Diageo grows profit despite falling sales

Drinks firm Diageo posted an 8.2% global operating profit increase in the second half of its financial year ended 30 June 2024.

However, its overall reported net sales of $20.3b (£15.8b) in the first six months of the calendar year represented a drop of 1.4%, which it blamed on “an unfavourable foreign exchange impact and organic net sales decline, partially offset by hyperinflation adjustments”.

The supplier, which owns brands including Smirnoff, Johnnie Walker, Guinness and Baileys, grew or held total market share in 75% of total net sales in measured markets, including in the US.

Organic net sales declined $129m (£100m) or 0.6%, primarily driven by a 21.1% decrease in its Latin America and Caribbean region (LAC). Plus, organic operating profit shrank by $304m (£237m) or 4.8%, of which $302m (£235m) was attributable to LAC.

Excluding LAC, organic net sales grew 1.8%, driven by resilient growth in Diageo’s Africa, Asia Pacific and Europe regions.

Diageo’s chief executive Debra Crew said that while the 2024 financial year proved challenging for the firm, it “focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves”.

She cited the North American sales slump as being due to “a cautious consumer environment and the impact of lapping inventory replenishment in the prior year”, and concluded: “In fiscal 2024 we made good progress against our strategic priorities. We ended fiscal 2024 gaining or holding share in measured markets totalling over 75% of our net sales value, including in the US.

“We are confident that when the consumer environment improves, the actions we are taking will return us to growth.”

Diageo will welcome Nik Jhangiani as chief financial officer from autumn this year.