GLOBAL: Developed challenges remain, but Diageo sees Q1 sales rise
- Net sales in Q1 increase by 5%
- Asia Pacific sales in three months to end of September inch up by 2%
- LatAm & Caribbean up by 16%
- Europe slips by 1%
Diageo released its Q1 interim statement earlier today (17 October)
Diageo has posted a lift in net sales for its first quarter, although developed markets remain challenging for the drinks giant.
In a trading update released earlier today (17 October), the company said that organic net sales in the three months to the end of September grew by 5% on a global group basis. However this was a slowdown on last year's Q1, when sales rose by 9%.
Net sales on a reported basis increased by 6% in this year's first quarter, while global volumes were up 2%.
Latin America and the Caribbean delivered the group's biggest growth, with organic net sales up 16%, despite a "tough" prior year comparison. In the US, meanwhile, a "continued good performance" in spirits helped drive up North American sales by 6% year-on-year.
In Africa, "strong growth" in spirits in South Africa and in beer in East Africa offset "weakness" in Nigeria, leading to overall growth of 11% for the division.
The Asia Pacific region saw a sales rise of just 2%. The region's developed markets were dragged down by "weakness" in South Korea. In Asia's emerging markets, strong growth in South-East Asia and China, especially in Scotch, was "offset by the postponement into the second quarter of sales to global travel customers and weakness in the vodka category in India," Diageo said.
Sales in Europe slipped by 1%, but chief executive Paul Walsh said: "While the consumer environment in Western Europe remained challenging, we delivered over 30% net sales growth in the faster growing markets ... especially in Turkey where we have driven share gains from the successful integration of (Turkish spirits company) Mey Içki."
Southern Europe and Ireland are still facing challenges, the group said, while consumer demand in France remains "weak" after duty rises in January.
Overall, Walsh branded the results a "solid" start to the year, with net sales growth in line with expectations.
"As a global business we continue to be aware of the uneven nature of the global economy," he added. "However we remain confident that we will deliver our medium term goals, given the strength of our brands and our routes to market."
Net sales from recent acquisitions Mey Içki, Meta Abo, Ypióca and Shuijingfang, were GBP79m (US$127.7m), while there was a negative foreign exchange impact of GBP49m (US$79.2m), the group said.
By 1100 BST today, Diageo's share price had slipped by 2.1% to GBP17.45.
To read Diageo's official statement, click here.
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