List
identifying information required to be furnished
by
Diageo plc pursuant to Rule 13a-16 or 15d-16 of
The
Securities Exchange Act 1934
1
– 28 February 2009
|
Information
|
Required
by/when
|
|
Public
Announcements/Press
|
The
Stock Exchange, London
|
|
Announcement
Company
released shares from treasury on 2 February 2009 to satisfy grants made
under employee share plans.
(03
February 2009)
|
Announcement
Blocklisting
six monthly return.
(19
February 2009)
|
|
|
Announcement
Company
releases shares from treasury to satisfy grants made under employee share
plans.
(06
February 2009)
|
Announcement
Company
announces acquisition of global distribution rights for Windhoek
beer
(26
February 2009)
|
|
|
Announcement
Company
notified of transactions in respect of the Diageo Share Incentive Plan and
Messrs Walsh, Rose and those persons discharging managerial responsibility
inform the Company of their interests therein.
Dr
Humer and Mr Stitzer inform the Company of their beneficial
interests.
(10
February 2009)
|
Announcement
Company
releases shares from treasury to satisfy grants made under employee share
plans.
(27
February 2009)
|
|
|
Announcement
Company
announces lodgement of the financial statements for Diageo Capital BV and
Diageo Finance BV with the UKLA.
(10
February 2009)
|
Announcement
Company
announces total voting rights.
(27
February 2009)
|
|
|
Announcement
Company
releases shares from treasury to satisfy grants made under employee share
plans.
(11
February 2009)
|
||
|
Announcement
Company
announces its interim results.
(12
February 2009)
|
||
|
Announcement
Company
releases shares from treasury to satisfy grants made under employee share
plans.
(13
February 2009)
|
||
|
Announcement
Company
releases shares from treasury to satisfy grants made under employee share
plans.
(18
February 2009)
|
FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Report
of Foreign Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
Diageo
plc
(Translation
of registrant's name into English)
8
Henrietta Place, London W1G 0NB
(Address
of principal executive offices)
indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F
|
Form
20-F x
|
Form
40-F ¨
|
indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
|
Yes
¨
|
No x
|
If "Yes"
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):82 .............
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorised.
|
Diageo
plc
|
||
|
(Registrant)
|
||
|
Date 03
March 2009
|
By
|
/s/
S Arsenić
|
|
Name:
|
S
Arsenić
|
|
|
Title:
|
Assistant
Company Secretary
|
|
|
Company
|
Diageo PLC
|
|
|
TIDM
|
DGE
|
|
|
Headline
|
Transaction
in Own Shares
|
|
|
Released
|
14:28
03-Feb-09
|
|
|
Number
|
91426-305D
|
|
TO:
|
Regulatory
Information Service
|
PR
Newswire
|
RE:
|
PARAGRAPH
12.6.4 OF THE LISTING RULES
|
Diageo
plc - Transaction in Own Shares
Diageo
plc (the 'Company') announces that on 2 February 2009, it released from treasury
1,750 Ordinary shares of 28 101/108 pence each ('Ordinary Shares'), to satisfy
grants made under employee share plans. The average price at which these
Ordinary Shares were released from treasury was 976.71 pence per
share.
Following
this release, the Company holds 254,358,903 Ordinary Shares as treasury shares
and the total number of Ordinary Shares in issue (excluding shares held as
treasury shares) is 2,499,514,313.
03
February 2009
END
|
Company
|
Diageo PLC
|
|
|
TIDM
|
DGE
|
|
|
Headline
|
Transaction
in Own Shares
|
|
|
Released
|
14:21
06-Feb-09
|
|
|
Number
|
91420-A06E
|
|
TO:
|
Regulatory
Information Service
|
PR
Newswire
|
RE:
|
PARAGRAPH
12.6.4 OF THE LISTING RULES
|
Diageo
plc - Transaction in Own Shares
Diageo
plc (the 'Company') announces that today, it released from treasury 4,513
Ordinary shares of 28 101/108 pence each ('Ordinary Shares'), to satisfy
grants
made under employee share plans. The average price at which these Ordinary
Shares were released from treasury was 976.71 pence per share.
Following
this release, the Company holds 254,354,390 Ordinary Shares as treasury
shares and the total number of Ordinary Shares in issue (excluding shares
held as treasury shares) is 2,499,518,826.
06
February 2009
END
|
Company
|
Diageo PLC
|
|
|
TIDM
|
DGE
|
|
|
Headline
|
Director/PDMR
Shareholding
|
|
|
Released
|
15:04
10-Feb-09
|
|
|
Number
|
91503-980C
|
|
TO:
|
Regulatory
Information Service
|
PR
Newswire
|
RE:
|
PARAGRAPH
3.1.4 OF THE DISCLOSURE AND TRANSPARENCY
RULES
|
The
notifications listed below were all received under Paragraph 3.1.2 of the
Disclosure
and Transparency Rules.
Diageo
plc (the 'Company') announces that:
|
1.
|
it
received notification on 10 February 2009 of the following
allocations of
ordinary shares of 28 101/108 pence each in the Company
('Ordinary Shares')
under the Diageo Share Incentive Plan (the 'Plan'),
namely:
|
(i) the
following directors of the Company were allocated Ordinary Shares on 10
February
2009 under the Plan, by Diageo Share Ownership Trustees Limited (the
'Trustee'):
|
Name
of Director
|
Number
of Ordinary Shares
|
|
N C
Rose
|
19
|
|
P S
Walsh
|
19
|
(ii) the
following 'Persons Discharging Managerial Responsibilities' ('PDMR')
were
allocated Ordinary Shares on 10 February 2009 under the Plan, by the
Trustee:
|
Name
of PDMR
|
Number
of Ordinary Shares
|
|
N
Blazquez
|
21
|
|
S
Fletcher
|
19
|
|
D
Gosnell
|
19
|
|
J
Grover
|
19
|
|
A
Morgan
|
19
|
|
G
Williams
|
19
|
|
I
Wright
|
19
|
The
number of Ordinary Shares allocated comprises those purchased on behalf of the
employee using an amount which the employee has chosen to have deducted from
salary ('Sharepurchase') and those awarded to the employee by the Company
('Sharematch') on the basis of one Sharematch Ordinary Share for every two
Sharepurchase Ordinary Shares.
The
Sharepurchase Ordinary Shares were purchased and the Sharematch Ordinary Shares were awarded at a
price per share of £9.07.
The
Ordinary Shares are held by the Trustee and in the name of the Trustee.
Sharepurchase Ordinary Shares can normally be sold at any time. Sharematch
Ordinary Shares cannot normally be disposed of for a period of three years after
the award date.
2. it
received notification on 10 February 2009 from Dr F B Humer, a director of the
Company, that he has purchased 877 Ordinary Shares on 10 February 2009 under an
arrangement with the Company, whereby he has agreed to use an amount of £8,000 each month, net
of tax, from his director's fees to purchase Ordinary Shares. Dr F B
Humer has agreed to retain the Ordinary Shares while he remains a director of
the Company.
The
Ordinary Shares were purchased at a price per share of £9.07.
3. it
received notification on 10 February 2009 from Mr H T Stitzer, a director of the
Company, that he has purchased 110 Ordinary Shares on 10 February 2009 under an
arrangement with the Company, whereby he has agreed to use an amount of £1,000 each month, net
of tax, from his director's fees to purchase Ordinary
Shares.
The
Ordinary Shares were purchased at a price per share of £9.07.
As a
result of the above transactions, interests of directors and PDMRs in the
Company's Ordinary Shares (excluding options, awards under the Company's LTIPs
and interests as potential beneficiaries of the Company's Employee Benefit
Trusts) are as follows:
|
Name
of Director
|
Number
of Ordinary Shares
|
|
Dr
F B Humer
|
9,462
|
|
N C
Rose
|
446,178
|
|
H T
Stitzer
|
6,209
|
|
P S
Walsh
|
719,783
|
|
Name
of PDMR
|
Number
of Ordinary Shares
|
|
N
Blazquez
|
43,207
|
|
S
Fletcher
|
151,942
|
|
D
Gosnell
|
59,396
|
|
J
Grover
|
149,544
|
|
A
Morgan
|
176,650
|
|
G
Williams
|
243,707
(of which 5,916 are held in the form
of ADS*)
|
|
I
Wright
|
30,017
|
P D
Tunnacliffe
Company
Secretary
10
February 2009
*1 ADS is
the equivalent of 4 Ordinary Shares.
