Recently, Diageo, the world's largest spirits company, announced its results for the first half of fiscal year 2024 ended December 31, 2023. The company's earnings performance was worse than expected due to a sharp decline in demand for expensive spirits in the Americas.
"FMCG" learned from the financial report that in the first half of the fiscal year, Diageo's net sales were US$10.962 billion, down 1% year-on-year, operating profit was US$3.317 billion, down 11% year-on-year, and adjusted operating profit was US$3.510 billion, down 7% year-on-year, less than market expectations of US$4.1 billion. By region, Latin America and the Caribbean was the worst performer, with net sales down 18% and operating profit down 41% year-over-year, while Asia Pacific saw net sales up 2% and operating profit up 1% year-over-year.
Diageo said demand from the U.S. market was shrinking due to reduced savings during the pandemic and the end of stimulus measures. In addition, the company lost some market share due to price competition, especially for whisky and tequila.
For the future, Diageo said that it expects the performance to improve in the second half of this fiscal year, and the profit decline will be smaller than in the first half of the year. The company reiterated its medium-term guidance for organic sales growth of 5% to 7% and expects operating profit to grow at a similar pace.
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