KEY FIGURES (Reported)
- Turnover £5,428 million (2001 - £6,478 million, including £1,455 million from Pillsbury)
- Operating profit* £1,243 million (2001 - £1,236 million)
- Premium drinks turnover up 11% to £4,949 million (2001 - £4,458 million)
- Premium drinks operating profit* up 23% to £1,188 million (2001 - £967 million)
Profit before tax* £1,295 million (2001 - £1,228 million)
- EPS* up 13% to 29.5 pence (2001 – 26.2 pence)
Interim dividend up 6.5% to 9.9 pence per share
PREMIUM DRINKS HIGHLIGHTS
Premium drinks organic growth:
- Volume up 1%
- Net sales up 4%
- Marketing up 13%
- Operating profit* up 6%
- Driven by organic growth in the global priority brands:
- Volume up 4%
- Net sales up 7%
- The ex-Seagram brands contributed:
- Volume of 9.4 million equivalent cases
- Net sales of £518 million
- Attributable operating profit* of £211 million
- Reported operating margin improved by 2.3 percentage points to 24.0%
OTHER KEY FINANCIALS
- £34 million improvement in economic profit to £440 million
- Free cash flow of £301 million
- £552 million returned to shareholders via share buy-back programme
- Burger King disposal completed 13 December 2002 for a loss before taxation of £1,395 million including goodwill previously written off of £673 million
- Exceptional integration costs before taxation £104 million
- Result after exceptional items, before tax and minority interests, loss of £208 million
* Figures stated before goodwill amortisation and exceptional items (see page 18)
Unless stated, percentage movements represent organic movements (at level exchange rates after adjusting for acquisitions and disposals) and are before goodwill amortisation and exceptional items.
Paul Walsh, Chief Executive of Diageo, commenting on the six months ended 31 December 2002 said:
"When we announced our preliminary results in September and again in our AGM trading update, we anticipated that we would face more challenging market conditions in many markets. That caution proved correct and this has been a tough six months. Top and bottom line growth has been constrained by economic weakness particularly in Latin America and parts of Europe. However, we have delivered strong performances in North America, in Great Britain, in many of our key markets especially in Africa and across our venture markets.
"Our scale, our diverse geographic reach and our unrivalled range of brands has enabled us to increase market share and deliver organic operating profit growth even in difficult times. This has been achieved as we continue to invest for the future growth of the business, for example by changing our distribution arrangements in South Korea and increasing marketing investment.
"In premium drinks, 6% organic operating profit growth coupled with the strength of the acquired Seagram brands, which are performing ahead of our expectations, resulted in reported operating profit growth of 23%. Together with our share buy-back programme, this has driven EPS growth of 13%.
"Diageo is benefiting from its position as the world’s leading premium drinks business and is well placed to deliver superior levels of growth.”
Commenting on current trading, Paul Walsh said:
"Diageo has the scale, geographic reach and brands to face the current challenging environment with confidence. We acknowledge that these are without doubt uncertain times. However, in the absence of any significant change to market trends we expect Diageo´s organic growth performance in the second half to improve against the first half. In that period we will compare against a lower second half growth rate in 2002 and benefit from the inclusion of the Seagram brands, which continue to perform ahead of our expectations."
Explanatory notes
Unless otherwise stated, percentage movements given throughout this statement for volume, turnover, net sales, marketing investment, contribution after marketing and operating profit are organic movements (at level exchange rates and after adjusting for acquisitions and disposals) for continuing operations. They are before goodwill amortisation and exceptional items. Comparisons are with the equivalent period last year.
Volume has been measured on an equivalent servings basis to nine litre cases of spirits. Equivalent cases are calculated as follows: beer in hectolitres is divided by 0.9, wine in nine litre cases is divided by 5, ready to drink (RTD) in nine litre cases is divided by 10. An equivalent case represents approximately 272 servings. A serving comprises 35ml of spirits; 165ml of wine; or 330ml of RTD or beer.
Net sales are turnover less excise duty.
The market data contained in this results announcement is taken from independent industry sources in the markets in which Diageo operates.
This document contains forward-looking statements that involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including factors beyond Diageo´s control. Please refer to page 25 – ‘Cautionary statement concerning forward-looking statements’ for more details.
This announcement includes names of Diageo’s products which constitute trademarks or trade names which Diageo owns or which others own and licence to Diageo for its use.
For further information
Diageo’s interim results presentation to analysts and investors will be broadcast at 9.30 am (GMT) on Thursday 20 February 2003 on Diageo´s internet home page at the address: www.diageo.com. Prior to the live link, the presentation slides will also be available to download from Diageo´s home page.
You will be able to listen to a live broadcast of the presentation and to the questions and answers session. The number to call is:
From: UK/Europe: +44 (0) 20 8515 2306
Back up no: +44 (0) 20 8515 2313
An instant replay facility will be available from 1.00 pm (GMT) to call in and listen to the morning session. The facility will be available until 6 March 2003 and the number to call is:
From: UK/Europe: +44 (0) 20 8797 2499 Access code: 860198#
US/Canada: +1 303 590 3060 Access code: 233771#
A press conference will take place beginning at 12.30 pm (GMT) on Thursday 20 February and will be broadcast live from a link on www.diageo.com.
The results presentation, webcast to analysts and investors and the press conference webcast will be available on the Diageo website until mid-March 2003.
Diageo management will host a teleconference to US and European analysts and investors at 3.00 pm (GMT) on Thursday 20 February. Call this number to listen or ask a question:
From: UK/Europe: +44 (0) 20 8400 6354
US/Canada: +1 613 287 8027
The teleconference will be available on instant replay from 5.00 pm (GMT) and will be available until 6 March 2003. The number to call is:
From: UK/Europe: +44 (0) 20 8797 2499 Access code: 860201#
US/Canada: +1 303 590 3060 Access code: 233770#
An interview with Paul Walsh is available in video, audio and text from 7.00 am (GMT) on Thursday 20 February on www.diageo.com and www.cantos.com.
The full text of this announcement is available to download in RTF format (David to add)