REG - Diageo PLC - Interim results

DiageoAnnouncement

04/02/2025 07:15

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250204:nRSD7500Va&default-theme=true

RNS Number : 7500V  Diageo PLC  04 February 2025

Improved organic sales in the first half of the fiscal year, despite a
challenging environment

-   Reported net sales of $10.9 billion declined 0.6% due to unfavourable
foreign exchange, partially offset by an increase in organic net sales.

-   Organic net sales returned to growth and increased $101 million or 1.0%,
driven by positive price/mix of 1.2pps, partially offset by a 0.2% volume
decline.

-   Reported operating profit declined 4.9% and reported operating profit
margin declined 132 bps, primarily due to unfavourable foreign exchange and a
decline in organic operating margin.

-   Organic operating profit declined by $42 million or 1.2%; organic
operating margin declined 69 bps primarily due to continued investment
primarily in overheads, partially offset by reduced marketing spend and
positive gross margin expansion.

-   Diageo grew or held total market share in 65%(1) of total net sales
value in measured markets, including in the US.

-   EPS pre-exceptionals declined 9.6% to 97.7 cents largely due to a
significantly lower Moët Hennessy contribution and unfavourable foreign
exchange.

-   Net cash flow from operating activities increased by $0.2 billion to
$2.3 billion. Free cash flow increased by $0.1 billion to $1.7 billion.

-   Medium-term guidance has been removed due to the current macroeconomic
and geopolitical uncertainty in many of our key markets impacting the pace of
recovery. We remain confident of favourable industry fundamentals and our
ability to outperform. Instead in the interim, we will provide more regular
near term guidance.

-   Declared interim dividend of 40.5 cents.

-   Leverage ratio of 3.1x (net debt to EBITDA) as at 31 December 2024.

Debra Crew, Chief Executive, said:

Our fiscal 25 first half results marked a return to growth, delivering organic
net sales growth of 1% despite a challenging industry backdrop as consumers
continue to navigate through inflationary pressures. Growth in four of our
five regions was supported by market share gains. Notably, in North America,
we outperformed the market with high quality share growth and positive organic
net sales growth, driven by strong execution and momentum in Don Julio and
Crown Royal. I'm also particularly proud of the performance of our iconic
Guinness brand, which delivered double-digit growth for an eighth consecutive
half, supported by brand building expertise, innovation and growing global
momentum.

While the pace of recovery has been slower in several key markets, we remain
confident of favourable long-term industry fundamentals and more importantly
in our ability to outperform the market. Spirits remains an attractive sector
with a long runway for growth, as we expect to continue to gain share within
Total Beverage Alcohol (TBA). Additionally, our investments in digital
capabilities, supply chain, and our transformational route-to-market changes
will all be supportive in driving long term sustainable growth, and I am
pleased that we are already seeing early benefits from changes in our US
route-to-market transformation. Diageo has anticipated and planned for a
number of potential scenarios regarding tariffs in recent months. The
confirmation at the weekend of the implementation of tariffs in the US, whilst
anticipated, could very well impact this building momentum. It also adds
further complexity in our ability to provide updated forward guidance given
this is a new and dynamic situation. We are taking a number of actions to
mitigate the impact and disruption to our business that tariffs may cause, and
we will also continue to engage with the US administration on the broader
impact that this will have on everyone supporting the US hospitality industry,
including consumers, employees, distributors, restaurants, bars and other
retail outlets.

Finally, on behalf of the Board, and personally, I would like to thank Javier
Ferrán for the enormous contribution he has made as Chair at Diageo. His
dedication and stewardship have left the company in a strong position for
high-quality future growth. I would also like to welcome Sir John Manzoni as
his successor. I am certain that the experience he brings as new Chair will be
invaluable.

