Diageo (DGE)

[Dod101]

Just as a follow up to my post on Diageo’s Annual Report I am going to ask their registrars to send me a hard copy of it each year. I do that with quite a few of my longer term holdings and find the very useful. I do not like having to scroll through a computer screen to read these but I at least find it very helpful to read these Reports.

Dod

[idpickering]

Diageo confirms delisting from Euronext Dublin.

Further to the announcements made on 13 April 2023 and 25 April 2023, Diageo plc ("Diageo") confirms that the listing of Diageo's ordinary shares (ISIN: GB0002374006) on Euronext Dublin has been cancelled with effect from 7.00 am today, 30 May 2023.

The delisting will not affect Diageo's listings on the London Stock Exchange (DGE) and the New York Stock Exchange (DEO). The delisting will also not have any impact on Diageo's day-to-day operations in Ireland.

With immediate effect, Ireland is no longer considered to be Diageo's EU Home Member State for the purposes of the EU Transparency Directive (Directive 2004/109/EC, as amended).

https://www.investegate.co.uk/announcement/7550324

Ian.

[Steveam]

https://www.bbc.co.uk/news/business-65770119

Accusation of racist behaviour by their investment choice.

Best wishes,

Steve

[idpickering]

Diageo Board Appoints Debra Crew Interim CEO.

Sir Ivan Menezes is currently in hospital receiving treatment for medical conditions including a stomach ulcer. Over the weekend, we learned that Ivan's recovery suffered a significant setback due to complications, which followed emergency surgery on the ulcer.

As a result of these developments, the Board of Directors has appointed Debra Crew Interim Chief Executive Officer with immediate effect, ahead of her appointment as Chief Executive Officer and joining the Board as an executive director on 1 July 2023. As previously announced, Ivan will retire from the Board on 30 June 2023.

Our thoughts are with our much-loved colleague, Ivan, and his family.

Out of respect for Ivan and his family's privacy, we will not be commenting further at this time.

https://www.investegate.co.uk/announcement/7558472

Ian.

[Dod101]

Diageo Board Appoints Debra Crew Interim CEO.

Sir Ivan Menezes is currently in hospital receiving treatment for medical conditions including a stomach ulcer. Over the weekend, we learned that Ivan's recovery suffered a significant setback due to complications, which followed emergency surgery on the ulcer.

As a result of these developments, the Board of Directors has appointed Debra Crew Interim Chief Executive Officer with immediate effect, ahead of her appointment as Chief Executive Officer and joining the Board as an executive director on 1 July 2023. As previously announced, Ivan will retire from the Board on 30 June 2023.

Our thoughts are with our much-loved colleague, Ivan, and his family.

Out of respect for Ivan and his family's privacy, we will not be commenting further at this time.

https://www.investegate.co.uk/announcement/7558472

Ian.

I hope that the CEO is Ok. Does not sound too good. Coming just at the end of his long and successful career for which we shareholders should be very grateful. People would rather go on about speed limits for driving or Schofield than a matter where shareholders should be at least interested.

Dod

[idpickering]

Diageo Board Appoints Debra Crew Interim CEO.


https://www.investegate.co.uk/announcement/7558472

Ian.

I hope that the CEO is Ok. Does not sound too good. Coming just at the end of his long and successful career for which we shareholders should be very grateful. People would rather go on about speed limits for driving or Schofield than a matter where shareholders should be at least interested.

Dod

Agreed Dod, on all counts. Thinking of the Sir Ivan and his family right now.

Ian.

[monabri]

Not good news. Death announced of Sir Ivan - 63 years old..getting ready for retirement.

https://www.telegraph.co.uk/business/20 ... s-aged-63/

[Dod101]

Not good news. Death announced of Sir Ivan - 63 years old..getting ready for retirement.

https://www.telegraph.co.uk/business/20 ... s-aged-63/

That is really very sad but not unexpected when reading the earlier piece. Shareholders have a great deal to thank him for as he was brought in to Diageo when it was created in the late 1990s. He had been with Guinness before that. Also on a personal basis, he was due to retire at the end of June and was only 63!

Dod

[Breelander]

Also announced by Diageo in an RNS with a lengthy biography as a 'Note to Editors...'

https://www.investegate.co.uk/announcement/7563483

[Dod101]

Also announced by Diageo in an RNS with a lengthy biography as a 'Note to Editors...'

https://www.investegate.co.uk/announcement/7563483

Thanks Bree. Not often you get that sort of RNS and a very generous one at that. What a shame.

