London-based Diageo, the world's largest liquor producer, reported its 2020 full year sales results on Tuesday, showing that higher demand for its products in North America wasn't enough to offset COVID-19 business impacts in the rest of the world.
The company's fiscal year ended on June 30. Diageo owns brands that include Johnnie Walker, Smirnoff, Baileys, Captain Morgan, Tanqueray, Guinness and Crown Royal.
Total 2020 sales of $15.5 billion were down 8.7 percent from 2019, driven by organic declines of 8.4 percent. The company — which opened its new North American headquarters in New York City in February of this year — showed that net sales of $6.1 million in North America grew by 4 percent in 2020 despite a 2 percent slide in volume. North America comprised 39 percent of the company's total 2020 sales.
Amid the pandemic, Diageo said North America sales from January through June fell roughly 1 percent year-over-year. Far worse conditions in the rest of the world brought total second-half sales down 23 percent.
Full-year organic sales fell by 12 percent in Europe and Turkey (22 percent of total); fell by 13 percent in Africa (12 percent of total); fell by 15 percent in Latin America and Caribbean (8 percent of total); and fell by 16 percent in Asia Pacific (19 percent of total).
Diageo's 2020 net profit of $1.91 billion dwindled from $4.39 billion of a year earlier, largely due to a $1.71 billion writedown related to its business in India, Nigeria, Ethiopia and the Windsor whiskey brand in South Korea — attributing it to challenging trading conditions from the pandemic.
"Fiscal 20 was a year of two halves: after good, consistent performance in the first half of fiscal 20, the outbreak of Covid-19 presented significant challenges for our business, impacting the full year performance,"said Ivan Menezes, Diageo CEO. "We have taken decisive action through the second half of fiscal 20, tightly managing our costs, reducing discretionary expenditure and reallocating resources across the group. We are further enhancing our data analytics and technology tools to rapidly respond to local consumer and customer shifts triggered by the pandemic. We have strengthened liquidity, giving us flexibility to continue to invest effectively in the business for the long term."