Diageo released its half-year results earlier today

Diageo released its half-year results earlier today

Earlier today, Diageo issued its half-year results for the six months to the end of December. Here, just-drinks, takes a look at the figures for each of the group's regions as well as the performance of its brands.

Regions

  • North America (32% of total sales) - Net sales down by 2%, operating profits fall by 5%

Spirits sales in North America were down by 1%, with wine inching up by 1%. Beer sales, however, fell by 5%, with the RTD stable slumping by 12%. Diageo highlighted weaker pricing in the US spirits market and a strong prior-year cycle as the main reasons for the dip in sales in the region. "Given our already premium price position in many categories (in the US), we have taken fewer price increases and engaged in more tactical promotional activities in the most competitive segments." The firm's higher-end 'reserve brand' business delivered a 10% lift in sales, thanks mainly to Don Julio and Bulleit. Canadian sales rose by 1%.

  • Europe (25% of total sales) - Net sales and operating profits both decrease by 6%

Spirits fell by 8%, beer and wine were down by 4% and 3%, respectively, with RTD sales coming in flat. “Diageo’s performance in Europe reflected a stable performance in Western Europe, strong growth in Turkey, and tough trading conditions in Russia and Eastern Europe.” The UK, France and Italy posted growth in the half-year, while Turkey grew thanks to Diageo's moves to premiumise its Yeni Raki brand in the country. Russia and Eastern Europe struggled due to the former's economic and political environment. Sales in the sub-region slumped by 25%. Diageo's Scotch sales in Russia fell by 17%.

  • Africa (13% of total sales) - Net sales fall by 4%, operating profits decrease by 6%

Spirits sales were up by 9%, although beer sales dipped by 4%. RTD sales were down by 38%. The company was upbeat about its African numbers. “Performance in our Africa regional markets has improved as beer in Ghana and Cameroon is in good growth, we have delivered strong growth in spirits in Angola … and our performance in Nigeria improved.” However, the volumes increase in Nigeria – up by 14% - came against a backdrop of beer consumers trading down to value offerings.

  • Latin America & Caribbean (10% of total sales) - Net sales drop by 31%, operating profits slump by 47%

Spirits fell by 34%, with wine and RTD dropping by 29% and 10%, respectively. Beer sales were up, however, by 7%. In organic terms, the LAC performance was less disappointing, with sales slipping by only 1%. Diageo's domestic business performed well in the half-year, although "the border business remains challenging". The effect of currency volatility led to reduced inventory levels in the region, but "a strong contribution from our domestic markets mitigated the impact on net sales". Price increases took hold in Brazil, while the high-inflation environment in Venezuela hit hard. Sales in Colombia, meanwhile, rose by 12%, with Mexico also delivering growth, of 7%.

  • Asia Pacific (20% of total sales) - net sales leapt by 55%, operating profits fell by 65%

Spirits sales leapt by 69%, with RTD inching up 1%. Beer sales fell by 11%. The half-year numbers were skewed by the full consolidation of United Spirits in India in the period. In organic terms, sales in Asia Pacific were down by 5%. Greater China's sales dipped by 7%, with Scotch sales (down 22%) being hampered by the ongoing anti-extravagance measures.

The company's baijiu division, Shuijingfang, improved in Q2 thanks to weak prior-year comparatives and increased activity in the premium segment of the category. Diageo's Global Travel, Asia and Middle East unit reported an 11% lift in half-year sales. Marketing spend fell markedly in the period - down 15% - with the company working to optimise its China spend in the "modern on-trade". Investment was prioritised to Haig Club in launch markets, the company noted.

Brands

Global Giants (30% of total sales)

  • Johnnie Walker - -9% organic volumes, -12% organic net sales
  • Smirnoff - -3% organic volumes, -3% organic net sales
  • Captain Morgan - -2% organic volumes, -4% organic net sales
  • Baileys - -4% organic volumes, -5% organic net sales
  • Tanqueray - +9% organic volumes, +12% organic net sales
  • Guinness - -4% organic volumes, -4% organic net sales

Local Stars (16% of total sales) - highlights

  • Buchanan’s - -3% organic volumes, +5% organic net sales
  • Yenì Raki - -2% organic volumes, +10% organic net sales
  • Old Parr - -11% organic volumes, -14% organic net sales
  • Bundaberg - -21% organic volumes, +17% organic net sales
  • Shuijingfang - - +170% organic volumes, +101% organic net sales

Reserve Brands

  • Scotch malts - +8% organic volumes, +10% organic net sales
  • Ciroc -+27% organic volumes, +27% organic net sales
  • Ketel One - -2% organic volumes, -1% organic net sales
  • Don Julio - +16% organic volumes, +21% organic net sales
  • Bulleit - +44% organic volumes, +57% organic net sales

Others

  • Beer (17% of total sales) - +2% organic net sales
  • RTD (5% of total sales) - -1% organic net sales
  • Wine (4% of total sales) - "broadly flat"