Dod

[ADrunkenMarcus]

This is horrible news. 63 is no age these days and he was about to start a well-earned retirement.

Best wishes


Mark.

[flyer61]

Very sad, 63 is no age.............what is truly disgusting is not a word from the BBC or Sky etc.....its as if successful global business leaders are not welcome or in need of mention in Britain....

[Steveam]

Very sad, 63 is no age.............what is truly disgusting is not a word from the BBC or Sky etc.....its as if successful global business leaders are not welcome or in need of mention in Britain....

He is the lead story on BBC Business today. It’s a very positive tribute article and well deserved.

Best wishes, Steve

[flyer61]

Maybe the BBC read this forum......

[idpickering]

Diageo Board Appoints Debra Crew CEO.

The Board of Directors of Diageo plc ("Diageo") has appointed Debra Crew Chief Executive Officer and Executive Director of Diageo, effective as of 8 June 2023.

https://www.investegate.co.uk/announcement/7567271

Ian.

[idpickering]

Diageo delivers strong performance.

Diageo delivers strong performance while investing in sustainable long-term growth

Delivered strong net sales and operating profit growth within medium-term guidance

- Reported net sales of £17.1 billion, increased 10.7%, primarily reflecting strong organic net sales growth, and favourable impacts from foreign exchange.

- Organic net sales grew 6.5%. Price/mix of 7.3 percentage points reflects a high single-digit contribution from price and premiumisation.

- Reported volume declined by 7.4%, and organic volume declined by 0.8%.

- Growth reflects our advantaged portfolio of strong brands, diversified footprint, and premiumisation.

Resilient operating margin despite increased cost inflation

- Reported operating profit grew 5.1% to £4.6 billion. Reported operating margin declined by 147bps, with organic margin expansion more than offset by exceptional operating items and foreign exchange.

- Organic operating profit grew 7.0% and organic operating margin expanded by 15bps, driven by disciplined cost management. Price increases more than offset the absolute cost inflation impact on gross margin.

Advantaged portfolio and premiumisation drove market share growth

- Growth in organic net sales was delivered across most categories, particularly in our three largest categories: scotch, tequila and beer.

- Premium-plus brands comprised 63% of reported net sales, a 7 percentage point increase from fiscal 19.

- Total trade market share grew or held in over 70%(1) of total net sales value in measured markets.

Optimisation of portfolio through acquisitions and disposals

- Acquired Mr Black, a leading Australian premium coffee liqueur, Balcones Distilling, a Texas craft distiller and one of the leading producers of American single malt whiskey and Don Papa Rum, a super-premium, dark rum from the Philippines.

- Completed the sale of Guinness Cameroun S.A., disposed of Archers and completed the disposal and franchising of a portfolio of brands in India.

Invested to sustain long-term growth

- Increased organic marketing investment by 5.6%, reflecting strong, consistent investment in our brands.

- Invested £1.2 billion of capital expenditure (capex) in supply capacity, sustainability, digital capabilities and consumer experiences.

Continued cash flow generation and strong balance sheet

- Net cash flow from operating activities declined £0.9 billion to £3.0 billion.

- Free cash flow of £1.8 billion, declined £1.0 billion as strong growth in operating profit and favourable foreign exchange impacts were more than offset by higher year-on-year working capital outflows, tax and interest payments, and capital investment. Increased working capital reflects normalisation of creditors relative to fiscal 22 as our growth rate moderated in fiscal 23.

- Strong balance sheet, with leverage ratio(2) of 2.6x as at 30 June 2023, at the lower end of our target range, as a result of strong operating profit performance.

And later;

Dividend

The group aims to increase the dividend each year. The decision in respect of the dividend is made with reference to the dividend cover as well as current performance trends, including sales and profit after tax together with cash generation. Diageo targets dividend cover (the ratio of basic earnings per share before exceptional items to dividend per share) within the range of 1.8-2.2 times. For the year ended 30 June 2023, dividend cover is 2.0 times. The recommended final dividend for the year ended 30 June 2023, to be put to the shareholders for approval at the Annual General Meeting is 49.17 pence, an increase of 5% on the prior year final dividend. This would bring the full year dividend to 80.00 pence per share, an increase of 5% on the prior year. The group will keep future returns of capital, including dividends, under review through the year ending 30 June 2024 to ensure Diageo's capital is allocated in the best way to maximize value for the business and its stakeholders.

