Smirnoff owner Diageo reports drop in Q1 sales

16th Oct 2014 07:33

Spirits group Diageo saw sales fall in its first quarter with North America the only region registering growth, though it expressed optimism that its full-year top line would still improve on last year.The drinks company, famous for the Baileys, Smirnoff and Johnnie Walker brands, said net sales in the three months to 30 September were 1.7% lower than the first quarter of last year, which it blamed on organic movement of -1.5% and the devaluation of the Venezuelan bolivar.Volumes during the period were down 3.5%.Sales in North America improved by just 0.1% despite a very strong comparative last year in the US spirits and wines division. Growth was helped by the sale of bulk stocks and a modest rise in stock levels, but these will be reversed in the next quarter.However, sales in Europe fell 1.4% due to weak consumer confidence in Russian and Eastern Europe, as well as the uncertainty in Ukraine. Price increases in the Benelux region also prompted a poorer performance, along with continued weakness in Germany.In Africa, sales were flat over the year as weakness in Nigeria was offset by Diageo's 'Africa Regional Markets' and east Africa.The Latin America and Caribbean division saw sales fall 1.4% as price increases in Brazil hit revenues, while Asia Pacific sales dropped 7.4% after lower inventory levels in South-East Asia and a challenging environment in mainland China."Consumer trends in most markets are unchanged and our first quarter performance is in line with our expectations given the prior year comparison of the performance of our US spirits and wines business and the destock we have implemented in South-East Asia," said chief executive Ivan Menezes."We expect full-year top-line growth to improve on last year's performance," he said.