Diageo reports 5% growth

18 April, 2013

Diageo, has reported 5% organic and 6% reported net sales growth for the nine months to 31 March 31. Volume was up 1%.

The world’s largest premium drinks company says this is in line with the first half performance of fiscal 2013.

In the quarter ended 31 March 2013, Diageo reports that it delivered 4% organic net sales growth with volume down 1%.
Reported net sales grew 7% in the quarter benefiting from the acquisition of Shui Jing Fang and Ypióca and a small positive foreign exchange impact, it says.

Reported net sales growth in the nine months ended 31 March 2013 was 6%, also against the comparable prior period.

By region, organic net sales growth for the nine month period was:

·North America         6%

·Western Europe         4%

·Africa, Eastern Europe and Turkey         9%

·Latin America and Caribbean         14%

·Asia Pacific                  4%

The company reports: “Diageo’s US spirits business again delivered a strong performance with underlying consumer trends unchanged from the first half. Price increases taken on US spirits brands since May 2012 delivered stronger price/mix. US spirits remain the key driver of performance for Diageo North America.

“Underlying trends in Western Europe remain unchanged. The stronger performance in the quarter was due to the comparison against a weak third quarter in the prior year in France, an earlier Easter in 2013 and shipment phasing in Spain, which is expected to reverse in Q4.

“Trading in Africa, Eastern Europe and Turkey is broadly unchanged from the first half. As anticipated, trading in Nigeria weakened slightly and there was a short term impact from the elections in Kenya. Russia’s performance was affected by comparison against a strong quarter in the prior year; the result of shipment phasing between Q3 and Q4 last year. Net sales growth in Turkey was impacted by customer purchases in Q2 ahead of the duty increase.

Performance in Latin America and Caribbean moderated as consumer weakness in Brazil impacted performance despite share gains. In Colombia and Venezuela, systems changes led to higher shipments in the first half, which reversed in Q3. Performance in Asia Pacific was affected by the comparison against a strong quarter in the prior year due to the timing of price increases and the continued decline of the scotch market in Korea.

March 31 2013, net assets were £7,670 million (£7,448 million at December 31 2012) and net borrowings were £8,431 million (£7,897 million at December 31 2012).

Diageo CEO Paul Walsh, said: “Our performance in the quarter was robust and again demonstrates Diageo’s strengths, global reach and category breadth and depth. Therefore despite consumer weakness in three markets, Korea, Nigeria and Brazil, Diageo’s performance for the nine months is in line with the first half and our expectations.

“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,” he said.

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

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