UK: Brazil, Nigeria weak but Q3 follows expectations for Diageo

By | 18 April 2013

  • YTD net sales rise by 5%
  • Volumes in nine months to end of March up by 1%
  • Q3 net sales increase by 4%, volumes down by 1%
  • LatAm & Caribbean YTD sales jump by 14% Asia Pacific sales rise slows, up 4%
Diageos third quarter performed in line with expectations

Diageo's third quarter performed in line with expectations

Diageo has highlighted slowing growth in two important emerging markets in its third quarter, but sales in the year-to-date remain in line with expectations.

In a trading update earlier this morning (18 April), the company said that total net sales in the nine months to the end of March rose by 5% year-on-year, as volumes inched up by 1%. For the third quarter, sales were up by 3%, although volumes slipped by 1%, due to a "strong price/mix".

The YTD sales numbers echoed the firm's half-year, when sales were up by 4.9%, albeit on a 1% lift in volumes.

On a regional basis:

  • North America saw net sales increase by 6%
  • Western Europe sales fell by 4%
  • Africa, Eastern Europe & Turkey was up by 9%
  • Latin America & Caribbean performed strongest, with sales jumping by 14%
  • Asia Pacific saw growth slow, increasing by only 4%

In related commentary, Diageo said that Nigeria and Brazil demonstrated “consumer weakness” in the third quarter. Korea was also singled out as having struggled in the period.

“Diageo’s performance for the nine months is in line with the first half and our expectations,” said CEO Paul Walsh. “Strong performance from our biggest business, US spirits; the continued growth of spirits in Africa; share gains across our markets in Asia Pacific and double-digit growth of Johnnie Walker, Crown Royal, Buchanan’s, and Tanqueray are the highlights of the quarter.

“Given our market positions and geographic diversity we remain confident that Diageo’s performance continues to be in line with our medium term guidance.”

The firm will report its full-year preliminary results on 31 July.

For Diageo's official statement, click here.

Expert analysis

Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review

Diageo plc (Diageo) is one of the world's leading companies in the beverage alcohol industry. The company carries out the production and distribution of spirits, beer and wine. The key brands of the company include Johnnie Walker, Smirnoff, Captain Morgan, Baileys Original Irish Cream, J&B, Tanqueray, Guinness, Crown Royal Canadian, Beaulieu Vineyard and Sterling Vineyards, and Bushmills Irish. Diageo also has distribution rights for the Jose Cuervo tequila brands in North America and various other markets.

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

Companies: Diageo, Johnnie Walker, Crown Royal, Tanqueray

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