Diageo PLC

Latest Results (23.05.2024):

Net Sales Decline

In the first half of fiscal year 2024, Diageo PLC reported a decline in net sales by 1.4%, amounting to $11.0 billion. This decrease was influenced by a $167 million unfavorable impact from foreign exchange and a $67 million or 0.6% organic net sales decline. The decline was particularly pronounced in the Latin America and Caribbean (LAC) region, which saw a 23% or $310 million drop in sales, primarily due to lower consumption and consumer downtrading under economic pressures.

Operating Profit and Margin

Diageo PLC's reported operating profit for the first half of fiscal 2024 fell by 11.1% to $3.3 billion, with the operating profit margin contracting by 329 basis points. The organic operating profit also saw a decline of 5.4% or $205 million, significantly impacted by the performance in the LAC region. Excluding LAC, there was a marginal growth in organic operating profit by 0.9% or $29 million.

Cash Flow and Dividends

Diageo PLC experienced a positive shift in its cash flow dynamics, with net cash from operating activities rising by $0.7 billion to $2.1 billion. Free cash flow also increased by $0.5 billion to $1.5 billion, driven by disciplined working capital management. Additionally, the company declared a 5% increase in its interim dividend, bringing it to 40.50 cents per share.

Share Buybacks

During the first half of fiscal 2024, Diageo PLC completed $0.5 billion of share buybacks. This action is part of a broader capital return program announced on August 1, 2023, which aims to return up to $1.0 billion to shareholders during the fiscal year. This reflects the company's ongoing commitment to delivering shareholder value.

Future Outlook

Looking ahead to the second half of fiscal 2024, Diageo PLC remains cautiously optimistic despite ongoing global economic volatility. The company expects to see an improvement in organic net sales and organic operating profit growth. CEO Debra Crew expressed confidence in the company's resilience and strategic positioning to navigate the challenges and capitalize on growth opportunities in the beverage alcohol sector.