Diageo hails North America as Asia slows

31 July, 2013

Diageo has reported steady net sales growth of 5%, despite Asia Pacific's revenues slowing and Western Europe continuing to falter.

As last year North America buoyed the overall picture, net sales having grown 5% in the year to June 30 2013.

While Africa, Eastern Europe and Turkey grew 10% in net sales and Latin America and the Caribbean saw increases of 3%.

Asia Pacific is now showing negative sales by volume, having slumped to -1% and is decelerating in value at only +3% (last year +8% net sales growth was recorded).

Western European sales continue to shrink, the region dropped  -4% in net sales and -3% in volumes during the period.

Diageo's operating profit stood at +8% for 2012/2013.

New Diageo CEO Ivan Menezes said: “Price increases in each region, positive mix in North America and Latin America and the rigour we have in managing our cost of production and controlling our overheads drove significant expansion in operating margin.”

Menezes hailed the “effectiveness” of Diageo’s marketing campaigns – which have seen investment rise by 5% - identifying them collectively as the group’s “competitive advantage”.

He said: “This has been a key driver of our performance in scotch, our biggest and most profitable category, especially for Johnnie Walker which is now a 20 million case brand.

“Innovation is driving growth in every region, with our biggest launches in US spirits where we continue to lead the innovation agenda in the industry. Elsewhere, the investments we have made to enhance our routes to market in Africa, Latin America and Eastern Europe have driven strong growth.”

Cash flow has fallen from 1.6bn to 1.5bn after Diageo made a £400 million contribution to the UK pension scheme. 

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