Diageo Share Discussion Threads

[pmeldrum] 24/6/2009 17:10

Cup and handle ?

[waldron] 20/6/2009 16:05

Diageo Favors Raising Its Stake In Moet Hennessy, F&W Reports
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By Thomas Mulier

June 20 (Bloomberg) -- Diageo Plc would be interested in raising its stake in Moet Hennessy if LVMH Moet Hennessy Louis Vuitton SA agrees, Finanz & Wirtschaft reported, citing Gilbert Ghostine, head of Diageo's European business.

Diageo Chief Executive Officer Paul Walsh has "made it clear" the drinks company would be willing to increase its 34 percent stake at the "correct" price, Ghostine told the newspaper.

To contact the reporter on this story: Thomas Mulier in Geneva at [e-mail].

Last Updated: June 20, 2009 04:22 EDT

[brain smiley] 10/6/2009 09:12

this is hopeless !

[donaceace] 09/6/2009 11:08

not yet.... plan in progress :)

regards

padlock

[brain smiley] 09/6/2009 11:07

still dull. sack the board.

[sundaymonday] 05/6/2009 19:08

upgraded today

[gateside] 08/5/2009 07:31

Diageo

Our view: Hold for now

Share price: 881p (+26.5p)

There were drinks all round at the world's biggest distiller, Diageo, yesterday. The company's shares jumped 3.1 per cent after it reconfirmed full-year operating profit growth of between 4 and 6 per cent, even though the first nine months of the year have produced flat sales.

The maker of Johnnie Walker whisky and Smirnoff vodka has suffered from weaker demand from Russia, but that should not worry investors if the analysts at Credit Suisse are to be believed. They argue that the worst is behind the company: "We believe Diageo came to terms with the issue of destocking and down trading earlier and more aggressively than its main competitors, and this will bear fruit going forward now that the destocking cycle is nearing an end," they say, adding that the shares will outperform the peer group.

We do not disagree that the group is solid, but would prefer to see some numbers to support the above thesis. The group's shares are undervalued, but we would be tempted to wait a little longer before piling in. Hold for now.

[grupo guitarlumber] 07/5/2009 09:23

UPDATE: Diageo 3Q Core Sales -7%, Keeps Fiscal Year Profit Guidance





(Adds further details and analyst comments.)


By Michael Carolan and Lilly Vitorovich
Of DOW JONES NEWSWIRES

LONDON -(Dow Jones)- Drinks giant Diageo PLC (DEO) Thursday reported a 7% fall in fiscal third-quarter core sales as markets weakened in the second-half of fiscal 2009, but reiterated its annual profit guidance.

Chief Executive Paul Walsh said 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, Walsh assured investors that it is "taking the steps necessary" to emerge from the global downturn as a stronger business.

Diageo - the world's biggest alcoholic-drinks producer by volume - said core sales, which strips out the effect of acquisitions and disposals, fell 7% in the quarter ended March 31 from the same period a year earlier.

The drop was largely due to the planned stock reductions in Diageo's U.S. spirits and wine distributors where stock was approximately one million cases lower than at the second-quarter of fiscal 2009. That compares with a 3% rise in core sales in the first six months of fiscal 2009 and 6% rise in the first quarter.

French drinks group Pernod Ricard SA (RI.FR) last month reported a 12% fall in core sales for the three months ended March 31 from a year earlier after distributors and wholesalers cut stocks.

Diageo - the maker of Guinness stout, Smirnoff vodka and Johnnie Walker scotch - maintained its fiscal 2009 guidance for core operating profit growth in the range of 4% to 6% - albeit well down from last year's 9% rise.

With most of its sales generated outside the U.K., Diageo said the sterling's weakness against major currencies and the lower tax rate mean that growth in reported earnings per share will be double digit.

However, Diageo's net assets fell to GBP4.19 billion at the end of March from GBP4.62 billion in the second quarter of fiscal 2009, primarily due to its recent interim dividend payment of a 13.9 pence a share.

On a reported basis, net sales rose 11% in the third quarter from a year ago, mainly driven by the impact of exchange rates movements since the comparable period.

In February, Diageo cut its full-year profit guidance and launched a new cost cutting plan after both sales and profit growth slowed sharply in its second quarter.

Diageo's trading update should be "well received, just out of relief more than anything," Shore Capital's Andrew Blain said.

"Following Pernod's update a few weeks ago, we knew that 3Q was a difficult quarter for the spirits guys," he added. Diageo's reiteration of FY profit guidance should assure the market, said Blain, who retains his hold rating.

In early morning trade on the London Stock Exchange, Diageo shares were up 22 pence, or 2.6%, at 877 pence, in a higher market.

