26 JUL 2018
26 JUL 2018 Video
2018 Preliminary Results in brief by Ivan Menzes - Diageo's Chief Executive
IVAN MENEZES – CHIED EXECUTIVE 2018 PRELIMINARY RESULTS IN BRIEF SYNC IVAN MENEZES CHIEF EXECUTIVE I am pleased we have delivered another year of strong performance. What you are seeing in our results is the consistent and rigorous execution of our strategy and the high performance culture that we have created at Diageo. We are a stronger company, we are more consumer focused. We are more efficient and agile. Net sales growth continues to be broad based across all our regions and all categories except Vodka. This year we have maintained the momentum that we have been building and are making progress towards our ambition to be one of the best performing, most trusted and respected consumer product companies in the world. SYNC IVAN MENEZES CHIEF EXECUTIVE If I take you into our numbers: organic net sales were up 5% with volume up 2.5%. Our organic operating margin expanded by 78 basis points and organic operating profit grew 7.6%. we also delivered another year of strong, consistent free cash flow of £2.5 billion. Our global giants, local stars, reserve brands were up 4%, 6% and 14% respectively this year. And all three focus areas for the business were in growth. Scotch was up 2%, US Spirits up 3% and India grew 9%. SYNC IVAN MENEZES CHIEF EXECUTIVE Looking at Scotch. Johnnie Walker had another strong year with 5% growth. I am really pleased with Johnnie Walker’s performance but we see room for improvement in both our Scotch malts and some of our local star brands in Scotch whisky. US Spirits delivered a stronger second half performance. We up weighted our investment behind the brands and we continue to make category share gains for all key brands apart form vodka. Although net sales were down in vodka, we did see early signs of improvement in both Ketel One and Ciroc. And we know we have more to do. SYNC IVAN MENEZES CHIEF EXECUTIVE In India our net sales were up 9% after a more stable operating environment in the second half following a year of challenges such as the highway ban. Prestige and above brands grew 12% supported by market recovery and an increase in marketing investment behind brands like McDowell’s No1, Rpyal Challenge and Signature. SYNC IVAN MENEZES CHIEF EXECUTIVE We once again increased our final dividend by 5% and basic earnings per share was up 14.8%. we know there is more to do but this performance gives me confidence in the resilience we are building in the business. Turning now to our six priorities. Our premium core brands saw good growth with Johnnie Walker up 5%, Guinness up 5%, Tanqueray 15% to but highlight a few. In Europe, Guinness’ performance was up 6% with growth in Guinness draft and new innovations. Tanqueray continues to be the bartenders’ gin of choice. We continued to make good progress in mainstream spirits. And finally our reserve brands grew 14% largely driven by Shui Jing Fang and Don Julio which were up 63% and 39% respectively. SYNC IVAN MENEZES CHIEF EXECUTIVE In F18 we have also introduced some exciting innovations, such as Gordon’s premium pink gin, Tanquaray Flor de Sevilla, Ketel One Botanicals and Guinness Pure Brew. Ketel One Botanicals, launched in the US has a 30% ABV and is for consumers who are looking for natural ingredients and fewer calories. Guinness Pure Brew from the Open Gate Brewery is a 0.5 ABV fully brewed beer, offering a lower alcohol option form this iconic premium brand. SYNC IVAN MENEZES CHIEF EXECUTIVE On route to consumer, we are continually evolving our industry leading approach. This is particularly evident with Shui Jing Fang where we are focussing on must win battlegrounds and expending distribution through a targeted approach. And finally I am happy with the progress we have made on our productivity programme. The cultural and operational changes that we have made to become a simpler business have enabled us to deliver more and reinvest in our business to fuel growth. In 2018 our productivity work supported a 78 basis point expansion in our organic operating margin, while also enabling an up-weight of 7% in marketing investment. Our focus on everyday efficiency means we are on track to meet our target of 175 basis points of organic margin expansion for the three years ending June 2019. In fiscal 18 we returned approximately £1.5 billion to our shareholders through our share-buy-back programme. And today following another strong year of cash flow delivery, we have announced a share-buy-back programme of up to £2billion in fiscal 19. I am pleased with the progress we are making and I am confident that we are on track to deliver our medium term guidance. Today Diageo is a more agile, consumer-focussed company and we are executing our strategy in a consistent and disciplined way. And finally I want to thank all our employees for their continued commitment to our purpose and values and for the spirit with which they are making Diageo a stronger business.