Diageo reports H1 decline in sales due to performance in Latin America

30 January, 2024

Drinks giant Diageo saw a 1.4% decline in net sales in the first half of fiscal 2024 due to a 23% decline in trading in Latin America and Caribbean markets.

It attributed the decline, equivalent to $158 million, to a $167 million unfavourable foreign exchange impact and an organic net sales decline of 0.6% driven by the aforementioned performance in LAC.

"The first half of fiscal 24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year and faced an uneven global consumer environment,” said Diageo chief executive Debra Crew.

“As previously announced in November 2023, materially weaker performance in LAC, driven by fast-changing consumer sentiment and high inventory levels, significantly impacted total business performance.

“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.”

Outside of LAC, net sales grew by 0.7%, with strong performances in Asia Pacific, Africa and Europe offsetting a 1.5% decline in North America.

“With a strong focus on execution, we delivered an improved free cash flow of $1.5 billion, and our pipeline of productivity initiatives in the first half of fiscal 24 drove $335 million of savings, helping us to sustain investment in brand building,” continued Crew.

“During the half, we returned $0.5 billion to shareholders via share buybacks as part of our commitment to return up to $1.0 billion of capital to shareholders in fiscal 24. We declared an interim dividend increase to 40.50 cents per share, reflecting our commitment to a progressive dividend policy.”

“Looking ahead to the second half of fiscal 24… while the macro environment will continue to present challenges, I am confident that we remain well-positioned and resilient for the long term. We are diversified by category, price point and region and will continue to invest behind our iconic brands to maintain our position as an industry leader in total beverage alcohol, an attractive sector with a long runway for growth.”

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