The results mark Diageo’s worst annual sales performance in more than a decade, with its share price falling over 6% in early trading. ![]() He added: “We have taken decisive action through the second half of fiscal 2020, tightly managing our costs, reducing discretionary expenditure and reallocating resources across the group.” Brewer giant AB InBev took a $2.5bn writedown on the value of its operations in Africa last week, whilst Heineken has written down the value of its assets by €550m.ĭiageo’s Chief Executive, Ivan Menezes, said: “Fiscal 20 was a year of two halves: after good, consistent performance in the first half of fiscal 20, the outbreak of Covid-19 presented significant challenges for our business, impacting the full-year performance.” Other alcoholic drinks makers have also taken impairment charges during the pandemic. Meanwhile, drinkers in Europe turned to rum, where sales rose 3%, driven by the Captain Morgan brand. Some of its brands performed relatively well with net sales of tequila in North America up 36%, reflecting the fast-rising popularity of its Don Julio and Casamigos lines. However, the UK business appears to have got off relatively lightly with sales down only 4% after a solid first half and increased demand in the off-trade during the pandemic.Ĭhief Financial Officer Kathryn Mikells said the robust results in North America, its biggest market by revenue, was because 80% of Diageo’s sales came from retail stores, in contrast to other markets, where bars and restaurants make up most of the sales. Organic net sales were down 8.4%, with growth in North America (+2%) more than offset by declines in all other regions such as Africa (-13%), Europe and Turkey (-12%), and Asia Pacific (-16%). Reported operating profit plummeted 47.1% to £2.1bn due the exceptional operating items and the weakness in sales during the final months of the reporting period. ![]() Over the year to 30 June, Diageo’s reported net sales were down 8.7% to £11.8bn, driven by organic declines. The world’s largest spirits maker, which owns brands such as Johnnie Walker, Smirnoff vodka and Guinness, said the non-cash charges related to its businesses in India, Nigeria, Ethiopia and the Windsor whisky brand in South Korea, “reflecting the impact of Covid-19 and challenging trading conditions”. Diageo has a taken £1.3bn writedown as it reported a worse-than-expected fall in annual sales due to the temporary closure of bars and restaurants during the pandemic.
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