With the challenging global environment, Diageo warned of continuous challenges for the industry and the company as the consumers are expected to remain cautious in this environment. In a statement, Debra Crew, Chief Executive, Diageo, said, “While consumers continue to be cautious in this environment, we are focused on strengthening the resilience of our business through operational excellence, productivity and strategic investments to win quality market share.”
While the company, she added, has made good progress on its strategic initiatives, including its US route-to-market enhancements, and in Nigeria, Diageo is progressing well towards completion of the agreement to restructure the business model.
I believe that the fundamentals for global TBA, and particularly the spirits industry, remain strong and am confident that when the consumer environment improves, growth will return and the actions we are taking will position us well to outperform the market,” she said.
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While staying cautious, Debra Crew maintained that the company’s expectations are unchanged from when it reported the fiscal 24 preliminary results in July 2024. Earlier, in its report, Diageo had reported net sales of $20.3 billion, down 1.4 per cent due to an unfavourable foreign exchange impact and organic net sales decline, partially offset by hyperinflation adjustments. The company’s operating profit saw a growth of 8.2 per cent and the operating profit margin grew by 262 bps, primarily due to the positive impact of exceptional operating items partially offset by a decline in organic operating margin.
Further, organic net sales had declined $129 million or 0.6 per cent, positive price/mix of 2.9pps was more than offset by a 3.5 per cent volume decline, primarily driven by a 21.1 per cent decline in Latin America and Caribbean region (LAC). Organic operating profit declined by $304 million or 4.8 per cent, of which $302 million was attributable to LAC; organic operating margin contracted 130 bps.
Debra Crew had said, “We ended fiscal 24 gaining or holding shares in measured markets totalling over 75 per cent of our net sales value, including in the US. We have taken actions to manage the inventory issues in LAC; we have strengthened our consumer insights and redeployed resources towards the best growth opportunities; we have stepped up our route-to-market across several markets, including our most significant transformation in at least a decade in our US Spirits organisation; we have delivered record productivity savings of nearly $700 million; and we have generated $2.6 billion in free cash flow while increasing strategic investments. We are confident that when the consumer environment improves, the actions we are taking will return us to growth.”
From: financialexpress
Financial News
