Slide 1: Preliminary Diageo Results 2012
PRELIMINARY DIAGEO RESULTS 2012 YEAR ENDED 30 JUNE 2012 Raa assssste 4 iil) Teed ,@ re) Ls bet il | iy
Slide 2: Paul Walsh, CEO
DIAGEO Paul Walsh CEO
Slide 3: A strong business, getting stronger
A strong business, getting stronger • Increased our presence in the faster growing markets • Enhanced our leading brand positions • Strengthened our routes to market • Announced investments to drive future growth • Delivered efficient growth 3
Slide 4: Deirdre Mahlan, CFO
DIAGEO Deirdre Mahlan CFO
Slide 5: Delivering efficient growth
Delivering efficient growth • Improved performance in each region • Increased gross and operating margin 5
Slide 6: Delivering efficient growth
Delivering efficient growth • Strong top line growth ̶ By market ̶ By category ̶ 4ppts of price/mix • Operating margin expansion • Free cash flow of £1.6 billion • Double digit eps* growth • Strong performance: stronger business Year ended 30 June 2012. Organic movement. *eps pre-exceptional items.
Slide 7: Stronger platform drove 6% organic net sales growth
Stronger platform drove 6% organic net sales growth • 2% volume growth • 4ppts price/mix • 2ppts driven by driven by: driven by: acquisitions: ̶ 4% growth of ̶ Scotch ̶ Mey İçki strategic brands ̶ Emerging markets ̶ 7% growth in ̶ Premium plus emerging markets ̶ Innovation £0.2bn £0.4bn £0.3bn Organ
Slide 8: Stronger platform drove 6% organic net sales growth
Stronger platform drove 6% organic net sales growth • 2% volume growth • 4ppts price/mix • 2ppts driven by driven by: driven by: acquisitions: ̶ 4% growth of ̶ Scotch ̶ Mey İçki strategic brands ̶ Emerging markets ̶ 7% growth in ̶ Premium plus emerging markets ̶ Innovation £0.2bn £0.4bn £0.3bn Organ
Slide 9: Premium plus brands drove net sales growth
Premium plus brands drove net sales growth Net sales, £bn 10.5 10.0 9.5 2011 Popular/value Premium Premium plus 2012 Scotch Vodka Rum Beer Year ended 30 June. Organic movement. 9
Slide 10: Acquisitions drove a further 2% net sales growth
Acquisitions drove a further 2% net sales growth • 2% volume growth • 4ppts price/mix • 2ppts driven by driven by: driven by: acquisitions: ̶ 4% growth of ̶ Scotch ̶ Mey İçki strategic brands ̶ Emerging markets ̶ 7% growth in ̶ Premium plus emerging markets ̶ Innovation £0.2bn £0.4bn £0.3bn Organic
Slide 11: Second half performance in line with expectations
Second half performance in line with expectations Net sales, % growth 23 19 15 12 11 10 9 8 7 7 6 6 6 5 5 0 (1) (2) Diageo NAM Europe Africa LAC Asia Pacific H1 H2 FY Year ended 30 June 2012. Organic movement. 11
Slide 12: Marketing spend focused on strategic brands
Marketing spend focused on strategic brands • Strategic brands focus • Emerging market focus • Capturing efficiencies in developed markets • Marketing spend up 30bps as % of net sales Year ended 30 June 2012. Organic movement. 12
Slide 13: Delivering efficient growth
Delivering efficient growth • Delivered strong price/mix • Supply asset rationalisation, advantaged sourcing and operational efficiencies • Overhead efficiency driven by: ̶ Developed market savings ̶ Scale efficiencies in emerging markets • Delivered 60bps of operating margin Year ended 30 June 2012
Slide 14: Strong free cash flow underpins our financial strength
Strong free cash flow underpins our financial strength Free cash flow, £m 563 1,812 (419) (80) 1,647 (156) (73) 2011* Operating profit Working capital Interest Tax Net CAPEX 2012 movement Year ended 30 June. * Restated to include acquisitions transaction costs, and excludes dividends paid to non-con
Slide 15: Exceptional items reflect restructuring costs, acquisitions and tax settlements
Exceptional items reflect restructuring costs, acquisitions and tax settlements 2011, 2012, £m £m Business restructuring (111) (96) Other operating exceptionals (178) 56 Operating exceptional items pre-tax (289) (40) Sale of businesses (14) 147 Exceptional tax items 120 (505) Discontinued operations
Slide 16: Financial strength enabled us to make important acquisitions
Diageo‟s financial strength enabled us to make important acquisitions 1,036 1,420 311 7,570 (1,647) 6,450 Net borrowings at Acquisitions Dividends Free cash flow Other Net borrowings at 30 June 2011 30 June 2012 16
Slide 17: Finance charges reflect financial strength
Finance charges reflect financial strength • Finance charges flat year on year • Lower effective interest rate offset higher debt from acquisitions • $2.5 billion bond issuances secure longer term rates Year ended 30 June 2012. 17
Slide 18: Improved performance throughout the income statement
Improved performance throughout the income statement 2011, 2012, Movement, £m £m £m Operating profit* 2,884 3,198 314 Associate income net of tax 176 213 37 Trading profit* 3,060 3,411 351 Net finance charges (397) (397) - PBET 2,663 3,014 351 Taxation* (463) (533) (70) Non-controlling interest (117
Slide 19: Delivering efficient growth
Delivering efficient growth Strong Faster organic net sales growth platform + Aim: 6% CAGR in the medium term Expansion Maximising in faster Organic operating cash and growing margin improvement returns markets Aim: The first 200bps by year ending + 2014 Sharper EPS growth focus Aim: Double digit gr
Slide 20: A strong business, getting stronger
A strong business • Leading brands across categories • Geographic breadth • Agility Getting stronger • Increasing our presence in the faster growing markets • Building even stronger brands through marketing and innovation • Strengthening our routes to market 20
Slide 21: A strong business: Leading brands across categories
A strong business: Leading brands across categories 21
Slide 22: A strong business: Geographic reach
A strong business: Geographic reach 33% 28% 6% (1)% 14% 13% 8% 11% 12% 19% Total net sales split by region Net sales growth in F12 Year ended 30 June 2012. 22
Slide 23: Combining agility with our brand range and geographic reach drives growth