END
|
Company
|
Diageo PLC
|
|
|
TIDM
|
DGE
|
|
|
Headline
|
Annual
Report and Accounts
|
|
|
Released
|
15:07
10-Feb-09
|
|
|
Number
|
91506-D7B5
|
|
TO:
|
Regulatory
Information Service
|
PR
Newswire
|
RE:
|
CHAPTER
9 PARAGRAPH 9.6.3 OF THE LISTING
RULES
|
Diageo
plc announces that in accordance with paragraph 9.6.3 of the Listing Rules, two
copies of the audited financial statements for Diageo Capital B.V. and Diageo
Finance B.V. for the year ended 30 June 2008 have been submitted to the UKLA and
will shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at:
UK
Listing Authority
Financial
Services Authority
25 The
North Colonnade
Canary
Wharf
London
E14 5HS
10
February 2009
END
|
Company
|
Diageo PLC
|
|
|
TIDM
|
DGE
|
|
|
Headline
|
Transaction
in Own Shares
|
|
|
Released
|
14:03
11-Feb-09
|
|
|
Number
|
91400-D6FF
|
|
TO:
|
Regulatory
Information Service
|
PR
Newswire
|
RE:
|
PARAGRAPH
12.6.4 OF THE LISTING RULES
|
Diageo
plc - Transaction in Own Shares
Diageo
plc (the 'Company') announces that today, it released from treasury 1,332
Ordinary shares of 28 101/108 pence each ('Ordinary Shares'), to satisfy grants
made under employee share plans. The average price at which these Ordinary
Shares were released from treasury was 976.71 pence per share.
Following
this release, the Company holds 254,353,058 Ordinary Shares as treasury shares
and the total number of Ordinary Shares in issue (excluding shares held as
treasury shares) is 2,499,520,158.
11
February 2009
END
|
Company
|
Diageo PLC
|
|
|
TIDM
|
DGE
|
|
|
Headline
|
Half
Year Results
|
|
|
Released
|
07:00
12-Feb-09
|
|
|
Number
|
1960N07
|
RNS
Number : 1960N
Diageo
PLC
12
February 2009
 |
Half year results, six months
ended 31 December 2008
|
In
a difficult market environment Diageo has delivered 3% organic net sales growth,
6% organic operating profit growth, 21% reported eps growth and maintained its
financial strength.
Results at a
glance
|
First half
F’09
|
First half
F’08
|
Reported
movement
|
Organic
movement
|
||||||||||||||
|
Volume
in millions of equivalent units
|
78.5 | 78.9 | (1 | )% | (2 | )% | |||||||||||
|
Net
sales after deducting excise duties
|
£
million
|
5,068 | 4,287 | 18 | % | 3 | % | ||||||||||
|
Operating
profit before exceptional items
|
£
million
|
1,649 | 1,414 | 17 | % | 6 | % | ||||||||||
|
Operating
profit
|
£
million
|
1,636 | 1,414 | 16 | % | 6 | % | ||||||||||
|
Profit
attributable to parent company’s equity shareholders 1
|
£
million
|
1,137 | 975 | 17 | % | ||||||||||||
|
Basic
eps 1
|
pence
|
45.6 | 37.6 | 21 | % | ||||||||||||
1 For
six months ended 31 December 2008 reported tax rate 15% (2007 tax rate
26%). Includes exceptional items.
Paul Walsh, Chief Executive
of Diageo, commenting on the six months ended 31 December 2008
said:
“Diageo's
performance in this first half again demonstrates the resilience we have from
our brand range across categories, price points and geography. The global
economic slowdown has affected business in the period and in November and
December this impact was more pronounced. In this difficult market environment
Diageo has delivered 3% organic net sales growth, 6% organic operating profit
growth and 9% underlying eps growth and we have maintained our financial
strength. We have delivered value in the half from the brands we have
added, Ketel One, Rosenblum Cellars and Zacapa. In addition we have benefited
from exchange rate movements given the scale of our business in the United
States and Europe and a reduction in our tax rate. This has resulted
in 21% growth in reported eps for the period.
“We have
returned £0.9 billion to shareholders in the half. Our share buyback programme
slowed as we maintained our conservative approach to balance sheet
management.
“Current
economic trends indicate that consumer confidence will reduce further and the
outlook for the second half is more difficult to predict. However, across Diageo
we have an experienced management team which combined with the consumer appeal
of our brands, the effectiveness of our routes to market and our geographic
diversity gives us confidence in our business. In the second half we will be yet
more agile in our response to changing consumer demand and we will continue to
invest behind our business while achieving efficiencies across the regions
particularly in marketing spend where we are seeing strong media rate deflation.
Given these strengths, albeit with more uncertainty about the wider economic
environment, we believe we can deliver organic operating profit growth for the
full year in the range of 4% to 6%. We will continue to preserve our advantaged
financial position and therefore we would not envisage reopening the share
buyback programme in the current calendar year.
“In the
second half we will implement a restructuring programme designed to ensure that
Diageo emerges from this challenging time with improved routes to market, even
stronger brand positions and enhanced financial strength. Anticipated
full year savings, in both cost of goods sold and overheads, of £100 million
will accrue largely in fiscal 2010. Restructuring costs, amounting to
approximately £200 million will be taken as an exceptional charge in the second
half. Continued positive exchange rate impacts and the lower tax rate mean that
growth in reported eps after the exceptional item will be double digit
”.
Highlights
|
|
·
|
New
brand additions, primarily Ketel One, contributed £97 million to net sales
and £46 million to operating profit
|
|
|
·
|
Organic
marketing spend decreased 1% as cost efficiencies were delivered from
media rate deflation and spend on ready to drink was
reduced
|
|
|
·
|
Organic
operating margin improved a further 0.4 percentage
points
|
|
|
·
|
Exchange
rate movements, excluding the impacts of IAS 21 and IAS 39, increased
operating profit by £103 million and net finance charges by £49
million
|
|
|
·
|
9%
underlying growth in eps before exceptional items using an underlying tax
rate of 22% (2007 - 26%) and adjusted for foreign exchange and
acquisitions
|
|
|
·
|
Free
cash flow of £387 million
|
|
|
·
|
Interim
dividend per share increased by 5.3% to 13.9
pence
|
|
|
·
|
£879
million returned to shareholders: £527 million in dividends and £352
million of share buybacks
|
Unless
otherwise stated in this announcement: net sales are sales after deducting
excise duties; percentage movements are organic movements; commentary refers to
organic movements and share refers to value share. See page 31 for
additional information for shareholders and an explanation of non-GAAP measures
including the reconciliation of basic eps to underlying eps.
Regional
summary
North
America – Benefiting from brand range and superior route to market to deliver
growth as industry slows
|
·
|
Volume
up 2%
|
|
·
|
Net
sales up 4%
|
|
·
|
Marketing
spend down 6%
|
|
·
|
Operating
profit up 7%
|
In North
America the worsening economic environment has increasingly impacted consumer
demand in the period. While US spirits’ industry volume growth has slowed,
Diageo maintained its 30.4% share and continued to outperform major competitors.
Spirits net sales grew 8% as a result of 3% volume growth and price increases.
This was driven by the performance of Smirnoff, Captain Morgan, Crown Royal and
Ciroc in the US and strong growth across spirits brands in Canada. Beer net
sales declined 2% and ready to drink declined with net sales down 10%. Wine net
sales were down 7% as the consumer slowdown has led to consumers switching to
less expensive wine varieties.
The new
brand additions Ketel One, Rosenblum Cellars and Zacapa have all performed well
and delivered £92 million of net sales in the half.
Marketing
spend was down as a result of the decision to reduce spend on ready to drink
brands and as a result of the deflation in media rates. This was partially
offset by increased activity on spirits brands especially Smirnoff, Jose Cuervo,
Captain Morgan and Ciroc.
Europe
- Economic conditions in Spain deteriorated and beer markets were
weak
|
·
|
Volume
down 5%
|
|
·
|
Net
sales down 3%
|
|
·
|
Marketing
spend down 4%
|
|
·
|
Operating
profit down 4%
|
The
overall performance in Europe was primarily driven by the weaker Spanish market.
Net sales there declined 18% as the worsening economy led to a steep decline in
consumer demand and reduced distributor and wholesaler ability to fund stock at
previous levels. The weak beer market in Western Europe also impacted
performance. This offset continued strong growth in Russia in the half and
growth in Continental Europe. From a category perspective in Europe,
spirits net sales were down 2%, beer was down 4%, ready to drink down 12% and
wine down 2%. Overall net sales declined at a slower rate than volume as a
result of price increases taken across the region, driving two percentage points
of price/mix. Marketing spend has benefited from procurement efficiencies
resulting from deflation in media rates.
International
- Strong performance in Africa and price increases in Latin America drove net
sales growth in the region
|
·
|
Volume
down 2%
|
|
·
|
Net
sales up 11%
|
|
·
|
Marketing
spend up 2%
|
|
·
|
Operating
profit up 11%
|
The
International region is again the key contributor to Diageo’s
growth. The performance in Africa remained very strong and in the
half net sales grew 20% primarily driven by the continued strong performance of
Guinness up 25%. In Latin America Diageo’s three largest markets, Venezuela,
Brazil and Mexico each delivered double digit net sales
growth. Elsewhere in Latin America and the Caribbean there has been
an increasingly difficult trading environment as a result of slowing economic
growth and currency devaluation, however Diageo has successfully managed these
market conditions and delivered net sales growth primarily driven by price
increases across the scotch brands in the region. However volume was impacted
and led to the overall decline in volume in the region. The impact of the
slowing global economy on travel has led to a significant slowdown in global
travel retail and volume was down but net sales grew slightly. Following a
number of years of building marketing spend to optimum levels in Latin America
and Caribbean, spend in the half was in line with the prior
period. In Africa marketing spend increased mainly behind the growth
of scotch, beer and ready to drink brands.
