Interim Management Statement for the nine months ended 31 March 2011
Diageo delivers 7% organic net sales growth in Q3
In the quarter ended 31 March 2011 Diageo delivered organic net sales growth of 7% against the comparable period with volume up 2%.
In the nine months ended 31 March 2011 net sales increased 5% on an organic basis against the comparable period and volume was up 3%. Organic net sales growth by region was:
North America 3%
Asia Pacific 9%
On a reported basis net sales grew by 3% in the quarter ended 31 March 2011 and by 2% in the nine months ended 31 March 2011, against the comparable prior period in each case.
Net assets were £5,407 million at 31 March 2011, compared with £5,650 million at 31 December 2010. The accrual for the interim dividend, partially offset by profit for the period, were the only material changes in the financial position of the group in the quarter. Profit for the period included an exceptional charge amounting to £54 million for increased liabilities for ongoing excise tax disputes in Turkey and Thailand, partially offset by a reduction in the provision for corporate tax liabilities following settlement with tax authorities. Net borrowings were £7,062 million at 31 March 2011 having been £7,010 million at 31 December 2010.
Foreign exchange movements are currently expected to increase operating profit for the year ending 30 June 2011 by £25 million against the prior year. This represents a reduction of approximately £30 million against the guidance given at the time of the interim results and is mainly as a result of the weakness of the US dollar against sterling.
Paul Walsh, Chief Executive of Diageo commented:
‘Trading in the third quarter was in line with our expectations that the second half would be stronger than the first.
‘In North America consumer trends are improving, albeit modestly, and Diageo’s scotch, vodka and tequila brands performed strongly in the quarter. Better mix and lower discounts offset volume decline to drive top line growth. Overall trading in Europe continues to be challenging although in the quarter stronger price/mix in Great Britain and Russia offset weaker price/mix in Ireland and Greece and a deterioration of the on trade in Spain. Further improvement in price/mix in both International and Asia Pacific in the quarter were driven by the continuing strength of our scotch brands especially around Chinese new year, improving trends for our beer brands in Africa, especially in Nigeria, and stronger growth in South Africa and Australia.
‘This overall improving trend is the result of our focus on our priority brands and our strengths in market. We remain confident that our up weighted marketing investment together with the increased investment we have made in emerging markets in the year will continue to deliver improving performance.’