Sources and tags:

• Financial Statements
• USA

In the nine months ended 31 March 2009 net sales were flat against the comparable period on an organic basis. In the quarter ended 31 March 2009 net sales declined by 7% on the same basis, driven primarily by the planned stock reductions in Diageo’s US spirits and wine distributors where stock at 31 March 2009 was approximately one million cases lower than at 31 December 2008.

On a reported basis net sales grew by 16% in the nine months ended 31 March 2009 and by 11% in the quarter ended 31 March 2009, against the comparable prior period in each case. Growth was mainly driven by the impact of exchange rates movements since the comparable period.

The only material change in the financial position of the group was the liability in respect of the interim dividend. Net assets were £4,192 million at 31 March 2009, having been £4,616 million at 31 December 2008.

Paul Walsh, Chief Executive of Diageo commented:

‘As we anticipated trading in markets around the world has weakened in the second half of the fiscal year. In particular there has been a significant decline in the Russian market from the beginning of January and the Global Travel Retail business continues to be adversely affected by the economic conditions. However, through our actions, including the reduction in trade stock levels which we orchestrated across many markets in the first half and delivered in our US spirits and wine channel in the third quarter, our focus on marketing efficiency and the implementation of our restructuring programme, we are taking the steps necessary to put ourselves in a position to emerge from this global downturn as an even stronger business.

‘Despite this more challenging trading environment we continue to forecast organic operating profit growth for the year ended 30 June 2009 in the range of 4% to 6%. Continued positive exchange rate impacts and the lower tax rate mean that growth in reported eps will be double digit.’

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