Asia
Pacific - Strong growth in spirits and beer across Asia Pacific offset by ready
to drink decline in Australia post the excise duty increase
|
·
|
Volume
down 8%
|
|
·
|
Net
sales up 2%
|
|
·
|
Marketing
spend up 12%
|
|
·
|
Operating
profit down 5%
|
In Asia
Pacific the decline in ready to drink in Australia, following a significant
increase in duties for ready to drink at the end of the last financial year,
reduced volume growth by 4 percentage points and net sales growth by 6
percentage points. The region delivered spirits net sales growth of 11%
(excluding ready to drink) and 16% growth in beer. This led to further share
gains across important categories such as scotch in China. The benefit of the
return to in-market distribution in Korea was somewhat offset by the decline in
the scotch category as a result of the marked economic slowdown
there. Investment in the in-market organisation in China, India and
Vietnam increased costs in the period, which contributed to the fall in
operating profit.
Financial
|
·
|
The
deficit in respect of post employment plans increased by £69 million from
£408 million at 30 June 2008 to £477 million at 31 December 2008. For the
full year ending 30 June 2009, finance income under IAS 19 is expected to
be minimal compared with the benefit of £46 million in the year ended 30
June 2008.
|
|
·
|
In
the six months ended 31 December 2008, exchange rate movements (excluding
the exchange impact under IAS 21 and IAS 39) increased operating profit by
£103 million and increased net finance charges by £49
million.
|
|
·
|
For
the year ending 30 June 2009, at current exchange rates, foreign exchange
movements (excluding the exchange impact under IAS 21 and IAS 39) are
forecast to increase operating profit by approximately £210 million and
increase the interest charge by approximately £80
million.
|
|
·
|
For
the year ending 30 June 2010, at current exchange rates, foreign exchange
movements (excluding the exchange impact under IAS 21 and IAS 39) are
estimated to increase operating profit by £200 million and increase the
interest charge by £30 million.
|
Brand
summary
|
Organic
volume
movement
%
|
Organic
net sales
movement
%
|
Reported
volume
movement
%
|
Reported
net sales
movement
%
|
|||||||||||||
|
Global
priority brands
|
(3 | ) | 3 | (3 | ) | 16 | ||||||||||
|
Local
priority brands**
|
(2 | ) | 3 | 6 | 26 | |||||||||||
|
Category
brands**
|
(1 | ) | 5 | (1 | ) | 17 | ||||||||||
|
Total
|
(2 | ) | 3 | (1 | ) | 18 | ||||||||||
|
Key
spirits brands*:
|
||||||||||||||||
|
Smirnoff
|
1 | 8 | 1 | 22 | ||||||||||||
|
Johnnie
Walker
|
(6 | ) | 5 | (6 | ) | 14 | ||||||||||
|
Captain
Morgan
|
7 | 13 | 7 | 33 | ||||||||||||
|
Baileys
|
(5 | ) | (2 | ) | (5 | ) | 11 | |||||||||
|
JεB
|
(13 | ) | (9 | ) | (13 | ) | 3 | |||||||||
|
Jose
Cuervo
|
(2 | ) | 2 | (2 | ) | 23 | ||||||||||
|
Tanqueray
|
(5 | ) | (4 | ) | (5 | ) | 15 | |||||||||
|
Crown
Royal - North America
|
6 | 6 | 6 | 29 | ||||||||||||
|
Buchanan’s
– International
|
(9 | ) | 6 | (9 | ) | 11 | ||||||||||
|
Windsor
- Asia Pacific
|
(24 | ) | 31 | (24 | ) | 23 | ||||||||||
|
Guinness
|
(1 | ) | 7 | (1 | ) | 21 | ||||||||||
|
Ready
to drink***
|
(15 | ) | (12 | ) | (13 | ) | (2 | ) | ||||||||
* Spirits
brands excluding ready to drink
** Brand
additions Ketel One vodka and Rosenblum Cellars wine are included as local
priority brands in North America and are reported as category brands in other
regions. Zacapa rum is reported as a category brand globally.
*** The
transfer of Smirnoff ready to drink brands to the new joint venture company in
South Africa has resulted in a difference between reported and organic
volumes
Management
reports
The
interim report for the six months ended 31 December 2008 forms one of the
management reports Diageo is required to publish under the EU Transparency
Directive. Diageo will issue the next interim management statement on 7 May
2009. The year end preliminary results announcement will be issued on 27 August
2009.
BUSINESS
REVIEW
For
the six months ended 31 December 2008
OPERATING
REVIEW – analysis by business area
North
America
Summary:
|
·
|
Growth
of standard and premium spirits brands has driven overall
growth
|
|
·
|
Price
increases across most brands drove net sales
growth
|
|
·
|
Innovation
again drove significant net sales
growth
|
|
·
|
Marketing
was refocused against changing consumer demand and media efficiencies were
delivered
|
|
·
|
The
integration of Ketel One was completed and brand performance has benefited
from integration into Diageo’s distribution
network
|
|
Key
measures:
|
First
half
F’09
|
First
half
F’08
|
Reported
movement
|
Organic
movement
|
||||||||||||
|
£
million
|
£
million
|
%
|
%
|
|||||||||||||
|
Volume
|
6 | 2 | ||||||||||||||
|
Net
sales
|
1,755 | 1,321 | 33 | 4 | ||||||||||||
|
Marketing
spend
|
237 | 201 | 18 | (6 | ) | |||||||||||
|
Operating
profit
|
682 | 491 | 39 | 7 | ||||||||||||
Reported
performance:
Net sales
were £1,755 million in the six months ended 31 December 2008 up £434 million
from £1,321 million in the comparable prior period. Reported operating profit
increased by £191 million from £491 million to £682 million in the six months
ended 31 December 2008.
Organic
performance:
The
weighted average exchange rate used to translate US dollar sales and profit
moved from £1 = $2.03 in the six months ended 31 December 2007 to £1 = $1.66 in
the six months ended 31 December 2008. Exchange rate impacts
increased net sales by £274 million and acquisitions increased net sales by £92
million; there was an organic increase in net sales of £68 million. Exchange
rate impacts increased operating profit by £108 million, acquisitions increased
operating profit by £44 million and there was an organic increase in operating
profit of £39 million.
|
Brand
performance:
|
Organic
volume
movement
|
Organic
net
sales
movement
|
Reported
volume
movement
|
Reported
net
sales
movement
|
||||||||||||
|
%
|
%
|
%
|
%
|
|||||||||||||
|
Global
priority brands
|
1 | 2 | 1 | 23 | ||||||||||||
|
Local
priority brands**
|
2 | 2 | 25 | 50 | ||||||||||||
|
Category
brands**
|
4 | 15 | 4 | 39 | ||||||||||||
|
Total
|
2 | 4 | 6 | 33 | ||||||||||||
|
Key
spirits brands*:
|
||||||||||||||||
|
Smirnoff
|
4 | 13 | 4 | 36 | ||||||||||||
|
Johnnie
Walker
|
(1 | ) | (3 | ) | (1 | ) | 18 | |||||||||
|
Captain
Morgan
|
7 | 12 | 7 | 36 | ||||||||||||
|
Baileys
|
- | 3 | - | 23 | ||||||||||||
|
Jose
Cuervo
|
- | 2 | - | 25 | ||||||||||||
|
Tanqueray
|
(8 | ) | (7 | ) | (8 | ) | 13 | |||||||||
|
Crown
Royal
|
6 | 6 | 6 | 29 | ||||||||||||
|
Guinness
|
(7 | ) | (3 | ) | (7 | ) | 16 | |||||||||
|
Ready
to drink
|
(12 | ) | (10 | ) | (12 | ) | 8 | |||||||||
* Spirits
brands excluding ready to drink
** Brand
additions Ketel One vodka and Rosenblum Cellars wine, are included in local
priority brands. Zacapa rum is included in category
brands.
In the
first half, volume growth of the beverage alcohol market in North America
slowed. Growth has also shifted from the super and ultra premium segments to
value and premium brands. Diageo’s strong position in the premium segment has
however driven volume growth of 3% in spirits, excluding ready to
drink. Spirits' stock levels (measured as future days' sales) are
estimated to have risen at the period end with higher distributor stock levels
partially offset by lower retail stocks. The planned stock reduction in beer and
malt based ready to drink brands was the main driver of a volume decline of 5%
in beer and 12% in ready to drink. The slowdown in the wine category led to an
8% decrease in volume of Diageo wines. Price increases across many
brands helped drive total net sales up 4% despite negative mix as a result of
stronger growth in premium brands than deluxe brands. Innovation in the half
drove 30% net sales growth led by Captain Morgan 100 and Baileys
Coffee.
