FDBusiness.com

Diageo Shows Resilience in Challenging Trading Conditions

 Breaking News
  • Younger British Consumers Turn Over a New Leaf on Tea New research from Mintel reveals that as many as 37% of British consumers aged 25-34 have drunk 5-6 different types of tea at home or in the workplace over the past month*, compared to just 3% of those aged 55+. Furthermore, Brits aged 25-34 are the most likely to drink every variety of tea tracked by [...]...
  • Irish Consumer Confidence Hits New High Consumer confidence in Ireland has hit its highest level since the recession and is now the fourth most confident country in Europe, according to the latest Nielsen Global Survey of Consumer Confidence and Spending Intentions. The Republic of Ireland’s Consumer Confidence Index score – which measures attitudes each quarter on topics including personal finances and job prospects [...]...
  • Fifth Acquisition For Frutarom in 2017 Frutarom Industries, one of the world’s 10 largest companies in the field of flavours and natural specialty fine ingredients, continues its momentum of acquisitions and the implementation of its rapid and profitable growth strategy by agreeing to purchase of 100% of the shares of the UK company Flavours and Essences (UK) Ltd (F&E) for approximately [...]...
  • Market-leading Food Contact Conference, Plastics & Paper in Contact with Food – 4-7 December, Berlin Over 200 experts from across the food contact industry will come together in Berlin, Germany from 4–7 December 2017 to attend Smithers Pira’s Plastics & Paper in Contact with Foodstuffs (P&P) –http://www.food-contact.com/plastics-paper. With the European Commission having recently published EU regulation 752/2017 amending EU Regulation 10/2011 on plastic materials and articles intended for food contact, all [...]...
  • Croxsons’ Stunning Black Bottle For 6 O’Clock Gin’s Limited Edition Debut Leading glass packaging company Croxsons has supplied Bristol based distiller, 6 O’Clock Gin, with a stunning black bottle for their first limited edition gin product – the Brunel Edition. Since Bramley & Gage’s partnership with Croxsons for the re-launch of their 6 O’Clock gin, the Brunel Edition is the first limited edition gin for 6 O’Clock [...]...
  • Carlsberg Group Remains on Course Carlsberg Group has announced organic and reported net revenue growth of 2% to DKr31.77 billion (€4.27 billion) for the first half of 2017 although group beer volumes fell organically by 3%, chiefly due to a decline in Russia. Operating profit was up 15% organically, with all three regions – Western Europe, Eastern Europe and Asia [...]...

Diageo Shows Resilience in Challenging Trading Conditions

Diageo Shows Resilience in Challenging Trading Conditions
February 01
16:05 2016

Adverse exchange and the impact of the disposal of non-core assets has reduced net sales at Diageo by £400 million to £5.606 billion and operating profit by £156 million to £1,717 billion for the six months ended 31 December 2015. However, Diageo reported 1.8% organic net sales growth, on 1.0% organic volume growth and organic operating profit growth of 2.4%.

The disposals included the sale of Bushmills and Gleneagles and the sale of wines in the United States and Percy Fox in Great Britain and beer assets in Jamaica and Asia.

Ivan Menezes, chief executive of Diageo, comments: “Diageo has become a stronger, more competitive business. We have delivered volume growth, a stronger top line, improved the performance of our key brands, driven cost productivity and continued to generate strong cash flow. While trading conditions remain challenging in some markets, Diageo’s brands, capabilities in marketing and innovation and our route to consumer have proved resilient. I am confident that Diageo can deliver improved, sustained performance.”

DiageoJohnnieWalkerProduction2He continues: “For the full year we expect volume growth to drive stronger top line performance, margin to slightly improve and strong cash conversion to continue. This will set us up to deliver better momentum in F17, with productivity gains supporting margin expansion and investment in growth. We remain confident of achieving our objective of mid-single digit top line growth and 100bps of organic operating margin improvement in the three years ending fiscal 19.”

In its Europe, Russia and Turkey region, Diageo continued its momentum in Europe, reported growth in Turkey and achieved net sales growth in Russia during the first half against the prior period although the trading environment there remains challenging. In Europe net sales were up 2% and Diageo gained share, with continued growth in Great Britain and improved performance in Continental Europe and France. Reserve brands in Europe delivered another strong performance with net sales up 18%.

In both Great Britain and Ireland Guinness momentum continued with innovations from ‘The Brewers Project’. Baileys was back to growth as a result of increased in-outlet activation and consumer sampling. Continued investment in Diageo’s route to consumer led to a 10% increase in outlets covered and coverage is expected to increase further in the second half.

In Russia price increases to offset devaluation led to a volume decline of 12% however net sales grew 20% driven by positive brand mix and Diageo gained share in rum although scotch share declined. In Turkey net sales were up 9% with premiumisation in the raki category and double digit growth of Johnnie Walker and Smirnoff. Total operating margin for the region improved 46 bps largely driven by procurement savings in marketing spend.

About Author

mike

mike

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • September 11, 2017drinktec
  • September 13, 2017FI Asia
  • September 19, 2017PROCESS EXPO 2017
  • September 22, 2017Global Summit on Food & Beverages
AEC v1.0.4

The Magazine

F&D Business Preferred Suppliers

Advertisements