Italy-based beverage company the Campari Group has reported its pre-tax profits has increased by 42.7% to €76.5m and its net financial debt declined by €42.8m was due to capital gain from the disposal of the company’s Lemonsoda business in the first quarter (Q1) of 2018.

Lemonsoda was sold for €81.5m and debt reduction was also aided by the company’s acquisition of Bisquit for €59.4m.

Net financial debt was €981.5m in the fourth quarter of 2017 and €938.7m in Q1 2018.

The company reported sales of €336m in Q1 2018 with organic growth of 2.2%. However, on a reported basis sales declined 8.2% from €366.2m in Q1 2017 as a result of exchange rate effects of -7.5% or €27.6m and perimeter impact of -2.9% or €10.7m.

Gross profit was €200m with 6.7% organic growth and margin accretion of 250 basis points due to a very favourable sales mix. Reported change in gross profit reduced by 3.6% from €207.4m meaning profit rose 290 basis points to represent 59.5% of net sales.

Pre-tax earnings grew by 8.9% on an organic basis causing a margin accretion of 110 basis points driven by higher investments in advertising and promotion and distribution capabilities. The Campari Group spent €54.1m on advertising and promotion in Q1, which represents a 3.4% decline on a reported basis, a7.2% increase on an organic basis and 43.4% of net sales.

The group’s earnings declined 5.1% on a reported basis to €61.1m due to -8.5% or €5.5m effect of foreign exchange and -5.4% or €3.5m perimeter impact. Overall earnings were up 60 basis points to 22.2% of net sales.

The region with the largest sales increase in Q1 was Asia Pacific, which experienced a 17.8% rise. Sales grew by 51% in New Zealand, 44.8% in Asia driven mainly by Japan and 9.4% in Australia as a result of double-digit growth for the Campari’s Group’s global priority brands, such as Aperol, Wild Turkey and SKYY.

The Americas saw 2.9% growth led by Jamaica with 13.9% sales increase. Southern Europe, the Middle East and Africa recorded 1.1% sales upsurge led by Italy with 3.9% growth. North, Central and Eastern Europe experienced -3.8% decline in sales led by Russia with a reduction of 30.5% because of unfavourable comparison base to Q1 2017 and price increase negotiations.