Smirnoff
delivered another strong performance in the first half growing volume 4% driven
by continued effective media campaigns that reinforced the quality message first
endorsed by The New York Times blind taste test. The Smirnoff James Bond
Campaign has promoted responsibility in addition to building brand
equity. Price increases on approximately 80% of the volume together
with mix improvements drove net sales growth of 13%. Smirnoff
Flavours grew volume 12% on the introduction of two new flavours, White Grape
and Passion Fruit. While Smirnoff is outperforming its major competitors, it
lost some share to new premium brands and some lower end brands.
The
scotch category declined as consumers traded out of super premium and deluxe
segments. Johnnie Walker volume declined 1% and negative mix reduced
net sales by 3%. Price increases were taken on 65% of volume increasing Johnnie
Walker’s price premium to competitors, however Johnnie Walker still gained 0.4
percentage points of share.
Captain
Morgan volume grew 7% driven by the new launches of Captain Morgan 100 and
Parrot Bay Key Lime. Price increases across over 50% of Captain
Morgan Original Spiced rum volume led to net sales growth of 12% and Captain
Morgan grew share 0.2 percentage points.
Baileys
maintained volume in one of the most difficult segments of the spirits category
gaining share of 0.4 percentage points. The introduction of Baileys Coffee with
increased TV advertising and support for the launch over the holiday period
offset a decline in Baileys Original and weakness in other Baileys
Flavours. Price increases on Baileys Original drove net sales growth
of 3%.
Jose
Cuervo volume was flat despite growth in the premium segment through Jose Cuervo
Classico. Price increases in most markets helped drive net sales
growth of 2%. Share increased 0.4 percentage points, with Jose Cuervo Especial
growing 1.8 percentage points.
Tanqueray
volume declined 8% as it lapped the Rangpur launch of the previous
period. Price increases only partially offset volume declines with
net sales down 7%. The imported gin segment lost share to domestic gin, a
reversal of last year’s trend and Tanqueray lost 1.1 percentage points of
share.
Crown
Royal total volume increased 6% on the strong growth of Crown Royal Canadian
Whisky. Lower volume growth on the higher marques, such as Crown
Royal Cask 16, which lapped a successful initial launch, led to negative mix and
therefore net sales also grew by 6% despite price increases taken on 85% of
volume. Crown Royal remained the best performing Canadian whisky and
gained share.
Guinness
volume declined by 7% as the planned stock reduction was
implemented. Price increases on over half the volume of packaged
Guinness and on kegs led to a net sales decline of only 3%. Guinness
share was down 0.1 percentage points.
Local
priority brands grew both volume and net sales 2% driven by the performance of
Crown Royal and good growth in Buchanan’s, volume up 7% and net sales up 8%, and
in Seagram’s 7, volume up 3% and net sales up 11%, offset by the decline of US
wine brands. Wine volume was down 10% while price increases led to 9%
decline in net sales. Weakness in Beaulieu Vineyard, Sterling and
Chalone was slightly offset by the introduction of an organic Sterling
line.
The
performance of Ketel One and Rosenblum Cellars has benefited from the
integration into Diageo’s superior distribution network in the US.
Category
brand volume grew by 4% and net sales grew 15% driven by growth of the vodka
category. In contrast to the consumer trend away from super and ultra premium
brands to premium and value brands Ciroc achieved an outstanding performance as
volume and net sales trebled albeit from a small base. Growth was also seen
across Gordon’s vodka, volume up 3% and net sales up 8%, Popov, volume up 8% and
net sales up 15% and Bushmills, volume up 2% and net sales up 4%. Growth was
tempered by a decline in Godiva and in Diageo’s French Agency brands, which
declined as consumers switched to domestic and less expensive
varieties.
There has
been an encouraging start for Zacapa with the brand seeded in high end and high
volume on and off premise outlets.
Ready to
drink volumes declined 12% driven mainly by the planned stock reduction in malt
based ready to drink products and the overall decline in the
segment. The introduction of three new Smirnoff Ice Flavours and the
success of Smirnoff Cocktails led to mix improvement and net sales decreased by
10%.
The
overall reduction in marketing spend reflects the decision to reduce spend on
beer and ready to drink brands and marketing efficiency benefited from deflation
in media rates. Spend on spirits brands increased by 1% focused on Smirnoff,
Captain Morgan and Jose Cuervo. Spend was also increased on Ciroc, fuelling the
strong performance of the brand. Tactical support at the local and regional
level was increased on select value and popular brands to reflect changes in
consumer demand.
Europe
Summary:
|
·
|
Deteriorating
economic situation in Spain was the key driver of the region’s
performance
|
|
·
|
Volume
decline in beer, however Guinness gained share both in Great Britain and
in the on-trade in Ireland
|
|
·
|
Strong
performance in Russia in the half
|
|
·
|
Spirits
brands performed well in Great
Britain
|
|
Key
measures:
|
First
half
F’09
|
First
half
F’08
|
Reported
movement
|
Organic
movement
|
||||||||||||
|
£
million
|
£
million
|
%
|
%
|
|||||||||||||
|
Volume
|
(5 | ) | (5 | ) | ||||||||||||
|
Net
sales
|
1,560 | 1,433 | 9 | (3 | ) | |||||||||||
|
Marketing
spend
|
248 | 228 | 9 | (4 | ) | |||||||||||
|
Operating
profit
|
534 | 509 | 5 | (4 | ) | |||||||||||
Reported
performance:
Net sales
were £1,560 million in the six months to 31 December 2008 up by £127 million
from £1,433 million in the comparable prior period. Reported operating profit
increased by £25 million to £534 million in the six months to 31 December
2008. Exceptional costs of £13 million in respect of restructuring
costs for the Irish brewing operations are included within operating expenses in
the six months ended 31 December 2008. Reported operating profit excluding
exceptional items increased by £38 million to £547 million in the six months
ended 31 December 2008.
Organic
performance:
The
weighted average exchange rate used to translate euro sales and profit moved
from £1 = €1.43 in the six months ended 31 December 2007 to £1 = €1.21 in the
six months ended 31 December 2008. Exchange rate impacts increased net sales by
£163 million. Acquisitions increased net sales by £4 million and there was an
organic decrease of £40 million. Exchange rate impacts increased operating
profit by £63 million. Exceptional costs decreased operating profit by £13
million and there was an organic decrease in operating profit of £25
million.
|
Brand
performance:
|
Organic
volume
movement
|
Organic
net
sales
movement
|
Reported
volume
movement
|
Reported
net
sales
movement
|
||||||||||||
|
%
|
%
|
%
|
%
|
|||||||||||||
|
Global
priority brands
|
(5 | ) | (2 | ) | (5 | ) | 9 | |||||||||
|
Local
priority brands
|
(6 | ) | (5 | ) | (6 | ) | 7 | |||||||||
|
Category
brands**
|
(4 | ) | (2 | ) | (3 | ) | 10 | |||||||||
|
Total
|
(5 | ) | (3 | ) | (5 | ) | 9 | |||||||||
|
Key
spirits brands*:
|
||||||||||||||||
|
Smirnoff
|
(4 | ) | - | (4 | ) | 9 | ||||||||||
|
Johnnie
Walker
|
2 | 7 | 2 | 23 | ||||||||||||
|
Baileys
|
(5 | ) | (4 | ) | (5 | ) | 7 | |||||||||
|
JεB
|
(13 | ) | (12 | ) | (13 | ) | 2 | |||||||||
|
Guinness
|
(8 | ) | (2 | ) | (8 | ) | 7 | |||||||||
|
Ready
to drink
|
(18 | ) | (12 | ) | (18 | ) | (4 | ) | ||||||||
* Spirits
brands excluding ready to drink
** Brand
additions Ketel One vodka, Rosenblum Cellars wine and Zacapa rum are included in
category brands.
In Europe
the worsening economic environment has led to a decline in beverage alcohol
consumption in many markets and has led to further momentum behind the switch
from on-trade to off-trade. Diageo’s performance reflects this wider
trend, however it also reflects out-performance in Great Britain, continued
positive performance in Continental Europe and strong growth in
Russia. Price increases offset duty increases and delivered 2
percentage points of price/mix.
In Great
Britain net sales were down 1% driven by the decline in the beer category and in
ready to drink offset by a strong spirits performance which benefited from price
increases in the second half of the year ended 30 June 2008. Advertising and
promotional spend also declined by 1% primarily as a result of Guinness lapping
increased spend in the prior year during the Rugby World Cup.
Performance
in Ireland was impacted by the further decline in the total alcoholic drinks
market where volume declined 3% and sales declined 2%. Against this, Guinness
net sales have grown 2% and share has increased in both the Republic of Ireland
and Northern Ireland on-trade channels. Local priority beer brands net sales
were down 6%. Harp gained share in the key Northern Ireland on-trade
following the successful launch of Harp Ice Cold.
