16th Apr 2015 06:58
LONDON (Alliance News) - Diageo PLC Thursday said net sales grew in the nine months to March 31, but organic sales and volume declined following difficulties in the Asia Pacific region.
The drinks giant, the world's largest spirits producer and a major producer of beer and wine, said net sales grew 4.6% in the nine month period but declined 0.3% on an organic basis and were down 0.7% in its third quarter. Volume was down 1.7% in the nine month period and dropped 0.8% in the third quarter.
It said that acquisitions, principally of United Spirits Ltd, contributed GBP700 million in sales, which was partially offset by an "adverse impact of currency movements" of GBP298 million and a reduction of GBP28 million due to disposals.
Organic net sales growth was the largest in Africa, which saw an increase of 6.2% in the nine months and 8.2% in the third quarter. Asia Pacific saw the biggest decline with a drop of 5.5% in the nine months and 6% in the third quarter.
Net sales improved in North America by 0.2% in the nine months, while declining in Europe, Latin America and the Caribbean by 0.5% and 3.3% respectively.
Diageo said sales in Africa were boosted by an improved performance in the third quarter in Nigeria, with the success of Orijin bitter drink and a steady improvement in the performance of Guinness beer. Net sales of spirits also grew 4% in South Africa in the quarter, although total net sales were down.
Diageo said that its performance in Asia Pacific was in line with the first half as net sales continued to be hit by the "decision to reduce inventory levels held by distributors". Regulatory changes to the sale of beer in Indonesia and political tensions in the Middle East also caused a decline, it said.
The company cautioned that lower inflation and weak economies will lead to "subdued net sales growth" in the current year.
"Consumers in North America remain the most resilient and while lower gas prices and a more favourable macro outlook have not led to a significant shift, growth in the spirits category is improving and our depletion performance continues to build momentum, although I do not expect to see shipments improve until we have lapped last year," Chief Executive Ivan Menezes said in a statement.
"We will continue to strengthen Diageo. We are investing in our brands, enhancing our route to consumer, introducing great innovations such as Crown Royal Regal Apple and Orijin, winning in reserve and focusing on cost and cash. We can realise Diageo's full potential and deliver our performance ambition," he added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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