UK: Asia Pacific fails to hold back Diageo H1
Diageo has posted a healthy lift in both sales and profit for the first half of its current financial year.
The UK-based drinks giant, which ducked out of the race for Vin & Sprit last week, said today (14 February) that net profit for the 12 months to the end of December rose in reported terms by 9% on a year earlier, to GBP975m (US$1.92bn). In organic terms, sales were up in the six-month period by 7% to GBP4.29bn, with operating profit climbing by 9% to GBP1.41bn.
In North America, Diageo saw net sales climb by 6%, with operating profit rising by 7%. Priority brands Smirnoff, Captain Morgan, Johnnie Walker, Crown Royal and Sterling and Chalone wines provided the main growth, while the company credited price increases and mix benefits for driving growth and margin improvement in the region.
Europe's performance, meanwhile, reflected the company's "increased focus on premium brands and growth markets". As net sales rose by 4% - with volumes up a lesser 3% - operating profit inched up 2%, with the UK benefiting from increased marketing spend. Guinness returned to growth in the UK and Ireland, while Johnnie Walker and Baileys contributed to growth in Russia.
The international division - comprising Latin America, South Africa, Global travel retail and the Middle East - saw net sales leap by 16% and operating profit rise by 20%. The growth of Smirnoff, Baileys and J&B were noted as pushing growth in the region.
Finally, in Asia Pacific, net sales were up by only 1%, although operating profit slid by 12%. Diageo blamed "a number of factors including the loss of the import licence in Korea" for the region's disappointing performance.
"Looking at our individual brand performances; Johnnie Walker has again delivered double-digit net sales growth as have Smirnoff and Captain Morgan," said Diageo's CEO, Paul Walsh. "The performance of Guinness has also improved with net sales up 6% and share gains in Great Britain and Ireland. In addition, a new marketing campaign has reintroduced JeB to consumers in Continental Europe, Mexico and South Africa and the brand grew strongly in the first half.
"This first half performance demonstrates that our brands are well supported and our routes to market remain strong and therefore, while we continue to watch for any impact that recent financial market volatility may have on broader trading conditions, we are maintaining our guidance for 9% organic operating profit growth for the current fiscal year."
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