Belfast Telegraph

Diageo upbeat for its future despite a fall in profits


By John Mulgrew

Diageo said the company's Northern Ireland business performed satisfactorily in a competitive marketplace after posting pre-tax profits of £2.7m.

The Guinness owner stressed that a drop in turnover to £111m for the year ending June 2016, down from £122m, was "driven mostly by the disposal of certain brands and a reduction in spirits volumes".

The drinks giant sold off its Bushmills brand in 2014 to Casa Cuervo.

Diageo, which also owns Smirnoff, Harp and Baileys, acquired Tequila Don Julio from Casa Cuervo in Mexico in return for the whiskey.

In its latest Northern Ireland accounts, Diageo said: "The business performed satisfactorily in the year in a competitive market place for both beers and spirits.

"The business grew volumes in the beer category while turnover was depressed by lower pricing."

The company also insisted it maintained profits by "effective price control".

Diageo's accounts show that the bulk of its sales in Northern Ireland remained in beer, with £84.2m of turnover. That was bolstered by strong Guinness sales.

Its spirits business made up £26.8m of overall turnover.

Overall, pre-tax profits fell from £3m in 2015, to £2.7m.

The company employed an average of 142 workers across sales and distribution. Overall wage costs, including pension and social security, totalled £6m.

Earlier this year Diageo revealed it was set to re-enter the whiskey market. It said it would pump €25m (£18.6m) into a start-up premium blend.

It will be dubbed Roe & Co, after 19th-century whiskey maker George Roe, with the investment to be made in the former Power Station at St James's Gate in Dublin.

At the start of this year, Diageo welcomed a rise in profits thanks to a triple tonic from the Brexit-hit pound, robust Scottish whisky sales and a strong US performance.

The maker of Captain Morgan rum and Johnnie Walker whisky saw operating profits jump 28% to £2.1bn in the six months to the end of December. Net sales beat expectations, rising 4.4%, with the market pencilling in a rise of 3.1%.

The company said sterling's Brexit-induced slump against the US dollar and the euro helped push net sales higher, with the pound's weakness set to bolster full-year sales and profits by £1.4bn and £460m respectively.

At the time, chief executive Ivan Menezes said the FTSE 100 firm was on track to hit its financial targets. "We have delivered strong results with broad-based improvement in both organic volume and top-line growth, and this positive momentum demonstrates continued effective execution of our strategy," he added.

"Highlights include improved performance in our US spirits and across our Scotch portfolio, driven by our focus on marketing with impact, innovating at scale, expanding our route to consumer and winning in reserve."

Diageo did not wish to comment on the latest Northern Ireland figures.

But announcing the sales figures across Ireland last year, country director Oliver Loomes, said: "On the island of Ireland Guinness net sales were up 4%, driven by the continued successful innovations launched through The Brewers Project.

"Globally, Guinness net sales grew 4%. Apart from Ireland, Guinness also gained share and increased net sales in Great Britain."

The amount by which overall pre-tax profits fell, down to £2.7m from £3m. Turnover also slid from £122m to £111, driven by the Guinness owner's disposal of brands

Belfast Telegraph