Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Diageo's first-half profits fall 11% on LatAm-Carribean weakness

(Sharecast News) - First-half profits at Diageo fell by more than a tenth as weakness in the Latin American and Caribbean (LAC) regions persisted, but the drinks giant pointed to improving trading conditions in the latter part of the financial year. The company, which owns brands such as Johnnie Walker, Guinness and Baileys, said reported operating profit fell by 11.1% year-on-year to $3.3bn in the six months to 31 December, with the operating profit margin shrinking by 329 basis points to 30.3%. Organic operating profits were down 5.4%, but would have grown by 0.9% if LAC was excluded.

Net sales were down 1.4% year-on-year at $11bn, due to a $167m unfavourable foreign exchange hit and a 0.6% slip in organic net sales which was blamed on a 23% sales decline in LAC.

As reported in a trading update in November, the LAC regions faced tough comparators with the previous year as well as lower consumption and consumer downtrading due to "macroeconomic pressures".

"Materially weaker performance in LAC, driven by fast-changing consumer sentiment and high inventory levels, significantly impacted total business performance," said chief executive Debra Crew.

"Having conducted a review of inventory levels and monitored performance in the critical holiday season, we have taken action and have further plans to reduce inventory to more appropriate levels for the current consumer environment in the region by the end of fiscal 24. This is a key priority," Crew said.

Despite the weaker results, Diageo lifted its interim dividend by 5% to 40.50 cents per share.

Looking ahead, despite "continued global economic volatility", Diageo said the rate of profit decline would ease compared with the first half, while organic sales growth would pick up. In LAC specifically, the company pointed to a net sales decline of between 10% and 20% year-on-year.

Share this article

Related Sharecast Articles

Aptamer enters partnership with Microsaic Systems
(Sharecast News) - Aptamer Group announced a partnership with Microsaic Systems on Friday, to develop a panel of Optimer binders for integration into Microsaic's water testing system.
CMA clears Pennon's Sutton & East Surrey Water and South West merger
(Sharecast News) - Water utility company Pennon has received the green light from the UK's competition watchdog for the proposed merger of Sutton & East Surrey Water and South West.
CPPGroup offloads legacy Italy operations
(Sharecast News) - CPPGroup, a provider of real-time, digitally delivered assistance products, announced the disposal of its legacy operations in Italy on Friday.
Raspberry Pi shares jump as retail investors join the fray
(Sharecast News) - Budget computer maker Raspberry Pi saw a significant jump in its shares on Friday morning, as retail investors began trading its stock.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.