Held in its in-house Geo Bar, Diageo's annual results presentation is always welcome respite from the grind of results season. And this year the company made an extra-special effort to mark the 250th anniversary of its Guinness brand, an event which is to be commemorated with its own stamp from the Irish post office.
And even in the worst consumer recession in recent history, Guinness continued to deliver solid growth. Organic beer sales climbed 5 per cent, thanks to an 18 per cent improvement in African Guinness sales. And although net beer sales fell 1 per cent in the UK, the enduring popularity of Guinness meant market share inroads in a declining market.
That's not to say it hasn't been a difficult year in which, as chief executive Paul Walsh pointed out, the consumer goods industry faced significant upheaval. Stripping-out exchange rate gains, and net sales were flat, as significant weakness in Europe and Asia Pacific offset steady trading in North America and a storming performance in its international division. Underlying European sales fell 5 per cent, reflecting severe economic downturn in Spain and Ireland, while destocking hit business in South East Asia. Mr Walsh said that a withdrawal of credit had forced Diageo to stop supplying a number of distributors, and pointed out that much of the lost inventory was unlikely to be replaced. "Retailers will continue to operate in a more efficient way," he said. Diageo also continues to face opposition to its plans to close plants in Glasgow and Kilmarnock, although Mr Walsh insisted this was crucial to ensuring the company's competitiveness.
Broker Charles Stanley has left its 2010 EPS forecast unchanged at 74p, which means a fairly full-looking forward PE ratio of 13.
DIAGEO (DGE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 966p | MARKET VALUE: | £24.1bn | |
| TOUCH: | 965-966p | 12-MONTH HIGH: | 1,068p | LOW: 727p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 129p* | NET DEBT: | 188% | |
| Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 6.68 | 1.93 | 42.8 | 29.6 |
| 2006 | 7.26 | 2.15 | 67.2 | 31.1 |
| 2007 | 7.48 | 2.10 | 50.2 | 32.7 |
| 2008 | 8.09 | 2.09 | 59.3 | 34.4 |
| 2009 | 9.31 | 2.02 | 65.2 | 36.1 |
| % change | +15 | -4 | +10 | +5 |
Ex-div: 9 Sep Payment: 19 Oct *Includes intangible assets of £6.22bn, or 249p a share | ||||
