Diageo released its H1 results this morning

Diageo released its H1 results this morning

Earlier today (30 January), Diageo posted slower sales growth in its fiscal half-year, compared to Q1. Here, just-drinks takes a closer look at the company's performance in the period by region.

North America – Net sales +5%, operating profits +8%

The company's spirits brands delivered a 5% lift in net sales in the region, despite a 2% dip in volumes. Beer sales were flat on a fall in volumes of 3%, while wine posted a 5% increase in sales. Sales of Johnnie Walker jumped by 13%, although Smirnoff sales were down by 5%. An economic slowdown in Canada was highlighted, while innovations were credited with driving the performance in the US.

Western Europe – Net sales -1%, operating profits -3%

Southern Europe and Ireland were highlighted as holding the half-year numbers back. In Ireland, “the beer market continues to decline”, the company said. Guinness sales in the country fell by 6%. However, the UK and France delivered growth. Across the region, spirits sales were down by 1% on a 1% dip in volumes. Beer sales fell by 4%. Captain Morgan was the star performer, posting an 11% jump in sales. However, Johnnie Walker, Smirnoff and Guinness were all down by low single digits. J&B sales plunged by 14%.

Africa, Eastern Europe & Turkey – Net sales +2%, operating profits -4%

The contraction of the beer market and the growth of value beers in Nigeria made a major impact in the region in H1. Russia and Poland were described as “robust”, Turkey was “solid” and South Africa delivered a “very good performance”. Across the region, spirits posted a 2% lift in both sales and volumes, although beer sales were down by 4% on a 16% fall in volumes. Guinness sales dipped by 2% and Smirnoff sales fell by 4%. However, Johnnie Walker was up by 2%, with Captain Morgan leaping by 17%.

Latin America & Caribbean – Net sales +8%, operating profits +10%

Growth in the region came in “at more modest levels” in H1, Diageo said. Venezuela and Argentina were flagged as presenting challenges, while net sales in Brazil were up by mid-single digits, despite a destock which halved the rate of net sales. The spirits portfolio delivered an 8% rise in sales, while beer jumped by 10% and wine climbed by 9%. Smirnoff sales were down by 2% on flat volumes, with the Johnnie Walker range rising by 2% on a 4% dip in volumes.

Asia Pacific – Net sales -6%, operating profits -4%

The company's Chinese baijiu division, ShuiJingFang, was hit particularly hard in the half-year by the introduction of anti-extravagance measures in late-2012. Despite this, sales of super and ultra premium Scotch whisky grew in Greater China.

India was credited with delivering “strong growth”: Sales in the country leapt by 35%. In South-East Asia, sales fell by 11% as volumes were also down, by 15%. Political unrest in Thailand, paired with a weaker market environment and double digit price increases due to tax rises were to blame. While Johnnie Walker sales across the region were down by 10%, Smirnoff sales rose by 4%.