By Saabira Chaudhuri
LONDON-- Diageo PLC reported lower operating profit for the year
as the world's largest spirits maker logged lower revenue in North
America, Asia and Latin America.
The maker of Johnnie Walker whisky and Smirnoff vodka reported
its operating profit, excluding one-time items, fell 0.8% to
GBP1.45 billion ($2.26 billion) while per-share earnings before
one-time items dropped to 88.8 pence from 95.5 pence. On an organic
basis, which strips out currency movements and acquisitions, net
sales were flat as Diageo posted declines in North America, Asia
Pacific, Latin America and the Caribbean. Sales in Europe were
flat, while Africa was a relative bright spot with net sales rising
6%.
The results cap a tough couple of years for Diageo, which has
lost market share in North America where once-blockbuster brands
like Smirnoff and Captain Morgan have floundered. Diageo has also
been hammered by weakness in Asia amid an anticorruption campaign
in China and social unrest in Thailand, both of which have slowed
demand in the region.
Including the impact of currency and acquisitions, Diageo
reported a net profit of GBP2.38 billion for the year ended June
30, compared with GBP2.25 billion a year earlier, on net sales that
rose 5.4% to GBP10.81 billion, including Indian liquor maker United
Spirits Ltd. and tequila brand Don Julio, which it acquired in
February.
Under Chief Executive Ivan Menezes, Diageo has said it is
shifting its focus to more closely tracking what is sold to
retailers rather than what is shipped to distributors. Diageo
recently received an inquiry from the U.S. Securities and Exchange
Commission, which is probing whether the spirits maker has been
shipping excess inventory to distributors in an effort to boost
results. Diageo has said it is working with the SEC on the
matter.
Thursday, the company reported its shipment volume for the year
was down 1% and that depletion volumes--or what is sold to
retailers--is estimated to be up 1%.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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