the growth of classic cocktails in all key cities. As well as Asian consumers acceptance and appreciation of the Aperol spirits, which we see when they're traveling abroad. So on the basis of that, we're undertaking, kicking off 3 very important initiatives. The first one regards the relocation of our regional headquarters from Australia to Singapore, and that will occur within Q1 of this year. So clearly, we'll be -- our team will be much, much closer to the markets. And we'll be able to move faster and much more effectively in all of those core markets. The second one regards China, obviously, this isn't -- this is a little bit of a difficult period due to the coronavirus in China, but we strongly believe in the opportunity for Aperol and Aperol spirits in the huge Chinese market. We've lined up a series of what we call micro battles to actually help us determine on the on-premise -- answer the 2 key questions, where to play and how to win, so it's in other words, how to best adapt the Aperol model to win the hearts and the palates of the Chinese consumers. There were all these micro battles set to kick off in February. Clearly, we haven't activated them, but we hope we'll be able to do that, activate this at the beginning of the second half of the year. But again, this is going to be quite an area of focus, both in terms of management attention as well as financial resources. Lastly, in Japan, which historically has been an important market for us, where we've been with third-party distributors. We've actually decided to make a move forward and to move to a newly established equity partnership with key local premium spirits operator. And the aim here is to develop our brands, our whole portfolio and particularly the premium end in this key market. We will have an initial stake of 40% of the JV, but we have the right to purchase up to 100% of the JV starting 2023. Japan currently generates only 1% of our sales. But clearly, it's another market where we see a very good opportunity, both for our aperitifs as well as our whiskeys going forward. The second big initiative regards France. I mentioned that in our kickoff, France is a very important market for us. We announced the signing of the acquisition for 100% of our French distributor, Baron Philippe de Rothschild France Distribution. They've been our exclusive distributors since 2009, and the team there is a very, very strong team, and they've done very well for our whole portfolio of brands as well as in some distribution brands, which they have. We expect this deal to close by the end of the first quarter. Clearly, it's subject to customary antitrust approvals. In terms of size, just to give you an idea, in 2018, if you look at the numbers from a local GAAP standpoint, RFP had reported sales of EUR 145.1 million. Clearly, this includes the net sales of our brands as well as third-party brands. As a market, France via the distributor, so at the lower net sales accounted for 2.2% of the group's net sales. We see it as really a core and very high potential market for the group. The track record on some of our key brands, such as Aperol, Campari, Riccadonna, and GlenGrant has been very strong. We've added to our critical mass with Trois Rivieres and La Mauny. So we really look forward to developing this business going forward. In terms of corporate actions, I took you through the dividend increase. With regards to the share buyback program, it will be implemented for an increased amount up to EUR 350 million in the next 12 months. And really, the increase of this buyback serves the purpose of implementing a new policy, which we have with regards to our portfolio of treasury shares. In the past, we always bought back the shares in a manner that they were sufficient to serve those plans, which are about to vest. With this new policy, we're looking at having a portfolio of treasury shares sufficient to serve all outstanding stock option plans. So this is obviously, a way of hedging the risk and also reducing the cost of the plan going forward. Lastly, and I'll take you through this more in detail, once we've gone through the conclusion and outlook, when the Board of Directors took the decision today to announce the transfer of the registered office of Davide Campari-Milano S.p.A to the Netherlands, with in conjunction and enhancement of the current increased voting mechanism. In terms of conclusion and outlook, you can see that 2019 was pretty solid. We delivered sustained performance across sales as well as our profit indicators, and this despite selective destocking as well as the pretty significant negative agave price effect. We've been able to do this through -- thanks to continuous sales mix improvement, driven by the outperformance of our key high-margin brands in core developed markets. So looking forward into 2020, our outlook remains pretty fairly balanced both in terms of risks as well as opportunities. We believe that the positive underlying business momentum will continue. It will be driven again, by the combination of key high-margin brands in core developed markets. We will see some tail-end effect of destocking activities and those which are linked to route-to-market changes, which are expected to impact the first half of the year, also on top of a tough comp base. So clearly, the phasing this year will be different from last year's. We expect a positive evolution of EBIT organic performance on a value basis. On the other hand, the margin development is expected to reflect both the agave's increasingly elevated purchase price, the