Diageo cites global uncertainty as Johnnie Walker flags
The drinks company reported interim results for the half year ended 31 December 2019, with net sales at £7.2bn (+4.2%), driven by organic growth.
It also reported operating profits of £2.4bn, up 0.5%, which it said were impacted by organic growth offset by unfavourable exchange rates, exceptional operating items and acquisitions and disposals.
However, it revealed that Scotch net sales were flat as growth in malts and Buchanan’s was offset by Johnnie Walker “softening”, due to challenging trading conditions in Mexico and Travel Retail, and political and economic disruptions in Peru and Chile.
Ivan Menezes, chief executive, said there was “ongoing uncertainty” in the global trade environment.
“Diageo has delivered another good, consistent set of results in the first half, with broad-based organic net sales growth across regions and categories. We have continued to increase investment behind marketing and growth initiatives, while expanding organic operating margins.”
He said that, for the full year, it expected organic net sales growth to be at the lower end of the scale of its 4-6% mid-term guidance range. Menezes added that he expected organic operating profit to grow roughly one percentage point ahead of organic net sales.
However, GMB, the union, has accused Diageo of “eye-watering” profits and has called for recognition of the role played by Scotch whisky.
Keir Greenaway, GMB Scotland organiser, said: “Diageo’s eye-watering profits are built off the back of Scotland, with Scotch whisky continuing to drive sales.
“These results should reassure whisky and spirits workers here in Scotland that, despite ongoing Brexit uncertainty and getting caught up in a trade war between the US and the EU, their industry continues to deliver for Diageo.”
Diageo is a global leader in beverage alcohol, with brands across spirits and beer categories including Johnnie Walker, Crown Royal, J&B, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan rum, Baileys liqueur, Don Julio tequila, Tanqueray gin and Guinness.
