Diageo reports lacklustre full-year revenue growth
Guinness maker takes hit after sales in China declined 5.7 per cent in three months
Diageo, the world’s biggest distiller, reported lacklustre full-year revenue growth as sales slowed in emerging markets.
Diageo, the world’s biggest distiller, expects improvement in emerging-market performance in the second half of its current fiscal year after lacklustre sales in regions such as Asia weighed on revenue growth.
Organic sales rose 0.4 per cent in the 12 months ended June 30, Diageo said in a statement today.
Earnings before interest and taxes, excluding some items, totaled £3.13 billion, compared with a £3.2 billion estimate.
“Our business has faced macroeconomic and market-specific challenges,” chief executive officer Ivan Menezes said in the statement. “But we have gained share and expanded margin.”
The maker of Johnnie Walker Scotch has been expanding outside its European heartland and the US, its largest region, pushing sales of pricey liquor in emerging markets and buying assets in countries from India to Turkey.
Remy Cointreau, the French cognac maker that has been hurt by China’s crackdown on lavish spending, said July 18 that its sales declined 5.7 per cent in the three months through June as revenue at the Remy Martin cognac unit plunged 15 percent.
Diageo gained control of United Spirits. this month after completing a $1.9 billion tender offer for stock of India’s biggest spirits maker.
In Turkey, the company bought raki producer Mey Icki for $2.1 billion in 2011.
Under Mr Menezes, who took the helm a year ago, Diageo has pledged to cut annual spending by as much as £200 million by the end of fiscal 2017.
Most of the savings will come from information systems, procurement and simplification of the organisation, chief financial officer Deirdre Mahlan said in January. Diageo’s shares have fallen about 11 percent in London trading this year, giving the company a market value of £44.9 billion.