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Focus - Diageo's FY Performance by Region, Brands

By | 31 July 2013

Diageo saw North America perform well in its fiscal full-year

Diageo saw North America perform well in its fiscal full-year

Earlier today (31 July), Diageo posted rising sales and profits for the 12 months to the end of June. Here, just-drinks takes a closer look at the company's performance in the period by region and by brand.

Regions

North America

Net sales rose by 5%, with operating profits increasing by 10%. Volumes inched up by 1%.

Spirits in the US were up by 3% in volume terms and by 7% in value. Overall volumes in Canada were flat, although sales in the country on a value basis increased by 7%. 

The region's beer sales fell by 2% in volume and 3% in value, with wine sales up slightly in volume by 1% and in value by 4%.

The company upped its markeing spend in North America last year by 10%.

Western Europe

The perennial bad apple of Diageo's regions remained so in the fiscal full-year. Net sales slid by 4%, while operating profits tumbled by 18% on an exceptional item loss versus an exceptional gain a year earlier.

Southern Europe & Ireland saw sales tumble by 11%, although sales in Great Britain were described as "resilient". Germany, Austria and the Benelux countries delivered double-digit sales value growth, but France was down by 8%.

Africa, Eastern Europe & Turkey

This newly-formed region for Diageo reported an 11% rise in sales and a 14% increase in operating profits. Overall volumes were up by 4%.

Africa posted lifts of 4% and 10% in sales volumes and value, respectively. Nigeria, which was flagged up as performing weakly for the company earlier this year, saw volumes slip by 1%. Sales by value, however, rose by 5% in the country.

Russia & Eastern Europe performed well, with volumes up by 14% and sales by value rising by 16%.

Turkey, where Diageo now owns raki producer Mey Icki, delivered a 4% fall in volumes, but a 8% rise in sales by value. The country recently introduced excise duty increases that have affected drinks producers.

As spirits volumes rose by 8% and beer volumes dipped by 1% in the whole region, Diageo's RTD brands performed particularly well, with volumes (+27%) and sales by value (+28%) both leaping.

Latin America & Caribbean

A sales jump of 15% was fueled by double-digit growth in Venezuela, Mexico and the West LAC sub-region. The introduction of stricter enforcement in tax collections in Brazil, however, saw destocking in the country's wholesale channel hamper Diageo's performance in the country.

Operating profits from LAC jumped by 28%, while overall volumes increased by 4%.

Asia Pacific

Net sales were up by only 3% in the year from the region, with South Korea and Asia Pacific's travel retail channel both suffering from "difficult trading environments". Operating profits overall, however, leapt by 24%.

The anti-extravagance measure introduced by China's government late last year were to blame for a slowdown during the second half for Diageo: FY volumes were up by only 1% with sales by value increasing by 8% in the country. India saw volumes (-5%) and sales by value (-2%) suffer due to stock reductions in the trade during Q1. The region's travel retail channel also struggled with destocking: net sales fell in the year by 15%.

Brands

Overall spirits volumes rose by 2% in the year, as sales by value were up by 7%. Beer was down by 2% in volume, but up in value, also by 2%. Wine volumes fell by 9% and posted flat sales in value terms. RTD volumes decreased by 3% in volume and were flat in value.

Total volumes increased by 1%.

In spirits - which accounts for 68% of total sales - whisk(e)y (36% of net sales) was up by 5% in volume and by 10% in value. Johnnie Walker posted a 10% lift in sales value, with Crown Royal also delivering healthy growth, of 17%. J&B, traditionally stronger in southern Europe, fell by 15% in sales value, with Windsor plunging by 21% as its main market of Korea struggled.

Vodka (12% of Diageo's sales) overall was flat in volume terms but up by 5% in value, with Smirnoff coming in 4% up in value terms. Ketel One and Ciroc both recorded sales growth of 8% each.

The volumes for rum (6% of net sales) rose by 1% while sales value increased by 5%. Captain Morgan sales were up by 7%.

Liqueurs (5% of net sales), predominantly Baileys, slipped by 1% in volume but sales value was up by 2%.

Volumes from beer (21% of net sales), led by Guinness, decreased by 2%, although sales value increased by 2%.

Expert analysis

Diageo plc - Mergers & Acquisitions (M&A), Partnerships & Alliances and Investment Report

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

Sectors: Beer & cider, Company results, Emerging markets – BRIC, Spirits, Wine

Companies: Diageo, Johnnie Walker, Crown Royal, Smirnoff, Captain Morgan, Guinness

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