Diageo Share Price Fell 4.13% on Weak H1 Fiscal 2024 Results

The Diageo plc (LON: DGE) share price fell 4.13% after releasing the interim results for the first half of its 2024 financial year. The company noted that it experienced robust cash generation during a challenging first half, positioning it well for future growth.

Despite the headwinds, Diageo reported net sales of $11.0 billion, a decline of 1.4% or $158 million. This decrease was mainly due to an unfavourable foreign exchange impact of $167 million and an organic net sales decline of $67 million or 0.6%. The Latin America and Caribbean (LAC) region saw a significant downturn with a 23% or $310 million drop in sales.

Excluding LAC's impact, Diageo's reported net sales increased by $72 million or 0.7%, and organic net sales rose by $243 million or 2.5%. Solid performances in Asia, Africa, and Europe primarily drove this growth. 

However, North America experienced a decline of $64 million or 1.5%, an improvement from the second half of fiscal 2023. The downturn in the LAC region was attributed to solid growth in the previous year, combined with reduced consumption and consumer downgrading due to regional economic pressures.

Reported operating profit fell by 11.1% to $3.3 billion, with a contraction of 329 basis points in the operating profit margin, impacted by a lower organic operating margin and negative exceptional operating items. 

Organic operating profit decreased by $205 million or 5.4%, with $234 million of this loss attributed to the LAC region. The organic operating margin saw a contraction of 167 basis points. However, when excluding LAC's impact, there was a $29 million or 0.9% growth in organic operating profit. 

Debra Crew, Diageo’s Chief Executive, said: “The first half of fiscal 24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year and faced an uneven global consumer environment. Excluding LAC, our group organic net sales grew 2.5%, driven by good growth in Europe, Asia Pacific and Africa. While North America delivered sequential improvement in line with our expectations, we are focused on returning to high-quality share growth as consumer behaviour continues to normalise in our largest region.”

Diageo share price. 

The Diageo share price fell 4.13% to trade at 2720.3p from Monday’s closing price of 2837.5p.