 Volume (equivalent units)                        Operating profit                                                    Earnings per share (eps)
 EU122.8m                                         $3,155m                                                             87.1c
 (F24 H1: EU124.6m)                               (F24 H1: $3,317m)                                                   (F24 H1: 98.6c)
 Reported movement      (1)%       i              Reported movement                   (5)%          i                 Reported movement                  (12)%      i
 Organic movement((2))  -%         i              Organic movement((2))               (1)%          i                 Eps before exceptional items((2))  (10)%      i
 Net sales                                        Net cash from operating activities                                  Interim dividend per share
 $10,901m                                         $2,325m                                                             40.50c
 (F24 H1: $10,962m)                               (F24 H1: $2,146m)                                                   (F24 H1: 40.50c)
 Reported movement      (1)%       i              F25 H1 free cash flow((2)) $1,696m                                  Flat                               -%
 Organic movement((2))  1%         h              F24 H1 free cash flow((2)) $1,571m

(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 for the six months ended 31 December 2024.

(2)      See pages 45-51 for an explanation and reconciliation of
non-GAAP measures.

See pages 45-51 for an explanation and reconciliation of non-GAAP measures,
including organic net sales, organic marketing investment, organic operating
profit, free cash flow, eps before exceptional items, adjusted net debt,
adjusted EBITDA and tax rate before exceptional items. Unless otherwise
stated, movements in results are for the six months ended 31 December 2024
compared to the six months ended 31 December 2023.

 

Dividend

An interim dividend of 40.50 cents per share (2023 - 40.50 cents per share)
will be paid to holders of ordinary shares and US ADRs on register as of 28
February 2025. The ex-dividend date is 27 February 2025 for holders of
ordinary shares and 28 February 2025 for holders of US ADRs. The interim
dividend will be paid to holders of ordinary shares and US ADRs on 24 April
2025. Holders of ordinary shares will receive their dividends in sterling
unless they elect to receive their dividends in US dollars by 21 March 2025.
The dividend per share in pence to be paid to ordinary shareholders will be
announced on 9 April 2025 and will be determined by the actual foreign
exchange rates achieved by Diageo buying forward contracts for sterling
currency, entered into during the three days preceding the sterling equivalent
announcement of the interim dividend. A dividend reinvestment plan is
available to holders of ordinary shares in respect of the interim dividend and
the plan notice date is 21 March 2025.

 

To view the interim results document in full, please paste the following URL
into the address bar of your browser:

http://www.rns-pdf.londonstockexchange.com/rns/7500V_1-2025-2-3.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7500V_1-2025-2-3.pdf)

 

Pre-recorded audio webcast and presentation slides

At 07:05 (UK time) on Tuesday 4 February 2025, Debra Crew, Chief Executive and
Nik Jhangiani, Chief Financial Officer, will present Diageo's interim results
as a pre-recorded audio webcast. This will be available to view at
www.diageo.com/en/investors/results-reports-and-events/2025-interim-results.
The presentation slides and script will also be available to download at this
time.

Live Q&A conference call

Debra Crew and Nik Jhangiani will be hosting a Q&A conference call on
Tuesday 4 February 2025 at 09:30-10:15 (UK time). For analysts and
shareholders wishing to ask questions, please use the dial-in details below
which will have a Q&A facility.

Please dial in 15 minutes ahead of the scheduled start time to register before
the call begins.

 From the UK:               +44 (0)20 3936 2999
 From the UK (free call):   0800 358 1035
 From the USA:              +1 646 233 4753
 From the USA (free call):  +1 855 979 6654
 Passcode:                  389803

Transcript and audio recording

Following the Q&A conference call, a transcript and audio recording will
be available from the link below:

 

www.diageo.com/en/investors/results-reports-and-events/2025-interim-results

 

Key dates

 Trading Update                                    19 May 2025
 Guinness Investor and Analyst Event               19-20 May 2025
 Preliminary Results for year ending 30 June 2025  5 August 2025

 

Enquiries

 Investors:  Sonya Ghobrial    +44 (0)7392 784784
             Andy Ryan         +44 (0)7803 854842
             Brian Shipman     +1 917 710 3007
                               investor.relations@diageo.com

 Media:      Brendan O'Grady   +44 (0)7812 183750
             Rebecca Perry     +44 (0)7590 809101
             Clare Cavana      +44 (0)7751 742072
             Isabel Batchelor  +44 (0)7731 988857
                               press@diageo.com

 

Diageo plc LEI: 213800ZVIELEA55JMJ32

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  IR FXLLBELLFBBX