import tariffs imposed by the U.S. as well as investments in brand building and route-to-market initiatives for our long-term and healthy business building opportunities. On the perimeter, we expect the effect to reflect the recent acquisitions as well as the agreement related to the acquisition of the French distributor, subject, obviously, to antitrust approval. On the other hand, FX is to be impacted by a volatile macro environment. Having said all of this, though, we remain quite confident in delivering a positive performance across all of our key business indicators also this year, 2020. Now before we move on to your questions, if you can take hold of the second smaller presentation we have for tonight, the one entitled, transfer of the registered office in the Netherlands and enhancement of the current increased voting right mechanism. I would like to take you through this and then move on to your questions, both on the full year as well as this key milestone agreement. In our eyes, that's clearly a new milestone, but it is also in continuity with the past. We aim to transfer the registered office of the company to the Netherlands. And we also aim to enhance the current double voting rights mechanism through the progressive introduction of additional voting rights. This transaction is clearly aimed at encouraging a capital structure, which is more supportive of our external growth strategy in the long run and rewarding a shareholder base with a long-term investment horizon. And this has always been our group's strategic guidance. The controlling shareholder, Lagfin S.C.A. confirms its long-term commitment to the group's strategy and prospects and its support to the transaction. With regards to the company aspects, we will have full continuity upon the transaction completion, which means that there will be no impact on the organization, management, business operations and employees. The tax residence of the company will be maintained in Italy. Our legal status will be preserved without any impact on our legal relationships. There will be no accounting impact on financial reporting. Clearly, IFRS has confirmed. There will be a sole listing of our ordinary shares on the Italian stock exchange, and the identity as well as historic presence of the group in Italy will be preserved. Moving on to Page #3 and the compelling rationale for the transaction. It's clearly about us continuing to focus on our long-term growth pillars. Through the transfer of the registered office and the simultaneous enhancement of the current double voting rights mechanism, we aim to, on the one hand, adopt a flexible share capital structure to allow the company to maintain and further strengthen a loyal and committed shareholding structure, while combining this essential goal with the objective of further supporting the group's growth strategy by external opportunities. We want to reward the shareholder base with a long-term investment horizon, capable of underpinning our long-term growth objectives and ambitions, in line with our guidance. And to benefit, lastly, from a corporate law framework, which is highly recognized and appreciated by international investors and market operators, so that we continue to promote the global profile of our group. While in the meantime, also maintaining culturally the identity and the historic presence of the company in Italy. Let's skip the next 2 charts, because I think most of you pretty well all know, our track record over the past 20 years, which has been very successful, and what the company and the group looks like today. And move on to Page #6 and the key elements of the transaction. So firstly, we'll transfer the registered office to the Netherlands and adopt a company form known, and I hope my Dutch friends will not get upset with me when I pronounce the name, Naamloze Vennootschap (N.V.) under Dutch law. There will be an enhancement of the double voting rights mechanism, which is currently in force. And we will adopt a mechanism based on the assignment of special voting shares. We will have an assignment of 2, 5 and 10 voting rights for each ordinary share, which is held for, respectively, 2, 5 or 10 years. These additional voting rights are subject to the uninterrupted, and that's important to underline, the uninterrupted holding of ordinary shares. The transfer of the ordinary shares to which the special voting shares are associated and the occurrence of change of control will cause the loss of the benefit of the increased voting rights. Shareholders, who are entitled to the current double voting benefit, called voto maggiorato in Italian as of the effective date of the transaction will be entitled to the same benefit immediately thereafter. While loyal shareholders, who are not yet entitled, will be allowed to carry over the registration period in a special register for the purpose of the assignment of 2 voting rights. Shareholders, who do not support the adoption of the resolution on the transaction, will be entitled to exercise their withdrawal right, diritto di recesso, in Italian. The transaction is subject to the satisfaction of a limited number of conditions precedent, including the amount of cash to be paid to shareholders exercising their withdrawal right not exceeding, in aggregate, the amount of EUR 150 million and this is calculated after taking into account the amounts payable by the shareholders exercising their option and preemption rights pursuant by applicable laws by other third parties. Moving on to our controlling shareholder Lagfin, and their support