Company Web site: www.diageo.com

-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; [e-mail]

[ariane] 26/4/2009 09:03

source: the telegraph

Diageo looking to seize its champagne moment
Paul Walsh is targeting the biggest prize of his career. But is Bernard Arnault, chairman of LVMH, willing to negotiate?

By Jonathan Sibun
Last Updated: 7:31PM BST 25 Apr 2009

Waking in the luxurious surroundings of Gleneagles Hotel on Wednesday morning, Paul Walsh might have finally dared to dream that this could be the year. The Diageo-owned hotel had the day before played host to the drinks group's annual strategy meeting, a time for the Smirnoff owner's executives to gather and discuss their plans for the coming 12 months.

A drive to restore Diageo as the undisputed champion of the drinks market will have been at the centre of those discussions, and for Mr Walsh and his colleagues a significant acquisition will have been near the top of the wish list.


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After Kauto Star's emphatic win... If only these beasts could talkHeading to bed after a few glasses of his favourite Johnnie Walker Blue Label on Tuesday night, Mr Walsh will have been doubtful of the chances of acquiring the company at the top of that list, LVMH Moët Hennessy Louis Vuitton. Waking to the morning newspapers on Wednesday morning, that doubt might well have changed to hope.

"Diageo mulls bid for Krug" blared the headline as the news broke that the UK company's long-held interest in its French rival might progress beyond the usual amorous glances.

LVMH's spinners went into action, rushing out a denial that the company – which owns brands from Dom Pérignon and Krug to Hennesy cognac – was in talks, but the statement left room for ambiguity.

Sources suggested that Bernard Arnault, the teetotal French billionaire behind LVMH, had been mulling a sale of the company's wine and spirits division. Whether talks had been held with Diageo or not was immaterial – the French company was well aware of its British rival's interest. A flirtatious comment was all it would take. There was no doubt that Mr Walsh would jump at any chance to take the much-coveted prize.

LVMH already boasts a portfolio of catwalk staples, from Louis Vuitton to Givenchy and Marc Jacobs. Operating in the heat of the recession and aware of the pressures facing the global luxury fashion sector, Mr Arnault realised that this could be his best chance to launch bids for a handful of coveted brands from Hermès to Armani.

"Moët Hennessy is not Arnault's great love, Vuitton is his love," said a drinks industry source.

A sale of Moët Hennessy for more than £10bn would give Mr Arnault – ranked by Forbes as the world's 15th richest man – the necessary funds.

For Mr Walsh, the opportunity has long been appealing. With one swoop he would be able to re-establish Diageo's credentials as the world's premier drinks company, leaving close rival Pernod Ricard in its wake.

And for Mr Walsh personally, the acquisition would allow the Lancastrian to secure his personal legacy and put to bed criticism of Diageo's overly conservative acquisition strategy.

That Mr Arnault and Mr Walsh had discussed Diageo's interest in Moët Hennessy was nothing new.

Diageo owns a 34pc stake in the business, a position that grants Diageo finance director Nick Rose and international head Stuart Fletcher seats on its rival's board and regular meetings with Mr Arnault and Moët Hennessy chief executive Christophe Navarre.

"The conversation has been going on for years," said a source close to Diageo. "Walsh has made it perfectly clear that whenever Arnault is ready to sell, Diageo is a buyer."

Should a deal come to light – and many industry insiders believe it is when rather than if – it would mark the latest chapter of Mr Arnault's relationship with Diageo.

Diageo was formed from the merger of Grand Metropolitan and Guinness in 1997. However, Mr Arnault's intervention nearly led to a very different conclusion.

Mr Arnault was a 14pc shareholder and board member at Guinness and did his best to upset the £24bn merger. Having angrily tendered his resignation from the Guinness board, the Frenchman proceeded to build a stake in GrandMet and proposed a three-way tie-up that would include Moët Hennessy.

Mr Arnault failed to get his way, but following months of negotiation he won his pound of flesh in the form of a £250m settlement designed to "bury the hatchet".

LVMH ended up with an 11pc holding in Diageo while the UK company retained its existing stake in Moët Hennessy. While LVMH slowly sold off its shareholding, Diageo has used its stake to build a number of joint ventures across the world, selling Moët Hennessy's products through its distribution arms.

While successful, the agreement presents its own challenges, say industry insiders. While Diageo is allowed to peddle some of the world's most sought after brands, it does not control them.

"The minority stake gives Diageo very little influence over how the business is run," explained one banker.

"In two of the wine and spirits industry's most important sectors they are essentially a passenger, serving as little more than a distributor."

