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23/04/2012
1
10th European Academic Conference on Internal Audit and Corporate Governance
Business Sustainability,
A Must In Crisis Times
20th April 2012
Verona
Antonio Zucchetti
Head of Internal Audit
Campari Group
Agenda
About Campari Group
Business Sustainability
Internal Auditing and Business Sustainability
Findings and Recommendations
Takeaway from these experiences
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About Gruppo
Campari2011 Full Year Results - Highlights
Founded in 1860
Listed at Italian
Stock Exchenge
FTSE-MIB
since 2001
Headcount: 2.278
- executives 137
- white c. 1.316
- blue c. 825
About Gruppo
Campari2011 - Sales breakdown by region and segment
FY 2011 consolidated net sales : € 1,274.2 million
Breakdown by region Breakdown by segment
(1) Includes:
USA 19.8% (22.3% in FY 2010)
Brazil 8.3% (8.4% in FY 2010)
Argentina & others 5.4% (4.1% in FY 2010)
(2) Includes:
Germany 13.0% (11.4% in FY 2010)
Russia 3.0% (2.2% in FY 2010)
(3) Includes:
Australia 5.1% (3.3% in FY 2010)
Italy31.6%
Rest of Europe (2)
25.7%
Americas (1)
33.5%
RoW (3) andDuty Free
9.2%
(34.2% in FY 2010)
(7.2% in FY 2010)
(34.8% in FY 2010)
(23.8% in FY 2010)
Spirits
76.6%
Wines14.5%
Soft DrinksOther
1.2%
(8.5% in FY 2010)
(75.4% in FY 2010)
(15.0% in FY 2010)
(1.1% in FY 2010)7.7%
45 brands
Sales in 180
Countries
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About Gruppo
CampariA Track Record of Successful Acquisitions
18 acquisitions
in 17 years
Acquisitions made
in 9 countries
Key Words Related To This ConceptBusiness
Sustainability
Enterprise
BusinessProfit
CSR
saving natural resources
saving energy
waste reduction
good things for the Planet
ROI
Trendy
a Marketing tool
a new profession
converting the business
competitive advantage
opportunities for Internal Auditing
and Company DNA
Act as entepreneur:
do not wait for the
crisis to step in
A natural process
sparked by
innovation
A simple paradigm:
be connected with
your era and
follow the profit
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Business
Sustainability
24 hrs /17 days of
intensive operations
plus 9 months of
storage at 0° C
Cinzano – grape crushing «fueled» by the sun
Saving money
and reducing
the environmental
impact
17.000 s.q.m. of solar cells
2.7 M Kw/year
3 times our yearly need
Technology made in Italy
Roof surface
saving land
Business
Sustainability
3 year project
together with Asti
Consorzio
Cinzano – Muscat grapes pesticides free
Thousands of
chemical tests
every vintage
Technical support
to the grape
growers
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Business
Sustainability
Built over the
previous historical
plant
Headquarters – a geothermic full conditioned building
The stone facade
and the roof garden
for a perfect control
of the temperature
The previous wells
are used for
conditioning
A state-of-the-art
projectSesto San Giovanni (MI)
Energy efficient
Business
Sustainability
A real business
case happened
12 years ago
Campari Soda – termination of reusable bottles
Supplier Bottling Warehouse Customers
Warehouse Supplier Cleanser Bottling Warehouse Customers
AverageReturn 60%
40% New Bottles
Hot Water + Caustic Soda + Water + EnergyManual selection
Empty bottles collectionManagement
From an
energy intensive
and wasteful
process
To a
virtuous and lean
process
Saving money
and reducing
the environmental
pressure
waste40%
recycle100%
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Internal
Auditing and
Business
Sustainability
Clear guidelinesEvaluate new risks from acquisitions and opening of a new CompanyMantain a high degree coverageKeep control through constant follow up
Mainly focused on
strategic risks
Very close to the
Top ManagementCentralized function based in HQContacts - on a daily basis -
Perceived as Adaptive and flexibleResponding to the Group’s challengesCollaboratingAdding value
Internal
Auditing and
Business
Sustainability
Sharing best
practice from all
over the world
>>> EUROPE
Austria
Belgium
France
Germany
Greece
Ireland
Italy
Monaco
Poland
Switzerland
The Netherlands
U.K.
>>> AMERICAS
Argentina
Brazil
United States
Mexico
>>> ASIA/PACIFIC
Australia
China
Hong Kong
India
>>> EAST EUROPE
Russia
Ukraine
Audit performed in 22 countries
Providing input
to the other
Functions for a
fast and effective
intervention
Close collaboration with all the Functions during the activitiesExit meeting before leaving the fieldQuick report to the Top ManagementReport released within 10 days
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Findings and
Recommandations
A selection of some examples to keep the key wordsin mind
CSRsaving natural resourcessaving energywaste reductiongood things towards the PlanetROITrendya Marketing toola new professionconverting the businesscompetitive advantageopportunities for Internal Auditing
and Company DNA
Background
Country Mexico
Full Assessment post acquisition
Issue
Risk
Recommendation
Output from waste treatmentwas not compliant
SanctionsReputation
Quick intervention of Quality Dept.Input to Legal Dept. related to Reps & Warranties
Performed in full capacity period
Status A big investment has been initiated
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8
Background
Country China
Visit to the warehouse
Issue
Risk
Recommendation
Storage doesn’t respectQuality guidelines
The product could reach theCustomer in sub-optimal condition
To send a claim to the owner and change the warehousein case of a rejection
Status After two claims being ignored we moved to another provider
Background
Country Greece
Browsing through a local newspaper
Issue
Risk
Recommendation
Problem with local Unions
Bsn interruptionReputation
To report to HQ and devise the approach to fix it
Status Fixed in five days
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Background
Country Ukraine
Full Assessment – Assets disposals
Issue
Risk
Recommendation
Old lorries are piled inthe backyard waiting forState clearance
HazardPollutionSpace occupancy
Formalize the request to the State administration
Status None
Background
Country U.K. (Scotland)
Pre-acquisition visit
Issue
Risk
Recommendation
Roof covered with asbestosThe stream close to the premises
Hazard for peoplePollutionFlooding
To take into consideration during the negotiation
Status The price was lowered and the roof was replaced after the acquisition
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10
KEY TAKEWAYS FROM THESE EXPERIENCES
1. What does Business Sustainability mean for your Company ?
2. Don’t let the details get lost in the big picture
Be curious, a small thing could be the indicator of a big risk and also opportunity
Every Company has its own DNA and direction
3. Tough times can bring innovative solutions
During times of crisis each Function should share the Company`s aspirationto save resources and be more effective
Thank you
antonio.zucchetti@campari.com
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