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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
10 November 2023
Commission File Number: 001-10691
DIAGEO plc
(Translation
of registrant’s name into English)
16 Great Marlborough Street, London, United Kingdom, W1F 7HS
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F X
Form
40-F
Diageo
PLC – Diageo issues trading update
Dated
10 November 2023
This announcement contains inside information
Diageo issues trading update due to a weaker performance outlook in
Latin America and Caribbean and updated medium term guidance ahead
of 2023 Capital Markets Event
10 November 2023, London, UK: On 28 September 2023, Diageo
issued a trading statement which stated that our outlook for fiscal
24 had not changed since 1 August 2023. At that time, our
expectation for the group was for the first half of fiscal 24 to
see a gradual improvement in organic net sales growth from the
second half of fiscal 23.
We have momentum continuing in four of our five regions, however at
the group level, in the first half of fiscal 24, we now expect to
see slower growth than the second half of fiscal 23. This is due to
a materially weaker performance outlook in Latin America and
Caribbean (LAC), which is nearly 11% of Diageo's net sales value
(fiscal 23), and is now expected to decline organic net sales by
more than 20%, year-on-year, in the first half of fiscal
24.
In other regions:
● Currently, in North America, we expect
gradual improvement in organic net sales growth in the first half
of fiscal 24 of compared to the second half of fiscal 23, while
maintaining distributor inventory in line with historical
levels.
● We also expect to see improvement in the
rate of net sales growth in Africa in the first half of fiscal 24
compared to the second half of fiscal 23.
● In Europe and Asia Pacific, we see continued
momentum, albeit slower than in the second half of fiscal 23. In
Europe, growth continues to be strong despite geopolitical tensions
escalating in the Middle East, where we are a leading spirits
company. In Asia Pacific, we continue to see momentum with good
growth, despite slower than expected recovery in
China.
LAC is lapping very strong 20% organic net sales growth, versus the
first half of fiscal 23. Macroeconomic pressures in the region are
resulting in lower consumption and consumer downtrading. These
impacts are slowing down progress in reducing channel inventory to
appropriate levels for the current environment. Despite
slowing category growth, our business continues to win share in
most markets, within the categories we participate in.
We now expect organic operating profit growth for the first half of
fiscal 24 to decline compared to the first half of fiscal 23,
primarily due to LAC's declining net sales, increased trade
investment, lower operating leverage and adverse mix resulting from
downtrading. Across other regions, we expect to continue to invest
additional A&P ahead of net sales. We expect that there will be
continued, albeit moderating, cost inflation, which will be
partially offset by pricing actions.
Looking ahead to the second half of fiscal 24, at the Group level,
we expect to see a gradual improvement in organic net sales and
organic operating profit growth from the first half of fiscal 24
while we continue to invest in marketing, and in the business, to
drive long-term sustainable growth.
Diageo's advantaged portfolio will drive sustainable long-term
growth
We continue to believe in the fundamental strength of our business
and expect to deliver organic net sales growth between 5 and 7%
over the medium term. We expect operating profit to grow broadly in
line with organic net sales growth, while we continue to invest
behind our brands. Over time, as inflation moderates and
productivity from our supply agility program flow through, we
expect operating profit to grow ahead of organic net sales growth.
We will continue to leverage our scale to drive accelerated
productivity savings and benefit from operating leverage,
premiumisation and revenue growth management.
Our confidence in our medium-term guidance is underpinned by our
participation in the attractive segment of International Spirits,
which is growing ahead of TBA, sourcing from Beer and Wine; our
advantaged portfolio and footprint which enables us to grow ahead
of spirits; and the investments we will continue to make to grow
share.
While we expect operating environment challenges to persist, with
ongoing cost pressure and geopolitical and macroeconomic
uncertainty, we will move with speed and agility and continue to
invest in marketing and innovation. We firmly believe the strength
of our portfolio, our diversified footprint and our deep consumer
insights will drive sustainable long-term growth and generate value
for shareholders.
