Diageo boosts growth and sales

By Laurence Gibbons

- Last updated on GMT

Diageo has boosted sales and growth
Diageo has boosted sales and growth

Related tags Diageo

Drinks giant Diageo has boosted sales, excluding acquisitions, by 1.8% and volume growth by 1% during a “challenging year for trading” during the six months to December 31 2015.

Diageo’s net sales fell by £400M to £5,606M and its operating profit reduced by £156M to £1,717M as a result of the disposal of non-core assets, the firm claimed.

The drinks firm completed the sale of its US-based Chateau & Estate Wines and UK-based Percy Fox to Australia’s Treasury Wine Estates for £361M on January 4 2016.

The deal had previously been agreed in October last year.

Its ceo Ivan Menezes said the business had become stronger and more competitive.

‘Stronger top line’

“We have delivered volume growth, a stronger top line, improved the performance of our key brands, driven cost productivity and continued to generate strong cash flow,”​ he claimed.

While Menezes admitted trading conditions remained challenging in some markets, Diageo’s brands, capabilities in marketing and innovation and route to consumer have proved resilient, he said.

Diageo results in numbers

  • 1.8% organic net sales growth, on 1.0% organic volume growth
  • 2.4% organic operating profit growth
  • £5,606M net sales
  • £1,717M operating profit
  • £140M free cash flow

For the full year, Diageo expected volume growth would drive stronger top line performance, margin to slightly improve and strong cash conversion to continue, Menezes said.

‘Productivity gains’

“This will set us up to deliver better momentum in F17 ​[2017 financial year], with productivity gains supporting margin expansion and investment in growth,”​ he said.

“We remain confident of achieving our objective of mid-single digit top line growth and 100bps ​[basis points] of organic operating margin improvement in the three years ending fiscal 19.”

Last week, Diageo updated its DRINKiQ website to help consumers make more informed purchasing decisions.

It included: enhanced nutrition, calorie and alcohol content information for about all its brands.

The site provided information about calories, carbohydrates and protein as well as, for the first time, detailing saturated fat, sugar, caffeine and sodium content.

Diageo’s brands include: Johnnie Walker, Crown Royal, J&B, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

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