Diageo Plc · LSE:DGE
Diageo — H1 F24 Earnings Presentation
39 slides from Diageo's earnings presentation, Jan 30, 2024
Slide 1: Interim Results Fiscal 24
DIAGEO Interim Results Fiscal 24 Debra Crew & Lavanya Chandrashekar
Slide 2: Cautionary statements concerning forward-looking statements and non-GAAP financial measures
Cautionary statements concerning forward-looking statements and non-GAAP financial measures The following presentation contains ‘forwarcHooking’ statements. These statements can be identified by the fact that they do not relate only to historical or current facts and may generally, but not always, b
Slide 3: Our ambition is to be one of the best performing consumer products companies
Our ambition is to be one of the best performing, most trusted and respected consumer products companies in the world DIAGEO 3. Interim Results Fiscal 24
Slide 4: H1 F24 key performance metrics
H1 F24 key performance metrics DIAGEO = 4. |__ Interim Results Fiscal 24 Organic volume NV -5.2% Organic net sales value NV; -0.6% Organic operating margin NY -] 67ops Free cash flow $1.5bn an +$0.5on Pre-exceptional eps 108. Lcents V-7.1% Interim dividend 40.50 cents an +5%
Slide 5: Expect to reduce LAC inventory to more appropriate levels by year-end F24
. Expect to reduce LAC inventory avontory to more review appropriate levels for the consumer environment by year- end F24 DIAGEO 5 Interim Results Fiscal 24
Slide 6: Robust action plan to expand inventory visibility in LAC
Robust action plan to expand inventory visibility in LAC Formalise and expand our access to sellout data Incentivise sellout data reporting Incentivise independent stock counts Invest in S&OP and commercial planning, and monitoring improvements am RWN > Test digital case tracking through distributio
Slide 7: Resilience from our diversified footprint
Resilience from our diversified footprint Group H1 organic net sales value -0.6% decline/growth Group, ex-LAC +2.5% H1 organic . volume 5.2% decline DIAGEO) 7_|_ Interim Results Fiscal 24 -3.3% H1 F24 organic net sales growth by region Latin America and Caribbean -23.5%
Slide 8: Diageo global TBA share impacted by loss in US market share
Diageo global TBA share impacted by 17bps loss in US market share DIAGEO = 8 |_ Interim Results Fiscal 24 39% US % Diageo total net sales value in measured markets 30% % Diageo total net sales value gaining/holding share in measured markets Including: Southern and Eastern Europe, Island of Ireland,
Slide 9: Strong focus on driving growth and share gains in US
Strong focus on driving growth and share gains in US Winning in Expanding tequila Recruiting with whisk(e}y portfolio innovation Raise the bar on execution DIAGEO) 9_[_ Interim Results Fiscal 24
Slide 10: Strong focus on driving growth and share gains in US
Strong focus on driving growth and share gains in US Winning in Expanding tequila Recruiting with whisk(e}y portfolio innovation Raise the bar on execution DIAGEO = 10_||_ Interim Results Fiscal 24
Slide 11: Continued momentum of Guinness is driving growth in Europe
Continued momentum of ; Guinness : is driving RAG growth in Europe MULE L Rims DIAGEO == 11_|_ Interim Results Fiscal 24
Slide 12: Asia Pacific organic NSV +6%
Asia Pacific organic NSV +6% driven by Greater China and India DIAGEO —22_ | Interim Results Fiscal 24
Slide 13: Africa +9% organic NSV broad-based growth
Africa +9% organic NSV broad-based growth across Beer Senator Guinness DIAGEO = 3 |_ Interim Results Fiscal 24
Slide 14: Scotch gaining share in largest measured Scotch markets
Scotch gaining share in 7 out of 10 largest measured scotch markets DIAGEO = 14._ | Interim Results Fiscal 24
Slide 15: Tequila global roll-out delivering strong growth
Tequila global roll-out delivering strong growth DIAGEO 315 | __ Interim Results Fiscal 24
Slide 16: Guinness: 6th consecutive half-yearly double-digit growth