to the transaction. Page #7. Our controlling shareholder, Lagfin, which they hold 51% of the issued share capital and 65.3% of the voting rights, has confirmed its long-term commitment to the group strategy and prospects and its support to the transaction. So for the purpose of strengthening the certainty of the transaction and mitigating the potential cash outflows resulting from the withdrawal process, Lagfin has committed to acquire withdrawn shares in the context of the offer and sales process provided for under Italian law, up to an aggregate amount of EUR 76.5 million, which is basically proportional to their 51% holding. If we look at the special voting mechanism and the detailed description on Page #8. You see 3 columns, ordinary shares, special voting shares, aggregated voting rights and then the time horizon, 2 years of uninterrupted ownership, 5 years of uninterrupted ownership 10 years of uninterrupted ownership. Now currently, 1 ordinary share remains 1 with 1 aggregate voting right. In 2 years' time, that will be equated to after registration obviously, equate to 1 ordinary share, 1 vote plus 1 special voting share A, which is equal to 1 vote. So in aggregate, 2 voting rights. Moving on to 5 years, again, it will be a combination of 1 ordinary share vote, so 1 vote, plus 1 special voting share B, which will amount to 4 votes, bringing the total to 5 votes. Moving on to 10 years of uninterrupted ownership, every 1 ordinary share of 1 vote, plus 1 special voting shares C of 9 votes amounting to 10 voting rights. The ordinary shares will continue to be tradable and listed on the Italian stock Exchange. They're transferable. But clearly, ordinary shares associated with the special voting shares are transferable subject to removals from the special register and the ordinary shares will be the only ones receiving the dividend. The dividend will be only paid on ordinary shares. The special voting shares will be nontradable they're related to voting rights, which are lost upon transfer of the underlying ordinary share and upon occurrence of a change of control over such shareholders. I think we'll skip Page #9, because it does just clarifying the situation as is to be immediately after our transformation. Moving on to Chart #10. It's important that we underline the fact that we have full continuity with the past, our identity and our historic presence in Italy are preserved. The ordinary shares will continue to be solely listed on the Italian stock exchange of Borsa Italiana. There will be absolutely no reorganization of the group's operational and managerial activities, which will continue to be led by the company on a continuous and uninterrupted basis. The company will maintain its own legal status without any impact on its legal relationships, including the relationship with its employees, and these will continue to be governed by Italian law. Our tax residence will be maintained in Italy, no impact on the financial reporting, our statements to continue to be prepared in accordance with IAS and IFRS. Our company's share buyback program will continue up to an increased amount of EUR 350 million in the next 12 months. In terms of governance and the governance framework following this transaction, we will move to a one-tier board system as that's provided under Dutch law. There will be no changes in the current composition of the Board of Directors. We will adopt, as I said earlier, the one-tier Board system, under which the nonexecutive directors will supervise the executive directors. In accordance with Dutch Corporate Governance Code, internal committees of the Board of Directors will be established in line with those currently in place. So there will be an audit committee and there'll be a remuneration and appointments committee. The Supervisory Body, Organismo di Vigilanza, pursuant to Legislative Decree no. 231/2001 will be maintained. And in accordance with the one-tier board system, the Board of Statutory Auditors will cease to exist. Closing up with the indicative transaction timetable as well as the key procedures. Clearly, today, the 18th of February announcement of the proposed transaction and the EGM call. On this 27th of March, we'll have the EGM to approve -- deliberate and approve the transaction. In the first half of April, we'll have the period for the exercise of the withdrawal rights. On the 22nd of April, the dividend payment will continue as usual. At the beginning of May until the end of July, there will be the offer of withdrawn shares in option and preemption to other shareholders, pre-transaction closing procedures to follow. And by the end of July, by July 31, where we expect to bring the transaction to completion. In terms of our withdrawal procedure, the redemption price payable to shareholders exercising the withdrawal rights is equal to EUR 8.376 per share. Following the period for the exercise of the withdrawal right, withdrawn shares will be offered in option and pre-emption to other shareholders and subsequently, the unsold shares may be offered to third parties. The payment of the redemption price of the withdrawn shares is subject to and will occur after the completion of the transaction. And withdrawing shareholders may not sell or otherwise dispose of any of the shares in respect to which the withdrawal right has been exercised only and only until the completion of the transaction. So this is it in detail. I'll grab a glass of water. And if you're nice enough with your first question, I'll pass it to Paolo. I will be back with you. Please go ahead.