In Spain
a gradual deterioration in trading conditions became a steep decline during
November across virtually all consumer driven categories leading to a volume
decline of 20% and a net sales decline of 18%. While JεB has held share
of scotch, consumers traded down particularly in the off-trade where value
brands and the discount channel are gaining share.
Smirnoff
volume was down 4% and net sales were flat driven by the brand’s performance in
Great Britain where volume was down 5% however net sales were up 2% as a result
of price rises introduced in the second half of fiscal 2008. Despite increasing
competition from value brands, Smirnoff maintained its position as the number
one premium spirit in Great Britain. Elsewhere, volume growth in Continental
Europe offset further volume declines in Ireland and Spain while price increases
were achieved across the region.
Johnnie
Walker volume was up 2% with strong performances in Continental Europe and
Russia partly offset by a decline in Iberia. In Russia print and digital
campaigns based on Johnnie Walker Strides drove volume of the trademark up 6%
with a strong performance of Johnnie Walker Red Label. Johnnie Walker
Black Label performed well in the Russian domestic market though overall volume
was down due to de-stocking in the duty free channel. Net sales increased 7% as
a result of the continuation of our scotch pricing strategy implemented in
fiscal 2008.
Baileys
volume was down 5% and net sales down 4%. The overall decline is mainly due to
the performance in Iberia where despite the weakness in the category Baileys has
maintained share through relevant investment in key growth drivers. In Great
Britain Baileys showed good volume and net sales growth in both the core brand
and Baileys Flavours variants following introduction of a new bottle design and
strong gifting focus.
JεB
volume was down 13% and net sales were down 12%. In Iberia JεB volume declined
25% as a result of both the sharp and accelerated decline in consumption from
November and the impact of Diageo’s decision not to supply to a number of
customers to minimise the risk of credit
defaults.
Guinness
volume was down 8% and net sales were down 2%. In Great Britain, against a
declining beer market and a strong prior year including the positive impact of
the Rugby World Cup, Guinness has achieved 24 consecutive months of share growth
achieving its highest ever share of the beer market. This growth has been driven
by a shift in strategy to focus on less frequent purchasers and through driving
footfall into the on-trade supported by the successful execution of the 17:59
campaigns. Guinness in Ireland has maintained the strategy to invest behind
strong share of voice growth through the ‘It’s Alive Inside’ communications
platform, helping to drive share gains in the key on-trade channels and overall
year on year net sales growth for the brand.
Local
priority brands volume was down 6% and net sales were down 5% driven by local
beer brands in Ireland reflecting the decline in the category and Cacique and
Cardhu in Iberia. Cacique was impacted in part by supply issues out of Venezuela
whilst Cardhu performance suffered from the weak market and on-trade contraction
in Spain.
Category
brands have improved gearing as a result of the scotch pricing strategy and
improved mix from Diageo’s range of scotch brands.
Ready to
drink volume has declined 18% versus the prior period driven by further segment
weakness in Great Britain where Smirnoff Ice was down 23% but the brand gained
share in the segment.
Marketing
spend in Spain was reduced, though marketing as a percentage of net sales has
increased. Spend was reduced on beer brands in Ireland in line with
the category decline while spend was increased in Russia behind Johnnie
Walker.
International
Summary:
|
·
|
Strong
performance in Africa and price increases across the scotch brands in
International drove net sales growth of
11%
|
|
·
|
Continued
strong performance by Guinness driving volume and net sales growth in
Africa
|
|
·
|
Marketing
effectiveness in Latin America was offset by increased spend on scotch,
beer and ready to drink in
Africa
|
|
Key
measures:
|
First
half
F’09
|
First
half
F’08
|
Reported
movement
|
Organic
movement
|
||||||||||||
|
£
million
|
£
million
|
%
|
%
|
|||||||||||||
|
Volume
|
(1 | ) | (2 | ) | ||||||||||||
|
Net
sales
|
1,237 | 1,050 | 18 | 11 | ||||||||||||
|
Marketing
spend
|
135 | 125 | 8 | 2 | ||||||||||||
|
Operating
profit
|
420 | 347 | 21 | 11 | ||||||||||||
Reported
performance:
Net sales
were £1,237 million in the six months ended 31 December 2008, up £187 million
from £1,050 million in the comparable prior period. Reported
operating profit increased by £73 million from £347 million to £420 million in
the six months ended 31 December 2008.
Organic
performance:
Exchange
rate impacts increased net sales by £64 million and increased operating profit
by £30 million. Changes in the business model in South Africa and brand
additions increased net sales by £1 million and operating profit by £2
million. There was an organic increase in net sales of £122 million and an
organic increase in operating profit of £41 million.
|
Brand
performance:
|
Organic
volume
movement**
|
Organic
net
sales
movement
|
Reported
volume
movement
|
Reported
net
sales
movement
|
||||||||||||
|
%
|
%
|
%
|
%
|
|||||||||||||
|
Global
priority brands***
|
(3 | ) | 11 | (2 | ) | 18 | ||||||||||
|
Local
priority brands
|
1 | 12 | 1 | 19 | ||||||||||||
|
Category
brands**
|
(2 | ) | 11 | (1 | ) | 17 | ||||||||||
|
Total
|
(2 | ) | 11 | (1 | ) | 18 | ||||||||||
|
Key
spirits brands*:
|
||||||||||||||||
|
Smirnoff
|
1 | 9 | 1 | 14 | ||||||||||||
|
Johnnie
Walker
|
(9 | ) | 5 | (9 | ) | 7 | ||||||||||
|
Baileys
|
(11 | ) | (3 | ) | (11 | ) | 5 | |||||||||
|
Buchanan’s
|
(9 | ) | 6 | (9 | ) | 11 | ||||||||||
|
Guinness
|
6 | 22 | 6 | 42 | ||||||||||||
|
Ready
to drink***
|
1 | 12 | 8 | 17 | ||||||||||||
*
Spirits brands excluding ready to drink
**
Brand additions Ketel One vodka, Rosenblum Cellars wine and Zacapa rum are
included in category brands.
*** The
transfer of Smirnoff ready to drink brands to the new joint venture company in
South Africa has resulted in a difference between reported and organic
volumes.
The
outstanding growth of Guinness in Africa, net sales up 25%, and the growth in
scotch brands in Latin America, net sales up 5%, were the key drivers of overall
net sales growth of 11% in the region.
Smirnoff
volume grew 1% and net sales were up 9%. Volume performance was driven by
growth in Brazil and South Africa, Smirnoff’s biggest markets in the region. Net
sales were driven by price increases in these two markets.
The
application of Diageo’s scotch strategy to focus on net sales across all scotch
brands in Latin America led to lower volumes but delivered strong price/mix
improvement. This impacted Johnnie Walker’s volume performance but led to 5% net
sales growth.
Baileys
volume was down partly due to temporary disruption in Duty Free channels.
However, price increases across Latin America and the Caribbean partially offset
this volume impact and net sales decreased 3%.
Buchanan's
net sales grew by 6% as price increases were taken in all markets as part of
Diageo’s focus on value over volume for scotch. The brand performed strongly in
Venezuela, the brand’s biggest market, and Buchanan’s remains the market leader
both there and in Mexico. Price increases held back volume in the rest of Latin
America.
Guinness
continued to drive growth throughout Africa. Guinness grew volume 8% in Africa
with strong performances in Nigeria, Cameroon and East Africa. Net sales grew
25% as a result of price increases taken across the region.
Local
priority brands grew net sales 12% with consistent performance across many
markets. Price increases taken across the scotch brands in Latin America and
beer in Africa drove growth especially Buchanan’s in Venezuela and Tusker in
East Africa. Volume grew 1% on the growth of Bell’s in South Africa,
Malta in Nigeria and Pilsner and Tusker in East Africa.
Category
brands net sales were up 11% primarily as a result of the performance of Cacique
in Venezuela and the beer brands Harp in Nigeria, Star in Ghana and Senator in
East Africa.
Ready to
drink volume increased by 1% and net sales grew 12% on price increases on
Smirnoff ready to drink brands in most markets and volume gains in Latin
America, especially Brazil, and in Nigeria. Volume growth in Brazil,
Nigeria and Duty Free offset a volume decrease in South Africa.
Africa
performed strongly as volume grew 5% and net sales grew 20%. Guinness’ strong
performance in Nigeria and Cameroon drove this growth, slightly offset by the
impact of supply constraints in Ghana.
Nigeria
had a strong performance in the first half. Volume grew 24% and net
sales grew 37% driven mainly by Guinness but also with good performances by Harp
and Smirnoff Ice. Price increases were taken across all
brands. The re-launch of Guinness Malta with new packaging and growth
in ready to drink and lager helped drive the strong performance.
Against a
tough trading environment in East Africa, East African Breweries Limited grew
volume 8% and net sales 11%. Tusker, Guinness and Senator were the
main drivers of the growth. Price increases offset some mix
deterioration as economic instability drove consumers to trade
downward.
