Diageo half-year sales rise 4.2%


Drinks maker Diageo Plc on Thursday reported its first-half sales for the 2020 financial year. The Guinness maker said that revenue grew by 4.2% to £7.2bn from £6.9bn in the previous year, driven by organic growth, with the positive impact of foreign exchange being offset by the negative impact from the disposal of 19 brands.

It noted that all regions contributed to the growth, driven by productivity benefits from everyday cost efficiencies and strong price/mix, partially offset by cost inflation and up weighted marketing investment.

Net profit declined by 6% to £1.86bn, from £1.97bn in the previous year.

Speaking on the result, Diageo’s CEO Ivan Menezes said in a release. “We continue to expand organic operating margins while increasing investment in our brands ahead of organic net sales growth.”

The company said it returned £1.1bn to shareholders through share buyback in H1 F20.

Looking at the company’s performance by region, Africa delivered 5% net sales growth, with growth across East Africa and Africa Regional Markets, Nigeria returning to growth and a decline in South Africa. In East Africa and Africa Regional Markets, net sales grew by 10% and 5%, respectively, driven by strong growth in spirits in both markets and double digit growth in beer in East Africa.

The company said that beer grew by 8% in Nigeria, supported by the launch of Guinness Extra Smooth as well as successful promotional activity around its partnership with the English Premier League.

Across Africa, beer net sales rose by 5%, driven by strong growth in Senator Keg, Serengeti Lite and Malta, partially offset by declines in Meta and Satzenbrau.

Spirits delivered good net sales growth driven by scotch in Africa Regional Markets and East Africa as well as strong growth of Tanqueray, offset by a decline in vodka in South Africa.

Elsewhere, sales grew by 6% in North America, helped by 6% spirits growth in the United States, 7% growth in Canada and 11% growth in Diageo Beer Company USA (DBC USA).

Europe and Turkey saw 3% sales growth, driven by strong performance in Continental Europe and a 13% sales growth in Turkey.

Latin America and Caribbean delivered 2% growth in net sales with strong performances in Colombia, Brazil and Central America (CCA), partially offset by declines in Mexico, Peru, Ecuador, Bolivia, Argentina, and Chile (PEBAC).

Asia Pacific delivered 4% growth in net sales with strong growth in Greater China and Australia, partially offset by declines in North Asia and Travel Retail Asia and Middle East and a slowdown in growth in India.

For the full-year, Diageo said it expects organic net sales growth to be towards the lower end of 4% to 6% mid-term guidance range.

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