Diageo reports sales and profit increases

27 July, 2018 by Andy Young

Diageo has posted another strong global result with reported net sales of £12.2bn and operating profit £3.7bn, while net sales in Australia were flat.

The results means that in total sales were up by 0.9 per cent and profits increased by 3.7 per cent. CEO Ivan Menezes welcomed the result saying that Diageo has delivered another year of strong, consistent performance.

Advertisement

“Organic volume and net sales growth is broad based across regions and categories,” Menezes said.

“We have expanded organic operating margin while increasing investment behind our brands ahead of organic net sales growth.

“These results reflect the high performance culture we have created in Diageo, the ongoing rigorous execution of our strategy, our focus on the consumer and our ability to move swiftly on trends and insights.

“During the year we returned £1.5bn to shareholders through a share buyback. We have delivered another year of strong cash flow generation in F18. Consequently, the Board has approved an additional share buyback programme of up to £2.0 billion during F19.

“The changes we have made in the business and the shifts in culture we continue to drive, ensure we are well placed to capture opportunities and deliver sustained growth. Our financial performance expectations are unchanged and we expect to continue to invest in the business to deliver our mid-term guidance of consistent mid-single digit organic net sales growth and 175bps of organic operating margin expansion for the three years ending 30 June 2019.”

Australia is reported as part of Diageo’s Asia Pacific region, which as a total saw 9.2 per cent organic movement in net sales, and represents 21 per cent of Diageo’s total sales.

The company did state that net sales in Australia were flat, adding: “Growth in Guinness and Tanqueray, with the latter gaining 1.1pps of share, was offset by declines in Smirnoff and Bundaberg in the ready to drink category.”

In his presentation on the results, Menezes said that Tanqueray had seen “double digit growth” in Australia.

Bundaberg is listed as one of Diageo’s ‘local stars’ and the report showed that the overall the brand had three per cent drop in organic volume movement, a four per cent drop in organic net sales movement and a seven per cent drop in reported net sales movement.