In Ghana,
raw material shortages, especially water, required the production schedule to be
reprioritised. Volume was down 8% affecting Guinness, Guinness Malta
and Smirnoff Ice, although price increases on all brands and changes in excise
duty offset the volume decrease and net sales grew 23%.
Cameroon
also performed well in the first half. Volumes increased by 14% driven by
Guinness and Gordon’s Spark. Net sales grew by 19% as price increases
implemented on Guinness fully offset the small price decrease on Malta Quench,
which brought it in line with competitor brands. Although some supply
constraints delayed the launch of Smirnoff Ice, its performance has been
promising to date.
South
Africa continued to grow and net sales increased 10%. Volumes were down 5% as a
result of the focus on driving value in scotch. Bells, JεB and Johnnie Walker all
grew share. Total global priority spirits brands grew
volume. This resulted in positive mix, which along with price
increases across spirits, grew net sales by 10%. The transition of
ready to drink and beer brands to the new joint venture company in South Africa
is progressing smoothly.
In Latin
America significant price increases were taken in response to the devaluation of
local currencies. This slowed volumes but drove net sales growth on the scotch
brands. Stock levels in trade were down due to better control processes,
depletions and limit on credit to some customers.
In Mexico
volume and net sales growth by Diageo’s scotch brands drove very strong
performance. Diageo made share gains in the scotch category, which was the
fastest growing spirit category in the half.
In
Paraguay, Uruguay and Brazil falling volumes were turned into low double-digit
net sales growth with price increases to reflect currency devaluations, positive
brand mix and stronger growth in Brazil where growth in Smirnoff and the reserve
brands helped grow the top line.
In
Venezuela net sales grew by 10% with price increases on the majority of brands
and mix improvement in rum and ready to drink. Strong volume
performance of Cacique up 26% was offset by losses in Johnnie Walker as it
lapped increased customer buy-in in the prior period ahead of a January 2008
price increase.
Global
Travel and Middle East has been impacted as global economic weakness has led to
a slowdown in travel retail. Scotch volume declined while non-scotch performance
was flat as declining Baileys and Gordon’s volume was offset by the growth of
Captain Morgan, Tanqueray and Smirnoff. Net sales increased by 1% as the result
of price increases taken in the second half of the previous financial
year.
Marketing
spend in the region increased 2% as effectiveness in Latin America was offset by
increased spend on scotch in South Africa, beer in Nigeria and ready to drink
across Africa.
Asia
Pacific
Summary:
|
|
·
|
The
decline in the ready to drink segment in Australia significantly impacted
regional volume and net sales
growth
|
|
|
·
|
Continued
top line growth in China, India and
Vietnam
|
|
|
·
|
Continued
share gains in scotch in China
|
|
|
·
|
Continued
organisational investment in China, India and Vietnam increased overheads
and reduced operating profit
|
|
Key
measures:
|
First
half
F’09
|
First
half
F’08
|
Reported
movement
|
Organic
movement
|
||||||||||||
|
£
million
|
£
million
|
%
|
%
|
|||||||||||||
|
Volume
|
(8 | ) | (8 | ) | ||||||||||||
|
Net
sales
|
477 | 438 | 9 | 2 | ||||||||||||
|
Marketing
spend
|
112 | 89 | 26 | 12 | ||||||||||||
|
Operating
profit
|
93 | 99 | (6 | ) | (5 | ) | ||||||||||
Reported
performance:
Net sales
were £477 million in the six months ended 31 December 2008, up £39 million from
£438 million in the comparable prior period. Reported operating
profit decreased by £6 million from £99 million to £93 million in the six months
ended 31 December 2008.
Organic
performance:
Exchange
rate impacts increased net sales by £28 million. There was an organic
increase in net sales of £11 million. Exchange rate impacts decreased
operating profit by £1 million. There was an organic decrease in operating
profit of £5 million.
|
Brand
performance:
|
Organic
volume movement
|
Organic
net
sales
movement
|
Reported
volume
movement
|
Reported
net
sales
movement
|
||||||||||||
|
%
|
%
|
%
|
%
|
|||||||||||||
|
Global
priority brands
|
(7 | ) | 3 | (7 | ) | 11 | ||||||||||
|
Local
priority brands
|
(13 | ) | 7 | (13 | ) | 7 | ||||||||||
|
Category
brands**
|
(11 | ) | (5 | ) | (10 | ) | 4 | |||||||||
|
Total
|
(8 | ) | 2 | (8 | ) | 9 | ||||||||||
|
Key
spirits brands*:
|
||||||||||||||||
|
Smirnoff
|
4 | 18 | 4 | 26 | ||||||||||||
|
Johnnie
Walker
|
(10 | ) | 6 | (10 | ) | 14 | ||||||||||
|
Bundaberg
rum
|
30 | 43 | 30 | 48 | ||||||||||||
|
Windsor
|
(24 | ) | 31 | (24 | ) | 23 | ||||||||||
|
Guinness
|
16 | 18 | 16 | 31 | ||||||||||||
|
Ready
to drink
|
(33 | ) | (30 | ) | (33 | ) | (26 | ) | ||||||||
*
Spirits brands excluding ready to drink
** Brand
additions Ketel One vodka, Rosenblum Cellars wine and Zacapa rum are included in
category brands.
Smirnoff
continues to grow with volumes up 4% driven by India and Australia. A
focus on Smirnoff Flavours in these markets, the growth of Smirnoff Black in
Australia combined with price increases in August and promotions focused on the
mixability of Smirnoff in India have improved net sales by 18%.
Johnnie
Walker volume was down as reduced trade stock levels were partially offset by
continued growth in super premium in China and Thailand. Net sales grew 6% as a
result of price/mix benefits including a strategy to focus on Johnnie Walker
Blue Label in China through sponsorship and advertising.
In
Australia Bundaberg benefited from the decline in the ready to drink segment
resulting in a 30% increase in volume and 43% increase in net
sales.
Windsor
in Korea drove the decline in local priority brand volume reflecting the move
back to in-market distribution. Despite the reduction in volume net sales
increased by 31% reflecting higher net sales per case in Korea with the return
to the normal route to market. In the comparable prior period sales were
recognised at the time stock was transferred to the distributor while net sales
per case were reduced to reflect the transfer of costs, including marketing
spend to the distributor. The net impact in the prior period was to increase
volume and reduce net sales per case, marketing spend and operating
profit.
Guinness
volume increased 16% and net sales increased 18%. This growth was achieved by a
strong performance in Malaysia and Indonesia reflecting both the resilience of
the beer market in the current economic climate and the growing strength of the
brand in the region.
The
decline in category brands was driven mainly by the decline of ready to drink in
Australia due to the higher duty rate. Australia remains the key
market for Diageo’s ready to drink brands in Asia Pacific. A 70% duty
increase on spirit-based ready to drink brands imposed by the Australian
government in April 2008 has resulted in a decrease of 34% in volume and 32% in
net sales in Australia.
In India
volume grew 18% as Diageo’s Bottled in Origin business grew especially in travel
retail following the reopening of a number of duty free shops at airports in the
second half of last year. Increased focus on deluxe and super deluxe
brands has increased net sales by 42%.
In China
the volume performance was impacted by the economic slowdown which reduced
credit and led to lower inventories in some parts of the supply
channel. This led to a decline in Johnnie Walker volume of
14%. However net sales of Johnnie Walker grew 8% mainly due to price
increases across all variants in the second half of last year, coupled with a
focus on super premium brands through sponsorship and
advertising. Diageo China volume was up strongly, albeit from a small
base, as JεB, Dimple
and Smirnoff all performed well in the modern on-trade which was less
affected by the decline in economic conditions.
Despite
the decline in the scotch category in Taiwan, total volume grew 24% and net
sales by 20% mainly driven by the performance of Johnnie Walker and Singleton.
This was the result of successful advertising campaigns coupled with price
increases for Johnnie Walker implemented in October 2008.
Marketing
in Asia Pacific has increased behind all scotch brands in China and in India
where spend increased significantly on Johnnie Walker. Elsewhere in the region
spend was in line with last year, although in many markets share of voice
increased.
Corporate
revenue and costs
Net sales
were £39 million in the six months ended 31 December 2008, down £6 million from
£45 million in the comparable prior period. Net reported operating costs were
£93 million in the six months ended 31 December 2008 and were £32 million in the
six months ended 31 December 2007. Certain period on period translation and
transaction exchange differences, arising on intra-group trading, are recorded
in reported corporate costs, amounting to a £97 million adverse impact in the
six months ended 31 December 2008. Corporate costs on an organic
basis were down £15 million and also benefited from a £21 million foreign
exchange gain on transactions in respect of the current
period.
