) earnings in fiscal 2013 ended Jun 30, 2013, went up 11% year
over year in local currency to 104.4 pence ($1.6* per share) from
94.2 pence ($1.5** per share) in the same period previous
Positive pricing, favorable mix in the emerging markets,
volume growth in North America and Latin America, and tight cost
control by management contributed to profit growth during the
On a reported basis, net revenue (i.e. total revenue excluding
excise duties) increased 6% in local currency to £11.4 billion
($17.9 billion) in fiscal year 2013. On an organic basis,
revenues increased 5%, while volume grew 1% from the prior-year
Diageo increased its marketing spending by 5% organically in
fiscal 2013. Operating profit before exceptional items (excluding
acquisitions and disposals) went up 8% year over year, on an
During fiscal 2013, scotch was the most profitable category
backed by the strong sales of Johnnie Walker. Diageo continued to
enhance its wide portfolio of brands with innovations and massive
product launches, particularly in the U.S. spirit market.
All the regions, except Europe, have delivered positive
organic sales growth.
, Diageo's organic sales increased 5% in fiscal 2013, with a
volume growth of 1% backed by positive price/mix and strong
results in the U.S. spirits market. The shift in demand toward
premium spirits led to strong sales of the premium brands of
Diageo during the period. Marketing spending increased 7% in the
region, primarily because of increased investment in strategic
brands. Operating profit grew 10% organically in the year.
Beer and Ready to Drink suffered sales decline mainly due to
increased competition and supply disruptions
, organic sales fell 4% along with volume declines of 3% due to
ongoing macroeconomic challenges. The company saw 9% decline in
operating profit with an 8% decline in marketing spending.
Marketing investment during the period was focused on the
strategic brands like Captain Morgan, Tanqueray and Guinness.
Diageo has started reporting
Africa, Eastern Europe and Turkey
as a new geographical segment. This segment's organic sales
increased 10% in the fiscal year, with 4% growth in volume backed
by strong spirits sales gain in the region. Marketing spending
increased 14% in the region, particularly on well established
brands. Operating profit increased 14%.
Latin America and Caribbean
region delivered a strong performance in the year, with organic
sales growth of 15% and volume growth of 4% backed by strong
growth in Venezuela and Mexico, partially offset by a slowdown in
Brazil. The company also increased its marketing spending by 12%
to enhance the brand equities in its reserve brands. It will also
invest part of it in enhancing strategic brands like Johnnie
Walker Red Label, Black&White and White Horse. Despite the
increasing costs, operating profit grew 28% in the year.
region, sales climbed 3% organically with a volume growth of 1%
mostly due to difficult conditions in Korea. Marketing spending
jumped 8% mainly on reserve brands and operating profit grew 24%
on an organic basis backed by positive pricing. Strong results in
Taiwan, Japan, Australia and the Middle East were partially
offset by reduced spending in China.
The company is increasing marketing investment in all the
geographical segments and is focusing more on its premium brands.
The strategy of converting to high-margin high-priced products is
helping the company improve its margins.
Diageo is expanding fast into the emerging markets. Diageo
holds 27.4% ownership in United Spirits Limited, a leading spirit
company of India.
Currently, Diageo Plc carries a Zacks Rank #4 (Sell). Other
consumer staples companies which are better placed and are worth
Tyson Foods Inc.
Green Mountain Coffee Roasters Inc.
Nash Finch Company
). While Green Mountain and Nash Finch hold a Zacks #1 (Strong
Buy), Tsingtao Brewery carries a Zacks Rank #2 (Buy).
*£1=$1.56908 (average price of the year ended Jun 30,
**£1=$1.58494 (average price of the year ended Jun 30,
DIAGEO PLC-ADR (DEO): Free Stock Analysis
GREEN MTN COFFE (GMCR): Free Stock Analysis
NASH FINCH CO (NAFC): Free Stock Analysis
TYSON FOODS A (TSN): Free Stock Analysis
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