Conference Call details and Capital Markets Event
At 8:00 am UKT, Diageo's Chief Executive, Debra Crew and Chief
Financial Officer, Lavanya Chandrashekar will
host a
30-minute conference call for the investment community. A
transcript of the call will be accessible from Diageo's Investor
Relations website.
In addition, the company will host a Capital Markets Event on
Wednesday 15 November 2023 where our Executive leadership team will
share our confidence in our medium-term guidance and showcase our
advantaged portfolio and footprint, our superior consumer
understanding, brand building and digital capabilities. Details of
how to access the webcast and materials will be available on
Diageo.com.
Currency Update
On 1 August 2023, Diageo announced a move in functional and
presentation currency from sterling to US dollar. We are not
providing specific guidance in relation to foreign exchange for
fiscal 24. However, using current spot exchange rates of
$1=£1.24 and $1=€1.07, and applying them to last year's
P&L profile, we would see a negative impact on net sales of
approximately $120m and a positive impact on operating profit of
approximately $35m.
Tom Shropshire, General Counsel and Company Secretary, is
responsible for arranging the release of this announcement on
behalf of Diageo.
ENDS
For further information please contact:
Investor relations:
Durga
Doraisamy
+44 (0)
7902 126 906
Andy
Ryan
+44 (0) 7803 854 842
investor.relations@diageo.com
Media relations:
Rebecca
Perry
+44 (0) 7590 809101
Clare
Cavana
+44 (0) 7751 742 072
Isabel Batchelor
+44
(0) 7731 988 857
press@diageo.com
About Diageo
Diageo is a global leader in beverage alcohol with an outstanding
collection of brands including Johnnie Walker, Crown Royal, JeB and
Buchanan's whiskies, Smirnoff, Cîroc and Ketel One vodkas,
Captain Morgan, Baileys, Don Julio, Tanqueray and
Guinness.
Diageo is a global company whose products are sold in more than 180
countries around the world. The company is listed on both the
London Stock Exchange (DGE) and the New York Stock Exchange (DEO).
For more information about Diageo, our people, our brands, and
performance, visit us at www.diageo.com.
Visit Diageo's global responsible drinking
resource, www.DRINKiQ.com,
for information, initiatives and ways to share best
practice.
Celebrating life, every day, everywhere.
Cautionary statement concerning forward-looking
statements
This document contains 'forward-looking' statements. These
statements can be identified by the fact that they do not relate
only to historical or current facts. In particular, forward-looking
statements include all statements that express forecasts,
expectations, plans, outlook, objectives and projections with
respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of changes in interest or exchange rates, the availability
or cost of financing to Diageo, anticipated cost savings or
synergies, expected investments, the completion of any strategic
transactions or restructuring programmes, anticipated tax rates,
changes in the international tax environment, expected cash
payments, outcomes of litigation or regulatory enquiries,
anticipated changes in the value of assets and liabilities related
to pension schemes and general economic conditions. In this
document such statements include, but are not limited to,
information related to Diageo's fiscal 24 outlook, Diageo's
medium-term guidance for fiscal 23 to fiscal 25, and any other
statements relating to Diageo's performance for the year ending 30
June 2024 or thereafter. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements, including factors that are
outside Diageo's control. Any forward-looking statements made by or
on behalf of Diageo speak only as of the date they are made. Diageo
does not undertake to update forward-looking statements to reflect
any changes in Diageo's expectations with regard thereto or any
changes in events, conditions or circumstances on which any such
statement is based.
An explanation of non-GAAP measures, including organic movements,
is set out on pages 232-239 of Diageo's Annual Report for the year
ended 30 June 2023.
Diageo plc LEI: 213800ZVIELEA55JMJ32
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Diageo plc
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(Registrant)
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Date:
10 November 2023
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By:___/s/
James Edmunds
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James Edmunds
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Deputy Company Secretary
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