REG - Diageo PLC - Diageo Preliminary Results 2024

DiageoAnnouncement

30/07/2024 07:00

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RNS Number : 2892Y  Diageo PLC  30 July 2024

Diageo delivers resilient performance with improved market share in the second
half of the fiscal year, despite volatile operating environment

-    Reported net sales of $20.3 billion declined 1.4% due to an
unfavourable foreign exchange impact and organic net sales decline, partially
offset by hyperinflation adjustments. Reported operating profit grew 8.2% and
reported operating profit margin grew 262bps, primarily due to the positive
impact of exceptional operating items partially offset by a decline in organic
operating margin.

-    Organic net sales declined $129 million or 0.6%, positive price/mix of
2.9pps was more than offset by a 3.5% volume decline, primarily driven by a
21.1% decline in our Latin America and Caribbean region (LAC). Organic
operating profit declined by $304 million or 4.8%, of which $302 million was
attributable to LAC; organic operating margin contracted 130bps.

Excluding the impact of LAC:

- Organic net sales grew $330 million or 1.8%, driven by price/mix of 3.9pps,
partially offset by a 2.1% volume decline. A decrease in organic net sales in
North America of 2.5% was more than offset by growth in Africa, Asia Pacific
and Europe. Organic operating profit declined 0.1%, and organic operating
margin contracted 56bps.

-    Diageo grew or held total market share in over 75%((1)) of total net
sales in measured markets, including in the US.

-    Net cash flow from operating activities increased by $0.5 billion to
$4.1 billion. Free cash flow increased by $0.4 billion to $2.6 billion.

-    Increased recommended full year dividend by 5% to 103.48 cents per
share.

-    Completed $1.0 billion return of capital programme announced on 1
August 2023 through share buybacks.

-    Leverage ratio of 3.0x as at 30 June 2024, Diageo remains committed to
its target leverage ratio of 2.5x - 3.0x.

Debra Crew, Chief Executive, said:

While fiscal 24 was a challenging year for both our industry and Diageo with
continued macroeconomic and geopolitical volatility, we focused on taking the
actions needed to ensure Diageo is well-positioned for growth as the consumer
environment improves.

Fiscal 24 was impacted by materially weaker performance in LAC. Excluding LAC,
organic net sales grew 1.8%, driven by resilient growth in our Africa, Asia
Pacific and Europe regions. This offset the decline in North America, which
was attributable to a cautious consumer environment and the impact of lapping
inventory replenishment in the prior year.

In fiscal 24 we made good progress against our strategic priorities. We ended
fiscal 24 gaining or holding share in measured markets totalling over 75% of
our net sales value, including in the US. We have taken actions to manage the
inventory issues in LAC; we have strengthened our consumer insights and
redeployed resources towards the best growth opportunities; we have stepped up
our route-to-market across several markets, including our most significant
transformation in at least a decade in our US Spirits organisation; we have
delivered record productivity savings of nearly $700 million; and we have
generated $2.6 billion in free cash flow while increasing strategic
investments. We are confident that when the consumer environment improves, the
actions we are taking will return us to growth.

Diageo is a resilient business, benefitting from its global reach and
unrivalled brand portfolio. With iconic brands that have been enjoyed for
decades, Diageo takes a long-term view, and will continue to invest in our
brands, people and diversified footprint to deliver sustainable long-term
growth and generate shareholder value.

 

 Volume (equivalent units)           Operating profit                                       Earnings per share (eps)
 EU230.5m                            $6,001m                                                173.2c
 (F23: EU243.4m)                     (F23((3)): $5,547m)                                    (F23((3)): 196.3c)
 Reported movement          (5)%  i  Reported movement          8 %           h             Reported movement                                                                                 (12)%  i
 Organic movement((2))      (4)%  i  Organic movement((2))      (5)%          i             Eps before exceptional items((2))                                                                 (9)%  i
 Net sales                                        Net cash from operating activities                           Total recommended full year dividend per share ((4))
 $20,269m                                         $4,105m                                                      103.48c
 (F23((3)): $20,555m)                             (F23((3)): $3,636m)                                          (F23((3)): 98.55c)
 Reported movement          (1)%  i               F24 free cash flow((2)) $2,609m                              Increase
                                                                                                               5 % h
 Organic movement((3))      (1)%  i               F23 free cash flow((2),(3)) $2,235m

(1)      Internal estimates incorporating Nielsen, Association of
Canadian Distillers, Dichter & Neira, Frontline, INTAGE, IRI, ISCAM,
NABCA, State Monopolies, TRAC, IPSOS and other third- party providers. All
analysis of data has been applied with a tolerance of +/- 3 bps and the
descriptions applied of gaining, holding or losing share by the Company or
brands are based on estimated performance within that tolerance. Percentages
represent percent of markets by total Diageo net sales contribution that have
held or gained total trade share fiscal year to date. Measured markets
indicate a market where we have purchased any market share data. Market share
data may include beer, wine, spirits or other elements. Measured market net
sales value sums to 89% of total Diageo net sales value in fiscal 24.

(2)      See pages 42-43 for an explanation and reconciliation of
non-GAAP measures.

(3)      See pages 29-30 for an explanation under Basis of preparation.

(4)      Includes recommended final dividend of 62.98 cents.

See pages 42-43 for an explanation and reconciliation of non-GAAP measures,
including organic net sales, organic marketing investment, organic operating
profit, free cash flow, eps before exceptionals, adjusted net debt, adjusted
EBITDA and tax rate before exceptional items. Unless otherwise stated,
movements in results are for the year ended 30 June 2024 compared to the year
ended 30 June 2023.

 

 

 

To view the preliminary results document in full, please paste the following
URL into the address bar of your
browser: http://www.rns-pdf.londonstockexchange.com/rns/2892Y_1-2024-7-29.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2892Y_1-2024-7-29.pdf)

 

 Investor enquiries to:  Durga Doraisamy   +44 (0) 7902 126 906
                         Andy Ryan         +44 (0) 7803 854 842
                         Brian Shipman     +1 917 710 3007
                                           investor.relations@diageo.com

 Media enquiries to:     Brendan O'Grady   +44 (0) 7812 183 750
                         Becky Perry       +44 (0) 7590 809 101
                         Clare Cavana      +44 (0) 7751 742 072
                         Isabel Batchelor  +44 (0) 7731 988 857
                                           press@diageo.com

 

Diageo plc LEI: 213800ZVIELEA55JMJ32

 

The preliminary results for the year ended 30 June 2024 have been submitted in
full unedited text to the Financial Conduct Authority's National Storage
Mechanism and will be available shortly for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

The preliminary results are also available in full on the corporate website at
https://www.diageo.com/en/news-and-media/press-releases/2024/2024-preliminary-results-year-ended-30-june-2024
(https://www.diageo.com/en/news-and-media/press-releases/2024/2024-preliminary-results-year-ended-30-june-2024)

 

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