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04 JAN 2016

04 JAN 2016 Press release

Unaudited financial results for the nine months ended 31 December 2015

Strong Q3 results building confidence in our strategy    

  • Robust performance with 22% increase in net sales in the quarter (13% up in the nine months)
  • Direct sales of the Diageo brand portfolio added Rs. 256 Crore of net sales in the quarter positively impacting net sales by 11ppts (Rs. 439 Crore in the nine months positively impacting net sales by 7ppts)
  • “Prestige and Above” segment net sales grew 41% in the quarter with 26ppts positive price/mix* (up 25% in the nine months with 14ppts positive price/mix*)
  • Diageo brand portfolio contributed 27ppts to the “Prestige and Above” segment net sales growth in the quarter (17ppts contribution in the nine months)
  • EBITDA up 16% in the quarter to Rs. 269 Crore (29% up to Rs. 789 Crore in the nine months)
  • EBITDA margin of 11.6% in the nine months with 146bps improvement versus last year – Related Party Transactions benefit(1) was partially offset by higher marketing investments
  • Profit after tax of Rs. 990 Crore in the nine months (versus Rs. (8) Crore last year) positively impacted by the UBL(2) divestment in the second quarter
  • Net debt reduced by Rs. 1,432 Crore in the nine months mainly driven by Bouvet and UBL(2) divestments

(*) Imputed revenue based on internal management data; (1) Refer below the EBITDA Margin Bridge; (2) United Breweries Limited

Anand Kripalu, CEO, commenting on the nine months ended 31 December 2015 said:               

“Robust performance in the quarter and we continue to build confidence in our strategy behind our power brands and our prioritized geographical participation strategy. The Diageo brand portfolio integration positively impacting both top line and operating margins. Our focus on reducing debt continues with a 27% reduction in our net debt in the nine month period (circa Rs. 1,400 Crore), driven by our non-core asset divestment strategy and the continued positive cash flow from operations.

Our premiumisation strategy and the benefit of the full integration of the Diageo brands into our portfolio driving the “Prestige and Above” segment growth of 25% in the nine months and 41% in the quarter. Our renovations strategy continues on our core brands with continued momentum from our Royal Challenge brand post its re-launch (58% volume growth in the last nine months) and the new look McDowell’s No.1 re-launch that is underway with early signs of positive consumer and trade response. We have however continued to face challenges in the period including specific industry challenges in states such as Uttarakhand and Chhattisgarh. The Haywards temporary pricing challenge in Karnataka that we faced in the second quarter has been remedied and we are now rebuilding momentum behind this brand in that state.

Our focus on driving productivity through every aspect of the P&L continues to fuel our strategy to invest behind capabilities and our brands. Our EBITDA delivery before taking into account the exception gain on the UBL share sales remains robust and grew 29% in the nine month period, in line with our expectations.

The above results and the actions that are driving this growth give me confidence that USL can deliver strong and sustained performance in the coming years."

ENDS

About Diageo

Diageo is a global leader in beverage alcohol with an outstanding collection of brands across spirits, beer and wine categories. These brands include Johnnie Walker, Crown Royal, J&B, Buchanan's and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

Diageo is a global company, and our products are sold in more than 180 countries around the world. The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO). For more information about Diageo, our people, our brands, and performance, visit us at www.diageo.com. Visit Diageo’s global responsible drinking resource, www.DRINKiQ.com, for information, initiatives, and ways to share best practice.

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