4th Aug 2020 08:32
(Alliance News) - Diageo PLC on Tuesday said it put in a consistent first-half performance but its business was significantly dented by Covid-19 in the second half of financial 2020.
Despite the reversal in fortunes, Johnnie Walker scotch-maker and Guinness brewer raised its annual dividend slightly.
Shares in the FTSE 100 alcohol producer were trading 6.0% lower at 2,709.50 pence each on Tuesday morning in London.
Pretax profit fell 52% to GBP2.04 billion from GBP4.24 billion in the financial year that ended June 30, as sales slipped 8.3% to GBP17.70 billion from GBP19.29 billion.
Net sales were GBP11.75 billion, down 8.7% from GBP12.87 billion the year prior. Organic net sales were down 8.4%, with growth in North America more than offset by declines in all other regions. According to company-compiled consensus for financial 2020, Diageo was expected to post a fall in organic net sales of 7.3%. Organic volumes were down 11%.
Organic operating profit was down 14.4%, hurt by volume declines, cost inflation and unabsorbed fixed costs. Consensus had expected organic operating profit to fall 13.6%.
Diageo said it incurred one-off costs, including non-cash impairment charges of GBP1.3 billion. These were in India, Nigeria, Ethiopia and on the Windsor brand in Korea, reflecting the negative impact of Covid-19 and challenging trading conditions.
A final dividend of 42.47p was declared, unchanged from a year prior, taking the full year dividend payout to 69.9p, up 1.9% from 68.6p paid for financial 2019.
Looking ahead, Diageo said that due to the continued uncertainty caused by the Covid-19 pandemic, it is unable to provide specific financial guidance.
"While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 21, I am confident in our strategy, the resilience of our business and am very proud of the way our people have responded. We are well-positioned to emerge stronger," said Chief Executive Ivan Menezes.
As at the end of June, the London-based company had cash of GBP3.3 million.
Diageo added that Ho KwonPing will retire as a non-executive director, effective from September 28, after eight years on the board, "to dedicate his attentions full-time to the leadership of his family group of companies in the aftermath of the COVID-19 pandemic".
By Ife Taiwo; [email protected]
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