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21st October

Diageo Reports Sales Rise Despite European Decline

Diageo has reported steady sales growth for the second blackstuffhalf of 2012, although sales in Europe fell 2 per cent. The solid performance was underpinned by price increases and growth of its premium portfolio. Organic net sales grew 5 per cent to £6,039 million (€7,038 million), with volumes up 1 per cent. Operating profit was up 9 per cent, totalling £2,029 million (roughly €2,364 million).

The group's European division, which makes up about 28 per cent of group sales, saw a 2 per cent fall-off. Russia and Eastern Europe delivered volume growth of 9 per cent and net sales were up 15 per cent, with double-digit net sales growth in Germany and the Benelux and a strong performance in Turkey. This helped to off-set the 19 per cent decrease in sales in Southern Europe and a "significant decline" in France.

Asia, accounting for approximately 14 per cent of total sales, delivered underlying sales growth of 6 per cent. The region reported a 28 per cent increase in sales of super premium scotch, which was dampened by the contraction of the whisky market in Korea.

The all-important US market, providing about 33 per cent of group sales, saw premium whisk(e)y and vodka brands deliver double-digit increases.

A group statement highlighted the importance of "faster growing markets" which made up 42 per cent of net sales in the half and delivered organic net sales growth of 14 per cent and operating profit growth of 21 per cent.

Commenting on the results, CEO Paul Walsh said, "These results reflect the global strength of our strategic brands, our leadership in the US spirits market and our increasing presence in the fastest growing markets of the world. Our expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth, while net sales growth was driven by our pricing strategy and premiumisation, especially in the US." (31 Jan)

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