FINANCIAL
REVIEW
Summary
consolidated income statement
|
Six
months ended
31
December 2008
|
Six
months ended
31
December 2007
|
|||||||
|
£
million
|
£
million
|
|||||||
|
Sales
|
6,691 | 5,667 | ||||||
|
Excise
duties
|
(1,623 | ) | (1,380 | ) | ||||
|
Net
sales
|
5,068 | 4,287 | ||||||
|
Operating
costs
|
(3,432 | ) | (2,873 | ) | ||||
|
Operating
profit
|
1,636 | 1,414 | ||||||
|
Sale
of businesses
|
- | 5 | ||||||
|
Net
finance charges
|
(344 | ) | (156 | ) | ||||
|
Share
of associates’ profit after tax
|
120 | 105 | ||||||
|
Profit
before taxation
|
1,412 | 1,368 | ||||||
|
Taxation
|
(211 | ) | (354 | ) | ||||
|
Profit
for the period
|
1,201 | 1,014 | ||||||
|
Attributable
to:
|
||||||||
|
Equity
shareholders
|
1,137 | 975 | ||||||
|
Minority
interests
|
64 | 39 | ||||||
| 1,201 | 1,014 | |||||||
Sales
and net sales
On a
reported basis, sales increased by £1,024 million from £5,667 million in the six
months ended 31 December 2007 to £6,691 million in the six months ended 31
December 2008. On a reported basis net sales increased by £781 million from
£4,287 million in the six months ended 31 December 2007 to £5,068 million in the
six months ended 31 December 2008. Exchange rate movements increased reported
sales by £670 million and reported net sales by £531 million. Acquisitions
resulted in an increase in reported sales of £103 million and reported net sales
of £97 million for the period.
Operating
costs
On a
reported basis, operating costs increased by £559 million in the six months
ended 31 December 2008 due to an increase in cost of sales of £327 million, from
£1,677 million to £2,004 million, an increase in marketing expenses of £89
million, from £643 million to £732 million, and an increase in other operating
expenses of £143 million, from £553 million to £696 million. The impact of
exchange rate movements increased total operating costs by £428 million.
Exceptional costs of £13 million in respect of the restructuring of Irish
brewing operations are included within costs for the six months ended 31
December 2008 (2007 - nil).
Post
employment plans
Post
employment costs for the six months ended 31 December 2008 of £50 million (2007
- £25 million) comprised charges to operating profit of £50 million (2007 - £48
million) and finance income of nil (2007 - £23 million).
At 31
December 2008, Diageo’s deficit before taxation for all post employment plans
was £477 million (30 June 2008 - £408 million). The increase in the
deficit is primarily a result of lower investment returns than expected, a
decrease in discount rate assumptions and adverse exchange rate movements partly
offset by a decrease in inflation rates.
Operating
profit
Reported
operating profit for the six months ended 31 December 2008 increased by £222
million to £1,636 million from £1,414 million in the comparable prior
period. Exchange rate movements increased operating profit for the
six months ended 31 December 2008 by £103 million.
Acquisitions
Acquisitions
made in the second half of the year ended 30 June 2008, principally with respect
to Ketel One vodka, Rosenblum Cellars wine and the distribution rights for
Zacapa rum, contributed £97 million to net sales and £46 million to operating
profit in the six months ended 31 December 2008.
Net
finance charges
Net
finance charges increased from £156 million in the six months ended 31 December
2007 to £344 million in the six months ended 31 December 2008.
The net
interest charge increased by £140 million from £157 million in the comparable
prior period to £297 million in the six months ended 31 December 2008. This
increase principally resulted from the increase in net borrowings in the period,
adverse exchange rate movements of £44 million and an increase in the adverse
impact of the revaluation to period end market rates of interest rate swaps
under IAS 39 of £27 million.
The
income statement interest cover was 6 times and cash interest cover was 9
times.
Other
finance charges for the six months ended 31 December 2008 were £47 million (2007
- £1 million net income). There was a reduction of £23 million in
post employment credits from £23 million in the six months ended 31 December
2007 to nil in the six months ended 31 December 2008. Other finance
charges also includes £15 million (2007 - £2 million) in respect of exchange
rate translation differences on inter-company funding arrangements that do not
meet the accounting criteria for recognition in equity, £4 million (2007 - £5
million) in respect of exchange movements on net borrowings not in a hedge
relationship and therefore recognised in the income statement, £11 million (2007
- £8 million) unwinding of discounts on liabilities and £17 million (2007 – £7
million) in respect of other finance charges.
Associates
The
group’s share of associates’ profits after interest and tax was £120 million for
the six months ended 31 December 2008 compared to £105 million in the comparable
prior period. Diageo’s 34% equity interest in Moët Hennessy
contributed £112 million (2007 - £96 million) to share of associates’ profits
after interest and tax.
Profit
before taxation
Profit
before taxation increased by £44 million from £1,368 million to £1,412 million
in the six months ended 31 December 2008.
Taxation
The tax
charge is based upon the estimate of the tax rate expected for the full year
under current legislation.
The
reported tax rate for the six months ended 31 December 2008 is 15% compared with
26% for the six months ended 31 December 2007. Factors that reduced the reported
tax rate in the period included settlements agreed with tax authorities that
gave rise to changes in the value of deferred tax assets and tax provisions. For
the year ending 30 June 2009 the reported tax rate is expected to be 17%, taking
into account draft legislation. The underlying tax rate for continuing
operations for the six months ended 31 December 2008 was 22% compared with 26%
for the six months ended 31 December 2007. The underlying tax rate for the year
ending 30 June 2009 is expected to be 24%, taking into account draft
legislation.
Exchange
rate movements
Exchange
rate movements are calculated by retranslating the prior period results as if
they had been generated at the current period exchange rates and are excluded
from organic growth. Exchange rate movements arising on transactions
relating to the current period are included in organic growth.
The
estimated effect of exchange rate movements on the results for the six months
ended 31 December 2008 was as follows.
|
Gains/(losses)
£
million
|
||||||||
|
Operating
profit
|
||||||||
|
Translation
impact
|
154 | |||||||
|
Transaction
impact
|
(51 | ) | ||||||
|
Associates
|
||||||||
|
Translation
impact
|
20 | |||||||
|
Interest
and other finance charges
|
||||||||
|
Net
finance charges – translation impact
|
(49 | ) | ||||||
|
Other
movements – relating to IAS 21 and IAS 39
|
(39 | ) | ||||||
|
Total
exchange effect on profit before taxation
|
35 | |||||||
|
Six
months
ended
31
December
2008
|
Six
months
ended
31
December
2007
|
|||||||
|
Exchange
rates
|
||||||||
|
Translation
US$/£ rate
|
1.66 | 2.03 | ||||||
|
Transaction
US$/£ rate
|
2.25 | 1.88 | ||||||
|
Translation
€/£ rate
|
1.21 | 1.43 | ||||||
|
Transaction
€/£ rate
|
1.40 | 1.41 | ||||||
Outlook
for the impact of exchange rate movements:
For the
year ending 30 June 2009, applying current exchange rates (US$/£1.49, €/£1.14)
for translation exposures for the balance of the year, foreign exchange
movements (excluding the exchange impacts of IAS 21 and IAS 39) are forecast to
increase operating profit by approximately £210 million and increase the
interest charge by approximately £80 million.
For the
year ending 30 June 2010 at current exchange rates (US$/£1.49, €/£1.14) foreign
exchange movements (excluding the exchange impacts of IAS 21 and IAS 39) are
estimated to increase operating profit by £200 million and increase the interest
charge by £30 million.
Dividend
An
interim dividend of 13.9 pence per share will be paid to holders of ordinary
shares and ADR’s on the register on 6 March 2009. This represents an
increase of 5.3% on last year’s interim dividend. The interim dividend will be
paid to shareholders on 6 April 2009. Payment to US ADR holders will be made on
14 April 2009. A dividend reinvestment plan is available in respect of the
interim dividend and the plan notice date is 16 March 2009.
|
Cash flow
|
Six months ended
31 December 2008
|
Six months ended
31 December 2007
|
||||||
|
£ million
|
£ million
|
|||||||
|
Cash
generated from operations
|
973 | 830 | ||||||
|
Interest
paid (net)
|
(199 | ) | (140 | ) | ||||
|
Dividends
paid to equity minority interests
|
(69 | ) | (37 | ) | ||||
|
Taxation
paid
|
(137 | ) | (118 | ) | ||||
|
Net
(purchase)/sale of other investments
|
(11 | ) | 6 | |||||
|
Net
capital expenditure
|
(170 | ) | (105 | ) | ||||
|
Free
cash flow
|
387 | 436 | ||||||
Free cash
flow decreased by £49 million to £387 million in the six months ended 31
December 2008. Cash generated from operations increased from £830 million to
£973 million principally as a result of increased operating profit partially
offset by an increase in working capital. Inventories increased by
more than in the prior period partially offset by a smaller increase in both
receivables and payables than in the prior period. Net capital expenditure on
property, plant and equipment increased £65 million to £170 million in the
period, being increased capital expenditure of £47 million and lower disposal
proceeds of £18 million.
Balance
sheet
At 31
December 2008, total equity was £4,616 million compared with £4,175 million at
30 June 2008. This increase was mainly due to the profit for the
period of £1,201 million partly offset by the dividend paid out of shareholders’
equity of £527 million and the shares repurchased for cancellation of £354
million.
