Diageo's FY 2024: Not Out Of The Woods

Hi reader,

Diageo reported FY 2024 earnings this week, which were not great. Earnings portrayed that the company is still immersed in the “bust” portion of the pandemic cycle, although I must say that earnings were probably better under the surface than many people believed them to be. My hunch is that some people saw the market's reaction (the stock was down more than 10% at one point) and judged the earnings based on that. The stock was indeed significantly down, but it somewhat recovered throughout the day:

Expectations are not the best for Diageo right now, but this should not take us by surprise because the company is down more than 40% off highs. I would never have thought expectations would be great down here, to be honest.

Before continuing with the article, don’t forget that I recently shared my analysis on Diageo, you can read that by clicking the button below:

So, without further ado, let’s get on with the numbers.

The numbers

The headline results

Diageo reported weak earnings in 2024, which were still heavily influenced by Latam's poor performance. There are so many moving parts in the company’s numbers that we must dig deeper to understand if weak results are worrying. The company is undeniably suffering two headwinds right now. The first one is somewhat company-induced: the situation in Latam. The second is broad-based weakness in the spirits industry due to the pandemic bust cycle and inventory destocking. Despite all these, organic sales “only” declined by 0.6% and even grew by 1.8% if we exclude Latam…