The Lemon Fool

Diageo issues trading update due to a weaker performance outlook in Latin America and Caribbean and updated medium term guidance ahead of 2023 Capital Markets Event

10 November 2023, London, UK: On 28 September 2023, Diageo issued a trading statement which stated that our outlook for fiscal 24 had not changed since 1 August 2023. At that time, our expectation for the group was for the first half of fiscal 24 to see a gradual improvement in organic net sales growth from the second half of fiscal 23.

We have momentum continuing in four of our five regions, however at the group level, in the first half of fiscal 24, we now expect to see slower growth than the second half of fiscal 23. This is due to a materially weaker performance outlook in Latin America and Caribbean (LAC), which is nearly 11% of Diageo's net sales value (fiscal 23), and is now expected to decline organic net sales by more than 20%, year-on-year, in the first half of fiscal 24.

In other regions:

· Currently, in North America, we expect gradual improvement in organic net sales growth in the first half of fiscal 24 of compared to the second half of fiscal 23, while maintaining distributor inventory in line with historical levels.

· We also expect to see improvement in the rate of net sales growth in Africa in the first half of fiscal 24 compared to the second half of fiscal 23.

· In Europe and Asia Pacific, we see continued momentum, albeit slower than in the second half of fiscal 23. In Europe, growth continues to be strong despite geopolitical tensions escalating in the Middle East, where we are a leading spirits company. In Asia Pacific, we continue to see momentum with good growth, despite slower than expected recovery in China.

ADrunkenMarcus wrote:Down 11%. Quite dramatic for a blue chip like Diageo. Even so, the dividend yield is ‘only’ 2.9%.

Best wishes


Mark.

ADrunkenMarcus wrote:Down 11%. Quite dramatic for a blue chip like Diageo. Even so, the dividend yield is ‘only’ 2.9%.

Best wishes


Mark.

BullDog wrote:Oh dear.

Turf wrote:I jumped in this morning with a 5k buy but should have not been so eager, I could have get them even cheaper, a stock I will probably hold forever.

Turf wrote:I jumped in this morning with a 5k buy but should have not been so eager, I could have get them even cheaper, a stock I will probably hold forever.

monabri wrote:

ADrunkenMarcus wrote:Down 11%. Quite dramatic for a blue chip like Diageo. Even so, the dividend yield is ‘only’ 2.9%.

Best wishes


Mark.

Remember AZN on reports of a failed drug trial in 2017 ( and note the shareprice!).

https://www.lse.co.uk/rns/AZN/az-report ... 70e11.html

YeeWo wrote:"Tom Shropshire, General Counsel and Company Secretary, is responsible for arranging the release of this announcement on behalf of Diageo."

I noticed the above in the incriminating RNS. I do wonder if Debra Crew & Mr Shropshire haven't quite worked-out how they're going to work together!? IIRC Diageo has a sustainable dividend, manageable (albeit growing) debt, £1bn+ in buybacks and a ROCE of comfortably 20%+.

Greedy when others are fearful comes to mind........

monabri wrote:edit:

Having looked at Brown Forman's shareprice...maybe the drinks industry is indeed under pressure. The Brown Forman group shareprice in the US is not exactly flying relative to March 2020 neither!

Dod101 wrote:Considering that investing in international shares has got to be one of the more borderless activities, I puzzle to understand why moving a primary listing from London to NY should lead to a sudden increase in the share price. I am not saying that it may not happen but cannot understand why. Is it regulation, liquidity, inclusion in different indices or what?

As for Diageo, It is still the same company with the same management where ever it is quoted, but as far as I am concerned it has not been a brilliant investment. That is all down to timing of course. It has great and well known brands but even a great company does not necessarily grow for ever.

SalvorHardin wrote:

Dod101 wrote:Considering that investing in international shares has got to be one of the more borderless activities, I puzzle to understand why moving a primary listing from London to NY should lead to a sudden increase in the share price. I am not saying that it may not happen but cannot understand why. Is it regulation, liquidity, inclusion in different indices or what?

As for Diageo, It is still the same company with the same management where ever it is quoted, but as far as I am concerned it has not been a brilliant investment. That is all down to timing of course. It has great and well known brands but even a great company does not necessarily grow for ever.

The share price should increase if the listing moves to the NYSE due to several factors.

The NYSE is a vastly more liquid stockmarket than London (Apple's market capitalisation is a bit larger than the sum of the entire FTSE100).

American investors generally put a higher PE ratio on a NYSE primary listed company than a secondary listed company. The inevitable comparisons with Brown-Forman will show that Diageo is undervalued.

More Americans would become interested in Diageo, driving up demand for the shares. Diageo would very quickly enter the S&P500.

I want Diageo to move to America. Britain is not particularly friendly to businesses and is likely to become even less friendly after the next General Election.

As to Diageo as an investment, it's one of the few companies that I am pretty confident that it is still operating in a hundred years time and making a lot more money than today (the only others in which I own shares are Union Pacific and Canadian Pacific).

dubre wrote:Is there a widespread trend away from alcoholic drinks, spirits in particular?