Johnnie Walker giant Diageo sees profits fall by half
Ivan Menezes: ‘we are well-positioned to emerge dstronger’ (pic: Terry Murden)
Drinks giant Diageo said operating profit plummeted almost by half as bars and restaurants closed around the world.
Reported operating profit for the year to the end of June plunged 47.1% to £2.1 billion as net sales fell 8.7% to £11.8bn.
The producer of Johnnie Walker Scotch whisky and Guinness maintainted its commitment to paying a dividend to shareholders.
The final recommended dividend of 42.47p per share is the same as the final dividend for last year. This brings the full year dividend to 69.88p per share, an increase of 2%.
Diageo does not currently plan to reinitiate its three-year share buyback programme which was suspended in April until the leverage ratio is back within the target range.
In Great Britain, net sales declined 4%. Solid first half results were offset by the impact of on-trade closures from March despite an increase in off-trade sales. The impact was further amplified by the cancellation of significant sporting and cultural events.
Continued growth in rum and liqueurs were offset by declines in beer, scotch, wine and vodka.
Ivan Menezes, chief executive, said: “Fiscal 20 was a year of two halves: after good, consistent performance in the first half of fiscal 20, the outbreak of Covid-19 presented significant challenges for our business, impacting the full year performance.
“Through these challenging times we have acted quickly to protect our people and our business, and to support our customers, partners and communities.
We are now a more agile, efficient and effective business.– Ivan Menezes, Diageo
“The actions we have taken to strengthen Diageo over the last six years provide a solid foundation to respond to the impacts of the pandemic. We are now a more agile, efficient and effective business.
“We have taken decisive action through the second half of fiscal 20, tightly managing our costs, reducing discretionary expenditure and reallocating resources across the group.
“We are further enhancing our data analytics and technology tools to rapidly respond to local consumer and customer shifts triggered by the pandemic. We have strengthened liquidity, giving us flexibility to continue to invest effectively in the business for the long term.
“While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 21, I am confident in our strategy, the resilience of our business and am very proud of the way our people have responded. We are well-positioned to emerge stronger.”