[Operator Instructions] The first question comes from Trevor Stirling of Bernstein.

Bob, sorry I couldn't give you a chance to have some GlenGrant 18 ahead of the water. But the first question is coming down to you. I suppose 2 questions related to the corporate transaction, Bob. One is -- then you say there's no change in the tax residency, but it does look like the big impact here is on the voting rights of the long-term shareholders. As an implication of that is that the new shares could be issued with less dilution to voting rights? And the second question related to transaction is that you mentioned the improved favorable corporate tax governance, I think, I've probably used a wrong word there. But I wonder if you could talk a little bit about the tax implications of this and what the advantage of the transaction is?

Well, Trevor, there are basically no changes from this fiscal perspective. Our fiscal residence remains in Italy, so no changes there. What happens is that over time, loyal, long-term consumers will receive proportionally over time, additional special voting shares, which will also increase over time. So special voting share A is 1 additional vote, special voting share B, after 5 years, is 4 votes and special voting share C is 9 votes over time. So this clearly rewards long-term shareholders and also introduces flexibility into our capital structure looking to potential external perimeter development of a much larger scale looking forward.

Okay. And to just check, Bob, the -- those incremental voting rights. They don't occur on day 1. So it's not retrospective. So for instance, Lagfin, who have owned their shares for a long time, do they get the 10 years of extra voting rights from day one? Or do they have to wait further 10 years?

All shareholders are treated the same way. Clearly, those that have registered their shares currently and have 2 double voting rights, they will continue to have those 2 -- those double voting rights.

Okay. So for the 2 voting rights, to be clear, there is the initial assignment and a subsequent assignment. The initial assignment is the one where -- on register you already have had the shares for 2 years and immediately receive as special voting shares, A. But if I'm a shareholder, who's been registered on the register for a year. I don't need to wait 2 further years, in 12 months, I can apply for special voting share, A, adding an extra vote. The point of the issuance of those special voting shares is that the 2 corporate law frameworks, the Italian one and the Dutch one are different. In the Italian legal system, the law allows you to grant increased voting rights, well, in the lesser amount of 2 votes share that has belonged to the same shareholder. But you can add votes to the very same ordinary shares. While in the Dutch legal system, you have to physically issue shares, these special voting shares, to grant more voting rights. So it's is a nuance, but basically, the increased voting mechanism is basically the same, achieved in a different manner and it is enhanced, as you know, from 2 voting rights, over time, you can get to 5 and 10 voting rights.

Great. If I could just ask a follow-up question on the day-to-day business. Clearly, a significant acceleration in Espolòn, despite a lot of entrance into 100% agave. I'm just wondering what you put that down to, Bob. But also a little bit of a deceleration on Aperol. So from 28% last year to 20.5% this year. So maybe a little bit of color on those 2 key critical brands would be great.

Yes. I mean, Espolòn is being propelled by a very, very, very strong proposition, which is very unique and distinctive, both from the concept, the imagery, the packaging, very high-quality liquids. And we've actually moved into brand building mode. So actively working the on-premise and running events to recruit new consumers into the franchise. Now with regards to Aperol, I mean, we don't see any really deceleration on the brands. I mean all of our markets are growing at a very solid double-digit rate. Clearly, the base is different. This year -- I mean, last year, we started off a higher base. And at the same time, there's one big delta between the 2 is that the summer of 2018 in Europe had actually lasted almost till the end of October, whereas this year, we had a very poor and damp summer in most of Europe. Lastly, with the tariffs also arriving, we decided to move some shipments of Aperol into the new year.