Net
borrowings were £8,416 million at 31 December 2008, an increase of £1,969
million from net borrowings at 30 June 2008 of £6,447 million. The principal
components of this increase were £354 million (2007 - £492 million) including
costs, to repurchase 38 million shares as part of the share buyback programme
(2007 – 46.4 million shares), £46 million net repurchase of own shares for share
schemes (2007 - £85 million), £64 million in respect of acquisitions (2007 –
nil), mainly the purchase of the remaining minority interest in the Russian
joint venture and an increase in the shareholding in Sichuan Quanxing Group,
adverse exchange rate movements of £1,470 million and £527 million equity
dividend paid (2007 - £523 million) partly offset by free cash flow of £387
million.
The share
buyback programme has not been activated since 31 December 2008 and it is not
envisaged that the buyback programme will be reopened during calendar year
2009. Diageo targets a range of ratios which are currently broadly
consistent with an A band credit rating. Diageo would consider
modifying these ratios in order to effect strategic initiatives within its
stated goals and which could have an impact on its rating.
Economic
profit
Economic
profit increased by £140 million from £577 million in the six months ended 31
December 2007 to £717 million in the six months ended 31 December
2008. See page 38 for the calculation and definition of economic
profit.
DIAGEO
CONDENSED CONSOLIDATED INCOME STATEMENT
|
Six months ended
31 December 2008
|
Six months ended
31 December 2007
|
|||||||||||
|
Notes
|
£ million
|
£ million
|
||||||||||
|
Sales
|
2 | 6,691 | 5,667 | |||||||||
|
Excise
duties
|
(1,623 | ) | (1,380 | ) | ||||||||
|
Net
sales
|
5,068 | 4,287 | ||||||||||
|
Cost
of sales
|
(2,004 | ) | (1,677 | ) | ||||||||
|
Gross
profit
|
3,064 | 2,610 | ||||||||||
|
Marketing
expenses
|
(732 | ) | (643 | ) | ||||||||
|
Other
operating expenses
|
(696 | ) | (553 | ) | ||||||||
|
Operating
profit
|
2 | 1,636 | 1,414 | |||||||||
|
Sale
of businesses
|
3 | - | 5 | |||||||||
|
Net
interest payable
|
4 | (297 | ) | (157 | ) | |||||||
|
Net
other finance (charges)/income
|
4 | (47 | ) | 1 | ||||||||
|
Share
of associates' profits after tax
|
120 | 105 | ||||||||||
|
Profit
before taxation
|
1,412 | 1,368 | ||||||||||
|
Taxation
|
5 | (211 | ) | (354 | ) | |||||||
|
Profit
for the period
|
1,201 | 1,014 | ||||||||||
|
Attributable
to:
|
||||||||||||
|
Equity
shareholders of the parent company
|
1,137 | 975 | ||||||||||
|
Minority
interests
|
64 | 39 | ||||||||||
| 1,201 | 1,014 | |||||||||||
|
Pence
per share
|
||||||||||||
|
Basic
earnings
|
45.6 | p | 37.6 | p | ||||||||
|
Diluted
earnings
|
45.6 | p | 37.4 | p | ||||||||
|
Average
shares
|
2,492 | m | 2,590 | m | ||||||||
DIAGEO
CONDENSED CONSOLIDATED STATEMENT OF
RECOGNISED
INCOME AND EXPENSE
|
Six months ended
31 December 2008
|
Six months ended
31 December 2007
|
|||||||
|
£ million
|
£ million
|
|||||||
|
Exchange
differences on translation of foreign operations excluding
borrowings
|
1,906 | 239 | ||||||
|
Exchange
differences on borrowings and derivative net investment
hedges
|
(1,466 | ) | (212 | ) | ||||
|
Effective
portion of changes in fair value of cash flow hedges
|
||||||||
|
- Net
losses taken to equity
|
(92 | ) | (16 | ) | ||||
|
- Transferred
to income statement
|
(158 | ) | (46 | ) | ||||
|
Actuarial
gains on post employment plans
|
15 | 23 | ||||||
|
Fair
value movements on investments available for sale
|
5 | - | ||||||
|
Tax
on items taken directly to equity
|
13 | 2 | ||||||
|
Net
income/(expense) recognised directly in equity
|
223 | (10 | ) | |||||
|
Profit
for the period
|
1,201 | 1,014 | ||||||
|
Total
recognised income and expense for the period
|
1,424 | 1,004 | ||||||
|
Attributable
to:
|
||||||||
|
Equity
shareholders of the parent company
|
1,158 | 958 | ||||||
|
Minority
interests
|
266 | 46 | ||||||
| 1,424 | 1,004 | |||||||
DIAGEO
CONDENSED CONSOLIDATED BALANCE SHEET
|
31 December 2008
|
30 June 2008
|
31 December 2007
|
||||||||||||||||||||||||||
|
Notes
|
£ million
|
£ million
|
£ million
|
£ million
|
£ million
|
£ million
|
||||||||||||||||||||||
|
Non-current
assets
|
||||||||||||||||||||||||||||
|
Intangible
assets
|
6,878 | 5,530 | 4,440 | |||||||||||||||||||||||||
|
Property,
plant and equipment
|
2,428 | 2,122 | 2,008 | |||||||||||||||||||||||||
|
Biological
assets
|
29 | 31 | 2 | |||||||||||||||||||||||||
|
Investments
in associates
|
2,339 | 1,809 | 1,682 | |||||||||||||||||||||||||
|
Other
investments
|
166 | 168 | 124 | |||||||||||||||||||||||||
|
Other
receivables
|
15 | 11 | 19 | |||||||||||||||||||||||||
|
Other
financial assets
|
622 | 111 | 82 | |||||||||||||||||||||||||
|
Deferred
tax assets
|
590 | 590 | 694 | |||||||||||||||||||||||||
|
Post
employment benefit assets
|
258 | 47 | 20 | |||||||||||||||||||||||||
| 13,325 | 10,419 | 9,071 | ||||||||||||||||||||||||||
|
Current
assets
|
||||||||||||||||||||||||||||
|
Other
investments
|
8 | - | - | |||||||||||||||||||||||||
|
Inventories
|
6 | 3,353 | 2,739 | 2,695 | ||||||||||||||||||||||||
|
Trade
and other receivables
|
2,992 | 2,051 | 2,541 | |||||||||||||||||||||||||
|
Other
financial assets
|
277 | 104 | 69 | |||||||||||||||||||||||||
|
Cash
and cash equivalents
|
7 | 2,088 | 714 | 811 | ||||||||||||||||||||||||
| 8,718 | 5,608 | 6,116 | ||||||||||||||||||||||||||
|
Total
assets
|
22,043 | 16,027 | 15,187 | |||||||||||||||||||||||||
|
Current
liabilities
|
||||||||||||||||||||||||||||
|
Borrowings
and bank overdrafts
|
7 | (1,892 | ) | (1,663 | ) | (1,372 | ) | |||||||||||||||||||||
|
Other
financial liabilities
|
(547 | ) | (126 | ) | (99 | ) | ||||||||||||||||||||||
|
Trade
and other payables
|
(2,565 | ) | (2,143 | ) | (2,180 | ) | ||||||||||||||||||||||
|
Corporate
tax payable
|
(750 | ) | (685 | ) | (799 | ) | ||||||||||||||||||||||
|
Provisions
|
(82 | ) | (72 | ) | (64 | ) | ||||||||||||||||||||||
| (5,836 | ) | (4,689 | ) | (4,514 | ) | |||||||||||||||||||||||
|
Non-current
liabilities
|
||||||||||||||||||||||||||||
|
Borrowings
|
7 | (9,223 | ) | (5,545 | ) | (5,154 | ) | |||||||||||||||||||||
|
Other
financial liabilities
|
(260 | ) | (124 | ) | (96 | ) | ||||||||||||||||||||||
|
Other
payables
|
(31 | ) | (34 | ) | (31 | ) | ||||||||||||||||||||||
|
Provisions
|
(380 | ) | (329 | ) | (278 | ) | ||||||||||||||||||||||
|
Deferred
tax liabilities
|
(962 | ) | (676 | ) | (658 | ) | ||||||||||||||||||||||
|
Post
employment benefit liabilities
|
(735 | ) | (455 | ) | (405 | ) | ||||||||||||||||||||||
| (11,591 | ) | (7,163 | ) | (6,622 | ) | |||||||||||||||||||||||
|
Total
liabilities
|
(17,427 | ) | (11,852 | ) | (11,136 | ) | ||||||||||||||||||||||
|
Net
assets
|
4,616 | 4,175 | 4,051 | |||||||||||||||||||||||||
|
Equity
|
||||||||||||||||||||||||||||
|
Called
up share capital
|
797 | 816 | 832 | |||||||||||||||||||||||||
|
Share
premium
|
1,342 | 1,342 | 1,342 | |||||||||||||||||||||||||
|
Other
reserves
|
3,228 | 3,163 | ||||||||||||||||||||||||||