Diageo's (DGE) hangover may just be starting to fade. The owner of Johnnie Walker scotch and Smirnoff vodka reported net sales growth of 5 per cent, although this was largely driven by the completion of its purchase of Indian company United Spirits and tequila brand Don Julio. Stripping out acquisitions and exceptional items, volumes were marginally lower than in the previous financial year and sales were flat.
Yet at least a tight hand on costs meant the drinks group was able to increase operating profits. The operating margin rose by 24 basis points organically, which helped the group avoid a third consecutive year of profit decline. Margins were even better if you account for the impact of a negative change in market mix - the fact that some lower-margin geographies are outselling more lucrative ones.
Diageo's Africa segment posted a 10 per cent increase in operating profit, countering a 2 per cent decline in the US. Net sales rose 3 per cent in Great Britain, but fell 1 per cent in Ireland in spite of momentum in Guinness sales.
Chief executive Ivan Menezes is looking for organic sales growth of around 5 per cent in the financial year to June 2017. Prior to these results, broker Natixis forecast EPS of 96.7p for the current financial year, up from 92.2p for FY2015.
| DIAGEO (DGE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,850p | MARKET VALUE: | £46.5bn | |
| TOUCH: | 1,849-1,850p | 12-MONTH HIGH: | 2,055p | LOW: 1690p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 309p* | NET DEBT: | 103% | |
| Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 9.94 | 2.36 | 76.2 | 40.4 |
| 2012 | 10.80 | 3.12 | 78.2 | 43.5 |
| 2013 | 11.30 | 3.06 | 98.0 | 47.4 |
| 2014 | 10.26 | 2.71 | 93.0 | 51.7 |
| 2015 | 10.81 | 2.93 | 95.0 | 56.4 |
| % change | +5 | +8 | +2 | +9 |
Ex-div: 12 Aug Payment: 8 Oct *Includes intangible assets of £11.2bn, or 446p a share | ||||
