It seems that Diageo’s solid FY21 wasn’t enough to keep the share price up (-2.5% at the opening), but this does not extinguish our confidence in the group. Admittedly, the guidance, which is only qualitative, may seem insufficient and, yes, Diageo is the first spirits group to express concerns about a future decline in the off-trade (ultimately not very surprising!), but we believe that the current positive momentum should continue to drive sales levels above those of 2019 in the months to come
Companies: Diageo plc
The H1 results came in ahead of consensus, helped by Greater China and an exceptional US performance. No FY21 guidance for now, but H2 should show positive growth thanks to strong comparables. We reaffirm our strong confidence on the stock.
FY20 top and bottom line missed expectations and Diageo didn’t provide guidance for next year. Improvements expected in the coming months thanks to lockdown restrictions easing, though the margin should still be under pressure for the next six months.
Diageo reported H1 results just ahead of peers. However, the lowered FY20 sales guidance and the shy volume growth (+0.2%) have slightly darkened the picture. The strong metrics, still ahead of peers, and the still growing return to shareholders still make it a quality stock for us.
The full year was, once again, driven up by emerging markets, as well as the buoyant Gin and Tequila. The new mid-term guidance expects further improvement regarding the operating profit. In parallel, the return to shareholders continues to be one of the group’s priorities, having announced it is to return a further £4.5bn to shareholders over the next three years.
Net sales were up +5.8% to £6.9bn on a reported basis, +7.5% organically, pushed by all regions. Organic volume grew by 3.5%
Reported operating profit reached £2.4bn (+11%), organic operating profit grew by 12.3%
Pre-exceptional EPS was 77.0p (+13.6%), while basic EPS was 80.9p, down by 1.6% due to the recent disposals
FCF at £1.3bn (+£317m yoy)
Interim dividend up by +5% to 26.1p per share
Following this strong set of results, the company has approved an incremental sh
Strong set of numbers as the performance in the second half accelerated. The announced share buy-back should please investors.
The company delivered another period of very solid organic growth in both top line and operating profit. We see business as resilient. Our Add recommendation is maintained.
Diageo’s (DGE LN, HOLD, T/P 2700p) brunchtime conference call with Sam Fischer, President of Diageo Greater China and Asia yesterday was interesting. The region – Diageo’s third largest at 20% of net revenue – should deliver the fastest pace of organic growth for the group in the next 2 years. The call confirmed our expectations of brisk sales growth and pointed further margin expansion for the region. We roll over our price target from calendar 2017 2018 and increased it from 2250p to 2700p.
FY preliminary results: volumes were up +1.1% (cons. 1.6%). Sales grew organically by +4.3% (cons. +4.2%, H2: +4.2%). On reported figures, sales were up +15% helped by FX tailwinds.
FY organic net sales by region: North America 3% (cons. 3%, H2: +3%), Europe 5% (cons. 4.5%, H2: +5%), Africa 5% (cons. 5%, H2: +6%), LatAm 9% (cons. 10.9%, H2: +7%), and Asia Pacific 3% (cons. 2.6%, H2: +3% ).
The operating margin before exceptional items was up 244bp on reported figures (cons. +130bp) and 37bp on
Diageo (DGE LN, HOLD, T/P 2250p) announced FY2017 revenue of £12.1bn, which was a touch above Bloomberg consensus £12.0bn but bang in line our own view. Organic sales grew 1.1% and like for like operating profit rose 5.6%, ahead of top line growth. This was driven partly by productivity gains. Diluted adjusted EPS was 105p (FY2016: 89p), in line with both Whitman Howard and consensus.
Next week includes a busy reporting schedule for the UK FMCG sector with 7 names in our coverage universe due to release either a trading statement or results. So far, we infer that Q2 2017 included sustained slowing in emerging markets for the larger operators and continued sluggishness in mature markets, notably Western Europe. However, for the small and mid-cap soft drinks companies, which include Britvic (BVIC LN, BUY, T/P 800p) the UK weather was clearly helpful. This should have had a posi
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The Scottish government, an administration which has no powers to raise duty but has powers to manage the region's NHS on an independent basis has implemented Minimum Unit Pricing for alcoholic drinks. Unusually high per capita consumption of alcohol in Scotland was responsible initially for the move towards minimum pricing. Importantly, a minimum price is being set for alcohol in its own right rather than for an alcoholic drinks category.
Diageo (DGE LN, HOLD, T/P 2250p) hosted a “brunch time call with the presidents” yesterday for Alberto Gavazzi, Diageo’s Latin America & Caribbean President. The region shrank in the last two fiscal years. However, organic net sales grew 11% at interim stage. The call focused on the opportunity in LAC, updates on current trading, progress in route to consumer, productivity and regional progress.
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