Guinness 6th consecutive half-yearly double-digit growth ~ WONDERFUL “ok wacko wha es a OF THE YEAR drinkaware.co.uk for the fac
Slide 17: ESG: driving performance & productivity
ESG: driving performance ¢ productivity Strong progress against 25 ESG targets Review of the road to 2030 underway Maintain Accelerate Focus Simplify & prioritise Our ESG commitments will continue to protect our licence to operate; deliver efficiencies; strengthen brand equity and improve employee e
Slide 18: H1 key performance metrics
H1 key performance metrics DIAGEO = 28_|_ Interim Results Fiscal 24 Efficient growth Organic net sales value Ny, -0.6% (Excl LAC T+2.5%) Organic operating margin J -] 67 ops (Excl LAC J -53bps) Free cash flow $1.5bn 4+$0.50n Pre-exceptional eps 108 Lcents NV -7.1%
Slide 19: Our growth algorithm supports quality long-term growth
Our growth algorithm supports quality long-term growth | - Quality long-term top-line growth 2. Positive price/mix 3. Driving productivity 4. Increasing A&P DIAGEO = 19 | Interim Results Fiscal 24 Quality top-line growth Organic net sales value growth -0.6% Bold reinvestment Positive price/mix $2.0b
Slide 20: Resilience from our diversified footprint
Resilience from our diversified footprint Organic net sales growth by region 9.3% 3.40% 5.9% |_| . ‘0 | F24 H1 vs = F23 H1 15% North America (NAM) DIAGEO = 20 _|_ Interim Results Fiscal 24 -23.5% Latin America Europe Asia Pacific and Caribbean Africa (LAC) -0.6% Diageo incl. LAC 2.5% Diageo excl. LA
Slide 21: Our broad portfolio is a competitive advantage
Our broad portfolio is a competitive advantage F24 H1 Organic net sales growth of key categories 32% ®@ Diageo incl. LAC ®@ Diageo incl. LAC © Diageo excl. LAC 10% 7% Scotch Tequila = Beer spirits Other whisk(ely’ IMFL whisky 6% 10% DIAGEO = 21 | Interim Results Fiscal 24 2 Other whiskey comprises a
Slide 22: Standard and premium price tiers growing faster than value
Standard and premium price tiers growing faster than value; Super premium+ impacted by US Spirits lapping inventory replenishment F24 H1 Organic net sales vs F23 H1 Diageo US Spirits Super premium+ by price tier Growth vs prior year+? 9.5% Diageo incl. LAC @ Diageo excl. LAC @ Diageo excl. LAC & US
Slide 23: Leveraging Revenue Growth Management to drive sustainable top-line performance
Leveraging Revenue Growth Management to drive sustainable top-line performance Diageo growth driven by Price/Mix Spirits excl. LAC Volume Price/Mix Percentage points F24 H1 vs F23 H1* Percentage points F24 H1 vs F23 H1* @ Volume Super premium+ 1.9% ERAN -0.5 @ Price/Mix Beer 3.2 1.1 14.3% Premium =3
Slide 24: Continued step up in productivity in the first half of fiscal 24
Continued step up in productivity in the first half of fiscal 24 DIAGEO Total productivity savings $m 24 | Interim Results Fiscal 24 535 490 ae 505 245 Ms 275 275 m0 335 m5 260 260 F20 F2I F22 F23 F24 @ H2 eH
Slide 25: Operating margin contraction driven by LAC
Operating margin contraction driven by LAC Excluding LAC positive gross margin and increased AeP Movement in organic operating margin Movement in organic operating margin incl. LAC excl. LAC (167)bps (53)bps 2bps 15bps = | nae {Sélops || — (7O)bps (75]bps {| (36)ops B Gross : Other F23 H1 Gross . Ot
Slide 26: Strong working capital management driving free cash flow generation
Strong working capital management driving free cash flow generation Movement in free cash flow 1,462 Operating Working Maturing C a F23 H1 Exchange’ profit? capita’ stock apex Tax Interest Other4 F24 H1 DIAGEO «26 |_ Interim Results Fiscal 24
Slide 27: Foreign exchange
Foreign exchange benefit on operating profit, negative impact on net sales DIAGEO = .27_|_ Interim Results Fiscal 24 Net sales Operating profit! $m $m (167) 4 a @ Transaction © Translation
Slide 28: Strong balance sheet drives resilience in our business