Combining agility with our brand range and geographic reach drives growth 24% 12% 2% 15% 7% 29% 19% 12% 28% 20% Total net sales of scotch split by region Scotch net sales growth in F12 Year ended 30 June 2012. Organic movement. 23
Slide 24: Combining Diageo's global strengths with agility to great effect
Combining Diageo‟s global strengths with agility to great effect 24
Slide 25: A strong business getting stronger
A strong business getting stronger • Increasing our presence in the faster growing markets • Building even stronger brands through marketing and innovation • Strengthening our routes to market 25
Slide 26: Increasing our presence in faster growing markets: through acquisitions
Increasing our presence in the faster growing markets: through acquisitions 26
Slide 27: Increasing our presence in faster growing markets: through acquisitions
Increasing our presence in the faster growing markets: through acquisitions 27
Slide 28: Increasing our presence in faster growing markets: investing in existing businesses
Increasing our presence in the faster growing markets: through investing in our existing businesses 28
Slide 29: Building even stronger brands through marketing and innovation
Building even stronger brands through marketing and innovation Net sales growth £m 350 12% 300 250 200 13% 150 5% 100 8% 50 3% 0 Gin Rum Beer Vodka Scotch Year ended 30 June 2012. 29
Slide 30: Building even stronger brands through marketing
Building even stronger brands through marketing Marketing innovation New consumer groups Emerging middle class consumers Range of price points 30
Slide 31: Building even stronger brands through marketing
Building even stronger brands through marketing Marketing innovation New consumer groups Emerging middle class consumers Range of price points 31
Slide 32: Building even stronger brands through marketing
Building even stronger brands through marketing Marketing innovation New consumer groups Emerging middle class consumers Range of price points 32
Slide 33: Building even stronger brands through marketing
Building even stronger brands through marketing Marketing innovation New consumer groups Emerging middle class consumers Range of price points 33
Slide 34: Building even stronger brands through marketing
Building even stronger brands through marketing Marketing innovation New consumer groups The power of global brand idea executed with local relevance Emerging middle class consumers Range of price points 34
Slide 35: Building even stronger brands through innovation
Building even stronger brands through innovation Unlocking growth in Premiumising our brands developed markets The female consumer Emerging middle class consumers 35
Slide 36: Building even stronger brands through innovation
Building even stronger brands through innovation Unlocking growth in Premiumising our brands developed markets The female consumer Emerging middle class consumers 36
Slide 37: Building even stronger brands through innovation
Building even stronger brands through innovation Unlocking growth in Premiumising our brands developed markets The female consumer Emerging middle class consumers 37
Slide 38: Building even stronger brands through innovation
Building even stronger brands through innovation Unlocking growth in Premiumising our brands developed markets The female consumer Emerging middle class consumers 38
Slide 39: Building even stronger brands through innovation
Building even stronger brands through innovation Unlocking growth in Premiumising our brands developed markets The female consumer Emerging middle class consumers 39
Slide 40: Strengthening our routes to market
Strengthening our routes to market 40
Slide 41: Strengthening our routes to market
Strengthening our routes to market 41
Slide 42: +MORE
+MORE 42
Slide 43: Strengthening our routes to market
Strengthening our routes to market 43
Slide 44: Strengthening our routes to market
Strengthening our routes to market 44
Slide 45: Sustainability and responsibility remains a priority
Sustainability and responsibility remains a priority 45
Slide 46: A strong business, getting stronger
A strong business, getting stronger • Increased our presence in the faster growing markets • Enhanced our leading brand positions • Strengthened our routes to market • Announced investments to drive future growth • Delivered efficient growth 46
Slide 47: Preliminary Results 2012 - Thursday 23 August 2012
Preliminary Results 2012 - Thursday 23 August 2012 At 09.45 (UK time), Paul Walsh, Chief executive officer and Deirdre Mahlan, Chief financial officer will be joined by Ivan Menezes, Chief operating officer; Larry Schwartz, President, Diageo North America; Andrew Morgan, President, Diageo Europe; Ni
Slide 48: Supplementary slides
Supplementary slides DIAGEO at Pa ; 4 Rs Fei , iW iil) Teed ie) oO Ls fe | ee a pa tage FI pS i aa ai * ‘ a |i se ey ‘Si WS SSS ao a y ae ~~ i. a ay
Slide 49: Outlook statements
Outlook statements For the year ending 30 June 2013 Cost of sales For F13, input cost increases will average about 4% and half of this impact is expected to be offset through supply savings and efficiencies. Exceptional operating items The table below sets out expected exceptional charges for the ye
Slide 50: Operating margin
Operating margin Exchange differences in respect of currency transaction hedging which arise during the year are reported in Corporate. If they were allocated to the regions, they would change the regional year on year operating margin improvements. The table below shows, by region, the impact if th
Slide 51: Net finance charges
Net finance charges 2011, 2012, Movement, £m £m £m Core interest (357) (386) (29) IAS 39 (12) 4 16 Net interest charge (369) (382) (13) Finance income/(charge) from post employment obligations (3) 7 10 Other finance charges (25) (22) 3 Net other finance charge (28) (15) 13 Net finance charges (397)
Slide 52: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This presentation contains „forward-looking‟ statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking statements include all statem