Diageo release half-year results and reveal plans for new Edinburgh whisky visitor experience

January 31st, 2019 | Posted in: News,Spirits,Whisky

Diageo has delivered its 2019 Interim Results, to the half-year ended 31 December 2018.

Reported net sales (£6.9 billion) was up 5.8% with organic growth partially offset by unfavourable exchange. Reported operating profit (£2.4 billion) was up 11.0%, driven by organic growth.

Organic operating profit grew 12.3%, ahead of top line growth, as cost inflation and higher marketing investment were more than offset by improved price/mix and efficiencies from the company’s productivity programme.

Cash flow continued to be strong, with net cash from operating activities at £1.6 billion, up £356 million and free cash flow at £1.3 billion, up £317 million.

Basic eps (earnings per share) of 80.9 pence was down by (1.6)%. Pre-exceptional eps was 77.0 pence, up 13.6%, driven by higher operating profit and lower finance charges, which more than offset an increased tax charge largely as a result of lapping the positive impact of US tax reform in the prior period.

The interim dividend increased 5% to 26.1 pence per share.

Commenting on Diageo GB’s half year results, Dayalan Nayager, Managing Director, Diageo Great Britain, Ireland and France, said, “We’ve experienced a very strong half in GB, with net sales up 14% and our key brands, including Guinness, Tanqueray, Gordon’s and Smirnoff, all performing well.

“The gin category continues to boom in GB1 . Tanqueray and Gordon’s remain firm favourites amongst consumers, with both brands delivering strong double-digit growth over the last six months.

“In beer we are outperforming the category2 .Guinness delivered net sales growth of 6% and increased its market share, driven by a strong performance from Hop House 13 lager. In December, Guinness was announced as the new title sponsor and official beer of The Six Nations from 2019, reinforcing the Guinness brand’s position as one of rugby’s biggest supporters.

“Smirnoff returned to growth with net sales increasing 4% despite the category being in decline in GB3 . It also cemented its position as the UK’s biggest spirits brand4 . Summer saw the launch of the ‘Smirnoff Soda Smash’ which encouraged consumers to put a modern twist on the classic vodka and soda.

“Johnnie Walker grew 6% partially driven by the launch of the limited-edition ‘White Walker by Johnnie Walker’, in collaboration with HBO® and Game of Thrones, which was released in GB in October 2018. The launch proved hugely popular, selling one bottle a minute on Amazon UK in the first 24 hours of it being available5 .

“We’ve seen a host of exciting activations by our brands over the half. The Guinness Open Gate Brewery opened its doors in London, giving consumers a chance to sample some of Guinness’s unique and innovative beers. We showcased seven of our Reserve brands at London Cocktail Week in October, which saw around 25,000 people attend, and the Baileys Treat Bar Christmas Pop-up returned to London for a second year in a row.

Diageo has also confirmed it is in talks to secure the former Frasers department store in Edinburgh’s west end as its base for a major new
Johnnie Walker “immersive visitor experience.”

The group said negotiations with the owners of 145 Princes Street were at an early stage.

House of Fraser moved out of the landmark building in September. It is understood the talks with property developers Parabola involve a leasing arrangement for the entire building.

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