Growth for Diageo but US market remains weak
The company posted 0.3% organic growth in net sales, helped by strong Guinness demand in Ireland and the UK
Diageo has this week beaten third-quarter sales forecasts, despite tough trading conditions in North America that new CEO Dave Lewis said would be his biggest challenge to reviving growth.
The company posted 0.3% organic growth in net sales, helped by strong Guinness demand in Ireland and the UK and stocking up in Latin America and the Caribbean ahead of the soccer World Cup.
The results are good news for Lewis with shares rising more than 6% in early trade.
Tough US Market
It is feared that new Diageo CEO Dave Lewis will have a tough job on his hands tackling the North American market
However, the British company is struggling in the US, it’s biggest market with North Amercian sales down 9.4%.
Lewis, former Tesco CEO, has been drafted in to turn around the company’s fortunes, due to his reputation for extreme cost-cutting and earning him the nickname, Drastic Dave.
Announcing the results, Lewis said: “North America remains our biggest challenge, where market conditions are soft and our offer needs to be more competitive. Actions are already underway to address this”.
Lewis, who is only in the job since January, has raised hopes of a turnaround as he has already cut its sales forecast and halved the interim dividend in February and has said he will set out a full strategy in August.
However, it is thought that Lewis will face a tough challenge due to a decrease in demand for spirits globally and the Iran war’s impact on energy prices.