The next question comes from Javier Gonzalez-Lastra of Berenberg.

I had a couple on Asia Pac. I just wonder if you could share with us the size of the costs, if I can call them one-off costs that you've incurred in the fourth quarter to move your headquarters from Asia -- from Sydney to Singapore? And whether there's any kind of guidance you can give us in terms of how much should we expect that to continue -- high cost base to continue into Q1, Q2 or maybe fiscal '20? And also, together with that, anything you can share in terms of the investment that you're looking at putting into the Chinese market to, as you said, develop the presence of Aperol? And on the second question, I'd like to ask on the U.S. Could you share with us whether there's been already an impact from the tariffs in the fourth quarter? And remind us of the overall impact that you're expecting to get on your gross profit and your gross margin?

Okay. I'll just take the second question, which was on Aperol in China. What we're planning this year in China is really to run a full battery of mini battles across different cities, different target consumers, different on-premise outlets with also different modes of serving the brand. So that we can really fine-tune the Aperol success model and adapt it to the Chinese market. So this year, there will be, yes, quite a big investment, but it's more on research. And on the basis of this, we will really decide next year onwards, how much more to step up the real A&P behind the brand?

Yes. Let's talk to the margin overall, what has happened last year and what we're envisaging for this year. So basically, the -- I said before, in 2019, we had an underlying gross margin expansion of 120 basis points, which was upside the gross margin level by the recovery of emerging markets, which accounted for 30 basis points in the aggregate for further 30 basis points. Looking into 2020, what we're expecting is basically that the underlying gross margin expansion still is confirmed at 120 basis points, but then that gross margin expansion will be offset by the tariffs, which you've mentioned, accounting for about 50 basis points, roughly EUR 7 million to EUR 8 million. This is the net impact of our price increase that we're putting on our imports. The agave effect which is costing us further 50 basis points or another EUR 8 million, and the tail-end effect sugar that is a further 20 basis point, a negative effect of EUR 4 million. So for 2020, we're not envisaging -- we're not relying on gross margin expansion to deliver a solid EBIT growth in value terms that we seek. So for 2020, we will -- margin expansion will pause for 1 year. And we will be relying on our very solid momentum of our key brands in key geographies. So this is how we see 2020. So we're definitely positive on EBIT development on a full year basis. The one that you've mentioned, APAC, the transfer of the regional headquarter from Sydney to Singapore. It came with a cost, probably EUR 2 million to EUR 3 million in 2019 and a further couple of million euros this year. But overall, nothing that we cannot absorb in terms of in the overall this scheme of things. So this is the guidance on numbers for 2020.

Okay. Can I ask in terms of the -- one last question on the agave inflation because you've guided us very well in previous occasions in terms of what analysts looking at that market, expect potentially in terms of the prices normalizing eventually. And I think last time you mentioned that, that is clearly deferred until at least late 2020, if not 2021. I just wonder if you could share any potential changes in those views?

Yes. I mean we confirm the guidance. So we're fairly optimistic vis-à-vis getting some significant tailwind in 2021. As you know, the agave, clearly the agave price clearly achieved -- it's big. So we're not seeing an increase in the agave price. Clearly, over the last few months, clearly, if you look at the average cost of agave across 2019 and the spot price, that has been stable for a couple of months still, we have a tail-end effect of the 50 basis points I mentioned. But going forward, just to frame it, we're talking of an overall negative impact on our P&L if we compare the current spot price of 20 pesos 29 pesos versus the 6 pesos that it used to be a few years ago, we're talking of north of EUR 30 million. And looking at the number of plants that we see in the fields, where it is a ticking bomb. It's difficult to predict exactly when it will happen. And our best guess is 2021. But for sure, it will happen. The price will start coming down in a meaningful manner and with a quite steep curve when all those plants will hit the market.

