Diageo PLC on yesterday reported a higher profit for the year and said that it would return more money to shareholders as the world’s biggest liquor maker reported broad-based sales growth.
The maker of Johnnie Walker whisky, Guinness beer and Smirnoff vodka reported a net profit of 3.16 billion pounds ($3.94 billion) for the year ended June 30 compared with 3.02 billion pounds a year earlier, on net sales that rose 6% to GBP12.87 billion.
In terms of regions, Africa delivered 7% net sales growth, with growth across East Africa, Africa Regional Markets and South Africa partially offset by a decline in Nigeria.
In East Africa and Africa Regional Markets net sales grew 13% and 8%, respectively, driven by growth across both beer and spirits. East Africa partially benefitted from lapping prior-year weakness in the first half. Net sales grew 6% in South Africa driven by growth in spirits.
Nigeria net sales declined by 7% driven by the continued tough economic and competitive environment in the Lager segment. Across Africa, beer net sales were up 5% driven by double-digit growth in Senator Keg, Serengeti Lite, and Malta Guinness, partially offset by declines in Satzenbrau. However, Net sales grew in Malta Guinness, Guinness and Spirits.
Net sales by market and category
Spirits delivered strong net sales growth driven by mainstream spirits and scotch across all key markets as well as strong growth of Tanqueray in South Africa. Scotch net sales were up 8% driven by Johnnie Walker, up 10%, partially as a result of a strong launch of “White Walker by Johnnie Walker” in South Africa.
Operating margin improved by 494bps driven by improved price/mix and the continued benefit from productivity initiatives more than offset cost inflation.
Marketing investment increased by 3% largely driven by up-weighted investment in Tusker marketing activities and media campaigns, the relaunch of Guinness Foreign Extra Stout, an evolution of Guinness’s successful football campaign across Africa, led by Guinness brand ambassador Rio Ferdinand, and the continuation of Serengeti’s sponsorship of the Tanzanian national football team.
In the year ended 30 June, 2018 a rights issue was completed by Guinness Nigeria (GN) where Diageo’s controlling equity share in GN increased from 54.32% to 58.02%. The transaction resulted in a credit of £31 million to non-controlling interests and a charge of £5 million to reserves.
