Slide 1: 2010 Preliminary Results
2010 PRELIMINARY RESULTS 26 AUGUST 2010
Slide 2: Paul Walsh, CEO
PAUL WALSH CEO
Slide 3: Diageo delivered top and bottom line growth and strong cash flow in a challenging year
DIAGEO DELIVERED TOP AND BOTTOM LINE GROWTH AND STRONG CASH FLOW IN A CHALLENGING YEAR • Organic net sales up 2% • Organic operating profit up 2% • Favourable currency movements led to reported growth of 5% in net sales and 6% in operating profit • eps pre-exceptionals up 13% • Free cash flow of £2b
Slide 4: Actions taken to make the business stronger
ACTIONS TAKEN TO MAKE THE BUSINESS STRONGER • Marketing spend increased ahead of net sales • Focus on building first class consumer goods sales capabilities • Improving brand positions • Successful execution of restructuring programmes • Exceptional cash flow and improved returns on invested capital
Slide 5: Resilience in developed markets while developing markets were again the growth engine
RESILIENCE IN DEVELOPED MARKETS WHILE DEVELOPING MARKETS WERE AGAIN THE GROWTH ENGINE Net sales growth*, £m Net sales growth 180 2% 15% 150 10% 120 90 19% 60 30 1% 0 (30) (60) (2)% (90) (3)% (120) North America Europe Asia Pacific Latin America Africa Global Travel Diageo & Caribbean & Middle East Y
Slide 6: Performance in developed markets reflects strength of brands and routes to market
PERFORMANCE IN DEVELOPED MARKETS REFLECTS THE STRENGTH OF DIAGEO’S BRANDS AND ROUTES TO MARKET WHILE DEVELOPING MARKETS WERE THE ENGINE OF GROWTH Developed markets (-2%*) NET SALES • Focused marketing spend • Strong innovation on core brands • Customer focus Developing markets (+11%*) 32% • Strong u
Slide 7: Return to growth in premium segments driven by Scotch in Latin America and Global Travel
RETURN TO GROWTH IN PREMIUM SEGMENTS DRIVEN BY SCOTCH IN LATIN AMERICA AND GLOBAL TRAVEL NET SALES GROWTH* BY SEGMENT £m 75 50 25 0 Value Standard Premium Super/Ultra premium ▲ Volume (1)% 1% 3% 4% ▲ Net sales 5% 1% 3% 4% % of Diageo 2% 65% 25% 8% Year ended 30 June 2010. *Organic growth.
Slide 8: Range of brands across categories delivered overall growth of 2%
OUR RANGE OF BRANDS ACROSS CATEGORIES DELIVERED OVERALL GROWTH OF 2% IN A DIFFICULT ENVIRONMENT Category Net sales Diageo’s Diageo category growth % leading brand performance Scotch 5% 7% 15% 10% Vodka (1)% (4)% 46% 5% Rum 3% 2% 38% Beer 5% 0% 26% 41%
Slide 9: Marketing spend was increased in the second half behind proven campaigns
MARKETING SPEND WAS INCREASED IN THE SECOND HALF BEHIND PROVEN CAMPAIGNS AND CATEGORY STRENGTH FY09 H1 H2 FY10 % increase (9)% (5)% 14% 3% % of net 14.3% 13.9% 15.2% 14.5% sales Years ended 30 June.
Slide 10: Leveraging digital to drive new consumer connections
LEVERAGING DIGITAL TO DRIVE NEW CONSUMER CONNECTIONS
Slide 11: Diageo's innovation delivers access to four major growth opportunities
DIAGEO’S INNOVATION DELIVERS ACCESS TO FOUR MAJOR GROWTH OPPORTUNITIES Winning in developing markets Driving growth in developed markets Premiumising our brands Sustaining what we’ve launched
Slide 12: Enhancing sales capabilities with increasing focus on customers and shoppers
ENHANCING OUR SALES CAPABILITIES WITH INCREASING FOCUS ON CUSTOMERS AND SHOPPERS IMPROVING PERFORMANCE WITH KEY Growth strategy in the on-trade GLOBAL CUSTOMERS • Implementation in first 175 pubs in just 14 weeks Net sales growth, % 17.2 • Diageo beer sales +17% in F’09 F’10 top 100 accounts • Grown
Slide 13: Significant steps to build a more efficient organisation
WE HAVE TAKEN SIGNIFICANT STEPS TO BUILD A MORE EFFICIENT ORGANISATION • The restructuring programmes delivered a leaner cost base • Increased investment in Scotland drove supply efficiencies • North American wine restructuring improved returns • The US Virgin Islands rum production is on track to p
Slide 14: Diageo's financial strength was enhanced in a challenging year
DIAGEO’S FINANCIAL STRENGTH WAS ENHANCED IN A CHALLENGING YEAR • Exceptional cash performance • Broadly maintained margins with strict control of costs • Accessed debt markets to optimise long term interest charge • Pension deficit funding addressed • Recommending 6% increase in final dividend
Slide 15: Summary: Strength and agility to improve performance
SUMMARY Strength and agility to improve performance • F10 was challenging and characterised by variability • Agility of response delivered a strong performance – particularly in H2 • Recovery will be variable – already seeing this trend • Confidence in our inherent strengths as a business • Guidance
Slide 16: 2010 Preliminary Results
2010 PRELIMINARY RESULTS 26 AUGUST 2010
Slide 17: 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