Diageo’s profits fall 47 per cent

05 August, 2020 by Andy Young

Diageo has released its preliminary results for the year ended 30 June 2020, which show a large drop in profits after a consistent first half performance was significantly impacted by COVID-19 in the second half.

The company said its reported net sales were down 8.7 per cent to £11.8bn driven by organic declines, while reported operating profit declined 47.1 per cent to £2.1bn, driven “mainly by exceptional operating items and organic net sales”.

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Chief Executive, Ivan Menezes, said: “Fiscal 20 was a year of two halves: after good, consistent performance in the first half of fiscal 20, the outbreak of COVID-19 presented significant challenges for our business, impacting the full year performance. Through these challenging times we have acted quickly to protect our people and our business, and to support our customers, partners and communities.

“The actions we have taken to strengthen Diageo over the last six years provide a solid foundation to respond to the impacts of the pandemic. We are now a more agile, efficient and effective business.

“We have taken decisive action through the second half of fiscal 20, tightly managing our costs, reducing discretionary expenditure and reallocating resources across the group. We are further enhancing our data analytics and technology tools to rapidly respond to local consumer and customer shifts triggered by the pandemic. We have strengthened liquidity, giving us flexibility to continue to invest effectively in the business for the long term.

“While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 21, I am confident in our strategy, the resilience of our business and am very proud of the way our people have responded. We are well-positioned to emerge stronger.”

In terms of performance in Australia, the only comment in the results presentation was that liqueurs had seen double-digit growth in Australia, and also highlighted the ‘Welcome Back’ support package Diageo Australia launched for on-premise venues recovering from lockdown.