Diageo said today that foreign exchange movements ‘severely impacted’ its 2014 top line while Chinese anti-extravagance measures also hit hard – our slideshow dissects the Johnnie Walker distiller's performance.
THE BIG PICTURE: ‘A mixed year – tougher than we anticipated’
“This has been a mixed year and a tougher one than we anticipated at the start.” With these words Diageo’s CFO Deirdre Mahlan introduced Diageo’s results for the year to June 30 2014.
Foreign exchange movements “severely impacted our top line”, she added, with reported net sales down at $10.258bn. Despite a £277m uplift in price/mix, adverse currency movements led to a £797m fall in revenues, and lower volume sales a $235m drop.
Group net income also fell – down 8% versus 2013 to £2.248bn – with CEO Ivan Menezes keen to look further forward towards strong “long-term growth opportunities”, especially in spirits.
In addition to economic weakness in emerging markets, Mahlan said anti-extravagance measures in China hit both international and local spirits brands, and admitted that tougher consumer and competitive conditions in Nigeria were conditions that Diageo “didn’t read well”.
Mahlan said tax increases on Senator Keg lager in Kenya and Diageo’s decision to reduce stock levels in certain markets also hit the top line – but she insisted there was cause for optimism.
Diageo gained share worldwide in scotch and rum, while its luxury brands gained ground, she added; Brazil and India grew sales double-digit despite weaker economic conditions, US spirits grew and Western Europe’s performance improved, allowing Diageo to stabilize revenues there.
Click through the rest of our slides to learn about Diageo's 2014 performance across its different operating regions.
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