Diageo profits hit by weaker performance in Latin America, Caribbean

Diageo reported a drop in full-year organic operating profit on Tuesday as it pointed to a weaker performance in Latin America and the Caribbean (LAC).

In its preliminary results for 2024, the drinks company said organic operating profit fell by 4.8% to $304m, of which $302m was attributable to LAC.

Reported net sales declined 1.4% to $20.3bn, it said, owing to an unfavourable foreign exchange impact and organic net sales decline, partially offset by hyperinflation adjustments.

Excluding the impact of LAC, organic net sales rose 1.8% to $330m, driven by "resilient" growth in its Africa, Asia Pacific and Europe regions.

Diageo said organic net sales in North America fell 2.5% due to a cautious consumer environment and the impact of lapping inventory replenishment in the previous year. However, this was more than offset by the growth in Africa, Asia Pacific and Europe.

Chief executive Debra Crew said: "While fiscal 24 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves.

"In fiscal 24 we made good progress against our strategic priorities. We ended fiscal 24 gaining or holding share in measured markets totalling over 75% of our net sales value, including in the US. We have taken actions to manage the inventory issues in LAC; we have strengthened our consumer insights and redeployed resources towards the best growth opportunities; we have stepped up our route-to-market across several markets, including our most significant transformation in at least a decade in our US spirits organisation; we have delivered record productivity savings of nearly $700 million; and we have generated $2.6 billion in free cash flow while increasing strategic investments. We are confident that when the consumer environment improves, the actions we are taking will return us to growth."