Subject to approval by shareholders, the final dividend will be paid to holders of ordinary shares and US ADRs on the register as of 25 August 2023. The ex-dividend date both for the holders of the ordinary shares and for US ADR holders is 24 August 2023. The final dividend, once approved by shareholders, will be paid to shareholders on 12 October 2023 and payment to US ADR holders will be made on 17 October 2023. A dividend reinvestment plan is available to holders of ordinary shares in respect of the final dividend and the plan notice date is 22 September 2023.

https://www.investegate.co.uk/announcem ... e-/7666927

Ian.

[Dod101]

Thanks for that. You can see why the share price is struggling with their margins way down. Managed to squeeze a modest increase in profit but nothing spectacular.

Anyway they are a good company and will come good again.

Dod

[KnightOfSpring]

Just listened to the analyst call (I'm not an analyst but I ask nicely, so get on the call ) . New CE Debra Crew came across well. Doesn't shy away from talking about areas that were disappointing and explained well why this was the case and what they were going to do about it. Seems very confident on medium term guidance and sensed this was genuine rather than saying what the market wanted to hear.

Lot of questions about stock levels. Destocking has hit them as retailers stocked up last year ahead of price rises. Going forward it seems to be normalising. Ready to Drink US has been strong and they have been under represented here. Plans to increase presence here, but they don't want to pile in to all areas- understandable as some is unbranded very price competitive. Also needs to be done carefully to protect the brand image. Crown Royal Canadian Whisky has had more supply issues than other brands. I think it has been resolved now and they have strong plans to innovate and regain lost sales. Their North American whisky is bigger than their combined rum and vodka categories there.

Luxury/aspirational I think was weaker in N America (not certain I caught this correctly), which may tie in with the luxury fashion brands talking about how some demand was stimulis cheques (checks) last year. Premium holding up and super premium is where all the growth is. Not seeing premium trading down to mainstream anywhere (NB slightly confused with the luxury/asprirational comment- perhaps these consumers just not buying rather than trading down).

On a more positive tack, Europe has had a great year, albeit UK bit weaker on spirits. Guinness, Johnnie Walker, non alcohol been very strong. India also very strong +17% with premium growing faster and super premium faster still. JW black up 54%. Unlike other emerging markets, Indian consumers are very comfortable with scotch (which due to it's taste often needs an "introduction").

Finally Ms Crew was asked about high level thoughts. She said she now been at Diageo 4 years and many things have her fingerprints on them. So evolution rather than revolution. However she did call out 3 areas of particular focus/potential growth: 1. Tequila outside of the US a big opportunity. 2. The Johnnie Walker "juggernaut". Interestingly a third of all JW consumers are female btw. 3. Guinness. Grew in every region in these results. 0.0 percent they have invested in capacity (NB this is a miracle product imho). These three areas are "half the business" (NB reminds me a bit of how important the billion plus euro power brands are to Unilever).

So overall pleased with the new CE and feel confident this will remain a good share to hold over the medium term. I did wonder if the shares would come off a fair bit today, but was surprised at initial share price increase (and sold a small amount around 3490, mainly as got over 10% of my portfolio in it and also have been building up my cash balances considerably).

[YeeWo]

I did wonder if the shares would come off a fair bit today, but was surprised at initial share price increase (and sold a small amount around 3490, mainly as got over 10% of my portfolio in it and also have been building up my cash balances considerably).

Trading 6 weeks later at 3162, perhaps time to repurchase?!

[idpickering]

Diageo issues trading commentary ahead of AGM.

Debra Crew, Chief Executive, commented:

"As I take the helm as Chief Executive of Diageo, I am excited to lead our teams around the world and by the many growth opportunities we see in front of us. Our expectations for fiscal 24 are unchanged from when we reported our fiscal 23 preliminary results on 1 August.

While we expect operating environment challenges to persist, with ongoing cost pressure and geopolitical and macroeconomic uncertainty, we will move with speed and agility and continue to invest in marketing and innovation. I am confident in the resilience of our business and our ability to navigate these headwinds while executing our strategic priorities.

We remain well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%. I firmly believe the strength of our portfolio, our diversified footprint and our deep consumer insights will drive sustainable long-term growth and generate value for shareholders."

https://www.investegate.co.uk/announcem ... gm/7782522

Ian (No holding).