GOOD HALF-YEARS FOR SOUTHCORP AND DIAGEO

Published: 23 July, 2008

Two of the world's largest drinks companies, Diageo and Southcorp, have both reported improved performances in their half-year trading statements, although neither feat was without difficulties. At Diageo, a 6% profit growth for the six months to 31 December 2003 was marred by the continuing decline of the RTD sector. Though Smirnoff Ice reported a rise in market share in the sector from 25.6% to 28.4%, sales volumes of the brand fell by 12%. Bell's was another struggler. The brand remains the number one blended Scotch whisky in Great Britain, but volumes declined by 3%. Better news came from the company's wine division, Percy Fox, which put in a strong performance, with Blossom Hill taking over as the bestselling wine brand in the UK off-trade, and Piat d'Or continuing its renaissance, with sales (in excess of 1 million cases) at their highest in the brand's 24-year history. Other strong performers in the Diageo portfolio included: Smirnoff (up 9% in volume); Baileys (up 7%); Gordon's (up 7%); and Pimms (up 34%). In Sydney, Southcorp chief executive John Ballard reported a net profit of A$40.5 million for the six months to December 2003, a notable improvement on the A$5.7 million made by the company in the six months to December 2002. The company was especially pleased by the return to profit of its British and European divisions, which showed a rise in EBITA (earnings before interest, tax and amortisation) from A$1.6 million to A$13.2 million. Ballard's stated intention of improving margins seemed to be paying off in Britain and Europe and Australasia, with average sales revenue per case rising by 10% and 16% respectively, and the company's cost-cutting drive, Project Veraison', had saved A$23 million. Sales revenue per case declined by 2.6% in the US. Total sales revenues were down, too, dropping by 17.4% to A$513.3 million, due to lower case-volumes and the effects of the strong Australian dollar, which cut revenue by A$68.4 million.

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