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22 JUL 2019

22 JUL 2019 Press release

Unaudited Financial Results for the quarter ended 30 June 2019

PAT INR 197 crores, up 143% in F20 Q1

First quarter performance highlights:
• Reported net sales increased 10%, partially benefiting from a one-time sale of bulk Scotch. Net sales excluding this one-time benefit grew 6%, impacted by general elections.
• Prestige & Above segment net sales grew 9%.
• Popular segment reported net sales grew 2%. Net sales, after adjusting for the impact of operating model changes,grew 3%, benefitting from a softer preceding quarter in one of the key states. Net sales of Popular segment in priority states grew 4%.
• Gross margin was 47.3%, down 291bps versus last year, primarily due to the adverse impact of COGS inflation as well as due to part-absorption of excise duty hike in Maharashtra. Underlying* gross margin decline was 359bps.
• Reported EBITDA was Rs. 395 Crores, up 95%. Despite gross margin erosion versus last year, EBITDA margin was 17.8%, up 772bps, primarily driven by savings in operating costs and phasing effect of marketing investment.Underlying* EBITDA increased 42% and underlying* EBITDA margin was 16%; 407bps higher than last year.
• Interest costs were Rs. 52 Crores, 11% lower, driven by our continued focus on debt reduction.
• Profit after tax was Rs. 197 Crores, up 143%.

Anand Kripalu, CEO, commenting on the quarter ended 30 June 2019 said:

"During the quarter, our core business was affected by general elections in line with our earlier guidance. However,benefited by a one-time sale of bulk Scotch, net sales grew 10%; excluding which, net sales grew 6%.

The Prestige and Above segment net sales grew 9%, on a base of 19% growth in the same quarter last year. Within that,our Scotch portfolio continued to do well, particularly Black Dog and Black & White, with both showing strong momentum.

On profitability, COGS inflation as well as adverse price/mix significantly impacted gross margin for the quarter. However,I am pleased that despite considerable gross margin erosion, we delivered 407bps of underlying* EBITDA margin improvement, primarily through savings in our operating costs, notwithstanding the phasing benefit of marketing investment.

We trimmed down the reinvestment rate for the quarter in light of the ongoing general elections; however, it should normalize over the course of the year as investing behind our brands continues to be an area of strategic priority for us.

Improved operating performance combined with lower interest costs have helped us deliver an overall PAT increase of 143% versus last year.

Looking ahead, while we remain watchful of the broader economic slowdown and its impact on the overall consumption in the near term, we remain committed to our medium-term ambition to grow top line by double digits and to improve EBITDA margin to mid-high teens."

ENDS

For further queries:

Investor inquiries:
Nidhi Verma
+91 97 6940 1515
Nidhi.Verma@diageo.com

Media inquiries:
Mona Kwatra
+91 9820210441
Mona.Kwatra@diageo.com

ABOUT DIAGEO INDIA

Diageo India is the country’s leading beverage alcohol company and a subsidiary of global leader Diageo plc. The company manufactures, sells and distributes an outstanding portfolio of premium brands such as Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No.1, Smirnoff and Captain Morgan. Headquartered in Bengaluru, our wide footprint is supported by a committed team of over 3500 employees, 50 manufacturing facilities across states and union territories in India, a strong distribution network and a state-of-the-art Technical Centre.

Incorporated in India as United Spirits Limited (USL), the company is listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. For more information about Diageo India, our people, our brands, and performance, visit us at www.diageoindia.com. Promoting responsible consumption of alcohol is at the core of our business.

Visit Diageo’s global responsible drinking resource, http://www.DRINKiQ.com, for information, initiatives, and ways to share best practices.

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