Preliminary results, year ended 30 June 2015
Dividend increase 9%. Free cash flow £2 billion.
- Reported net sales up 5%, with full consolidation of United Spirits
- Free cash flow of £2 billion. Up £0.7 billion
- 9% final dividend increase to give recommended full year dividend of 56.4 pence
- Organic net sales flat; organic operating margin up 24bps
- Shipment volume down 1%; depletion volume is estimated to be up 1%
- Basic eps 95.0 pence, up 6%
- eps before exceptional items 88.8 pence: due to adverse exchange and associates, offset by underlying improvements
- Productivity gains will release a further £500 million of cost to invest in growth and improve margin over a three year period from F17. No exceptional charge will be taken
Ivan Menezes, Chief Executive, commenting on the year ended 30 June 2015 said:
"Our F15 performance reflects the challenges we have seen on top line growth. However, it does not diminish my confidence in what we can achieve in F16 and even more so beyond that. Diageo has an enviable position, by geography, by brand and by category range, in an attractive consumer market place with strong long term growth drivers. This year we made further changes to build strong, sustained performance including embedding our sell out discipline, improving cash conversion and strengthening our route to consumer. We have consistently applied a long term perspective in making these changes, despite the short term challenges we have faced from an external environment where currency volatility continues to impact the emerging market consumer.
"We acquired control of United Spirits in the year giving Diageo unparalleled access to one of the world’s most attractive spirits markets. We have enhanced our position in tequila by acquiring the remaining 50% of Don Julio, a brand that is already growing net sales double digit and for which I see significant potential now we have full control. Our participation strategy is clear by market and category. We are focused on our core and have a more proactive approach to our portfolio. We sold Gleneagles in the year, and since the year end, have sold the shares USL owned in United Breweries and we restructured our South African operations to focus on spirits and monetise investments worth £125 million.
"We are delivering the change which will further strengthen this business and deliver our performance ambition. In F16 we believe stronger volume growth will deliver an improved top line performance. As we achieve our productivity gains from F17 we expect to deliver mid single digit organic top line growth on a sustained basis and operating margin expansion of 100 basis points over 3 years. Our brands, our global footprint and our people give me confidence that Diageo can deliver strong and sustained performance."