Clearly, I mean the brand has grown to a substantial size, Espolòn and continuing to grow at a 30% clip. It's obvious that it impact us more this year.

Yes. I mean now to be totally transparent, Espolòn has a dilutive impact on our margins due to the increase on agave price. As soon as things go the opposite direction, clearly, this would become a further driver of the underlying gross margin accretion.

The next question is from Marion Boucheron of MainFirst.

Two questions for me, please. The first 1 would be on the U.S. in the fourth quarter. If you could move -- share with us some of the moving parts that you have been in the region for the brand. I mean Espolòn seems very strong from earlier, likely better but what was the big drag? Then the second question would be on the distribution [indiscernible] in France. Could you give us more details to help us modeling for the year forward? I mean, what was the part of your brands that will distribute that were the sale of total distribution? And what's the impact on margin we should expect?

I'm not sure, sorry, we understood your second question.

And when you go direct in France as of the second quarter, so you have given us what sense was in your sale in 2019. Now that the sales you recorded without direct distribution. So what -- I mean, how could you help us model it for the next year? And then the third question would be on the change in the structure. And what -- I mean, how does that help you with the external growth strategy?

So talking to France, the RFP, potential acquisition, first and foremost, there is a big condition precedent that is the antitrust approval, that is not yet there. This is not a deal done until antitrust confirms that, as we believe that it works for them. So it's basically -- the impact will primarily be on perimeter where we envisaged an impact of about EUR 60 million in net sales and about EUR 1 million in EBIT. Clearly, there will be a higher contribution in terms of -- contribution after A&P, which offset incremental SG&A coming from the consolidation of target, incremental SG&A will be in the region of EUR 9 million to EUR 10 million in perimeter, clearly, not in existing business. So this is how we model the acquisition if and when it occurs. So this is on a full year basis. So we need to -- clearly, there's to be take into consideration that it really depends when antitrust gives the green light for closing.

On the U.S., I think you need to differentiate between what our depletions and what our shipments. Clearly, you see things evening out throughout the year. Net-in-net, if you look at our U.S. business, I mean, if you take out SKYY Vodka, we're growing high single, if not low double-digit, across the rest of the portfolio. So we have a pretty healthy business. And even if you look at SKYY Vodka, actually our depletions were better than our shipments and our consumption is better than our depletions and compare it to some of our peers, we've actually performed much, much, much better. So the brand is starting to stabilize. And remember that we also drove through a destocking, particularly on the infusions side of the business. Now moving on to the third, structure. I mean currently, our shareholders, our loyal shareholders benefit from a double voting right. Potentially, over time, moving on 10 years onwards, that can increase to tenfold. So that, obviously, over time, opens up other scenarios where we could actually emit equity for transformational deals or other strategic partnerships, which we couldn't do at this stage. We would have too much of a dilutive effect.

Okay. And just following up on the U.S. So we look for some [indiscernible] next year on, I mean, notably for Aperol, where you had [indiscernible] ahead of shipments this year?

Sorry, I'm not sure. I mean when the tariffs were announced, we looked at it, and we decided to do 2 things: one, which is to actually reduce shipments on Campari and Aperol and move them to the new year and then also take a 2-point price increase on both brands at the beginning of February, which is what we did.

[Operator Instructions] The next question comes from Alessandro Tortora with Mediobanca.

I have, let's say, one question, if I may, a clarification, a follow-up of the previous question on Baron de Rothschild, the recent acquisition in France. If you can confirm to us, it's -- sorry, EUR 50 million change perimeter at the top line level and at the EBIT level, here, we're talking about change perimeter. You mentioned before the EUR 1 million-plus the G&A, EUR 9 million, EUR 10 million. Is it right?

Yes, after the G&A. So actually, contribution after [ NPA ] of about EUR 10 million, EUR 9 million of SG&A and a positive EUR 1 million of contribution. So is the tiny bit impact, it is irrelevant.