Drinks firm Diageo has said that it is not expecting a ‘material financial impact’ from Brexit on its business, adding that it believes its ‘finished case goods will continue to trade tariff free’, regardless of the nature of the UK’s exit from the EU.
The firm made the claim as it posted reported net sales growth of 5.8% in the first half of its financial year, of £6.9 billion (€7.8 billion), with reported operating profit up 11%.
The drinks group said that all regions contributed to growth in the period, to 31 December 2018, with organic volumes up 3.5% across the group.
“Diageo delivered broad-based volume and organic net sales growth across regions and categories,” commented Ivan Menezes. “We continue to expand organic operating margins while increasing investment in our brands ahead of organic net sales growth.”
Brexit Planning
On Brexit, Diageo said that while there ‘continues to be uncertainty’ over the future trading relationship between the UK and the EU, the company has ‘mitigation plans in place for the short-term disruption that could arise from a ‘no deal’ scenario’.
It said that it has maintained ‘appropriate stock levels’ to mitigate the risk of a no-deal exit, adding that the ‘ full implications of Brexit will not be understood until future tariffs, trade, regulatory, tax, and other free trade agreements to be entered into by the United Kingdom are established’.
It also pledged to take ‘prudent actions to mitigate risk’ and ensure potential disruption to its supply chain is minimised.
Regional Performance
In terms of the group’s regional performance, North America saw 8% reported net sales growth in the period, as did Asia Pacific.
Its Africa business saw 4% net sales growth, while Europe & Turkey was up 2% and Latin America and Caribbean was up 4%.
In terms of volume growth, the highest growth was seen in Asia Pacific (+7%), with North America and Europe & Turkey both posting 2% growth.
“As we deploy our strategy, we remain focused on building the long-term health of our brands and ensuring we grow our business in a consistent and sustainable way,” Menezes added.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