Strong balance sheet drives resilience in our business F24 H1 F23 H1 Movement Closing net debt! $m (20,483) (18,203) (2,280) Average Net Debt! $m (20,638) (17,454) (3,184) Net interest charge $m (454) (333) (121) Net other finance charges $m 23 (12) 35 Net Finance Charges $m (431) (345) (86) Effecti
Slide 29: Consistent and disciplined approach to capital allocation
Consistent and disciplined approach to capital allocation Leverage ratio policy Adjusted net debt! to adjusted EBITDA: 2.5x - 3.0x . Dividends M&A and Organic 1.8x to 2.2x portfolio g dividend cover management Return excess cash to shareholders DIAGEO 29. |_ Interim Results Fiscal 24
Slide 30: Decline in eps due to softer operating profit and higher finance charges
Decline in eps due to softer operating profit and higher finance charges Movement in earnings per share before exceptional items (cents) 116.4 | 0.2 22 — rd 01 a 108.1 —s a a (9.0) (1.2) (0.2) (0.8) (4.1) F23 HI eps ; Foreign i F24 HI eps before Seen Accuistion, (AYER Fair value exchange Assocs Toe
Slide 31: Expecting gradual improvement in H2 F24
Expecting gradual improvement in H2 F24 DIAGEO © 32 | Interim Results Fiscal 24 H2 F24: * Expect gradual improvement when compared to H1 F24 With -10% to -20% organic net sales decline in LAC * Expect organic operating profit to decline compared to the prior year, With the rate of decline expected t
Slide 32: Fiscal outlook
Fiscal 25 outlook DIAGEO 32 | Interim Results Fiscal 24 Organic net sales growth trajectory improving in fiscal 25 compared to fiscal 24 Expect organic operating profit growth to be broadly in line with organic net sales growth As consumer environment improves
Slide 33: Confident in our strategy and ability to drive sustainable long-term growth
Confident in our strategy and ability to drive sustainable long-term growth PURPOSE Celebrating life, every day, everywhere AMBITION | To be one of the best performing, most trusted and respected consumer products companies in the world Drive growth in Unleash the power | . . Strate 1 p nnovate to r
Slide 34: Celebrating life, every day, everywhere
DIAGEO Celebrating life, every day, everywhere
Slide 35: Appendix: Decrease in operating profit driven by organic decline
Appendix: Decrease in operating profit! driven by organic decline DIAGEO F24 H1 F23 H1 Reported $m $m operating margin? Prior period operating profit 3,70 3,730 33.9% before exceptional items’ Exchange rate movements 4 (295) 5ibps Fair value remeasurement & other (22) 10 (56)bps Acquisitions & dispo
Slide 36: Financial/legal appendix: Definitions and reconciliation of non-GAAP measures
Financial/legal appendix: Definitions and reconciliation of non-GAAP measures to GAAP measures Diageo's strategic planning process is based on certain non-GAAP measures, including organic movements, These non-GAAP measures are chosen for planning and reporting, and some of them are used for incentiv
Slide 37: Continued from the previous page
Continued from the previous page (0) Exchange rates ‘Exchange’ in the organic movement calculation reflects the adjustment to recalculate the reported results asif they had been generated at the prior period weighted average exchange rates. Exchange impacts in respect of the external hedging of inte
Slide 38: Continued from the previous page
Continued from the previous page (d) Fair value remeasurement Fair value remeasurement in the organic movement calculation reflects an adjustment to eliminate the impact of fair value changes in biological assets, earrrout arrangements that are accounted for as remuneration and fair value changes re
Slide 39: Continued from the previous page
Continued from the previous page Shareholder value metrics '* Dividends: Diageo internal information. + Return of Capital (RoC): Diageo internal information. ‘© TSR: FactSet as of 31 December 2023. TSR based on time periods of 6 months, 1 year, 5 years and 10 years up to 31 December 2023. TSR for 1