For Mr Walsh, timing is also key. Times are tough in the drinks trade. Champagne and cognac are among the most volatile drinks categories, suffering sizeable falls in volumes during a recession.

"That makes it an opportune time for Diageo to strike, but also significant is that other players cannot get involved," said a banker. "Bacardi is finding life tough and Pernod is deleveraging."

Mr Walsh claims to have been preparing Diageo for such an opportunity for some time.

While rivals including Pernod Ricard have been willing to pay top dollar to secure trophy assets such as Absolut Vodka, Mr Walsh has chosen to keep his powder dry.

"These times will create winners. Those who can seize the right opportunity will do very well, and we intend to be one of them," he said last December.

Industry watchers suggest the time for action is now. While other assets remain on Diageo's potential shopping list – including United Spirits in India and other medium- tier assets – LVMH remains near the top.

"It is a must-do deal if the option comes up," said the drinks analyst. "Walsh will feel, quite rightly, that he has done a good job operationally. But ego is human nature and he might want to seal his legacy with a blue-chip deal."

The difficulty for Mr Walsh is that he will know that the fate of any deal is not in his hands. Mr Arnault looks likely to retain the upper hand in any negotiations – LVMH's cash-to-debt position means it is in a strong position.

Mr Arnault is famously canny when it comes to the M&A market – his part in the Diageo merger proved that – and there were suggestions last week that news of Diageo's interest in Moët Hennessy had been leaked to flush out any fashion brands that might be willing to enter takeover talks. Such a theory underlines Diageo's main challenge – a takeover of Moët Hennessy will only take place if Mr Arnault is willing to sanction it.

"The key question is whether Arnault can line up a deal in the luxury goods sector," one analyst said last week. "He's simply not going to sell and then put the money on deposit. If he does sell it will only be at the right price, and that price will be high."

[bikeaholic] 05/3/2009 10:32

Bit quiet in here..........Looks like Scotland is following the US but instead of calling it an extra tax on booze they call it minimum cost.

Polititians?????.........Rotton to the core!!!!!

[waldron] 23/2/2009 10:52

Bar Tabs May Climb as U.S. States Consider Raising Booze Taxes
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By Andrew Cleary

Feb. 23 (Bloomberg) -- Heineken and Johnnie Walker fans from New York to Oregon could be paying more soon. Lawmakers need to balance state budgets, and alcohol companies say drinkers will have to soak up any new taxes.

Kentucky last week approved a new 6 percent levy on all store-bought beer, wine and spirits, and at least 18 other states are considering proposals to charge drinkers more for liquor to narrow deficits. New York plans to more than double its beer and wine tax, while Oregon may increase its surcharge to $49.61 per 31-gallon (117-liter) barrel from $2.60.

"We'll fight this hard, but if states do raise taxes we'll have to pass that increase on," Ivan Menezes, who heads distiller Diageo Plc's U.S. business, said in an interview.

Diageo and Pernod Ricard SA say lower demand in the world's largest market leaves little room for them to swallow tax hikes, and Heineken CEO Jean-Francois van Boxmeer says the brewer will "always pass higher excise duty directly to consumers." Spirits sales in the $181 billion U.S. alcoholic beverages market rose the least in seven years in 2008, and beer shipments fell to 2005 levels.

"There are a lot of individual states agitating to hit this industry," said Trevor Stirling, a Sanford C. Bernstein analyst in London who estimates average alcohol retail prices in the U.S. may rise as much as 2 percent because of state taxes.

The taxman may compound the stock-market damage wrought by waning demand. The 10-member Bloomberg Europe Beverages Index slid 40 percent in the last 12 months. Pernod stock is down 33 percent, Heineken tumbled 40 percent and Diageo fell 17 percent.

Wild Turkey Protest

Kentucky's tax increase prompted Jimmy Russell, the master distiller of Pernod's Wild Turkey, to pour a bottle of bourbon on the state Capitol's steps in protest. At brewer MillerCoors, "we don't think an economic recession is anytime to levy a tax against Joe Sixpack," spokesman Pete Marino said.

The 41 states facing budget shortfalls may not care as they struggle for health and education funds. New York Governor David Paterson, facing deficits as high as $17 billion, wants $63 million a year from an extra 24-cent tax per beer gallon.

That tax is "necessary" for the state's fiscal plan, said Matt Anderson, spokesman for the governor's budget office. "Once the deficit reached that magnitude, it became clear that spending reductions alone would not be enough to bring the budget back into balance without devastating vital services."

Pernod chief Pierre Pringuet says "devastating" would be the word to describe the effect of higher booze levies, both for distillers suffering lower demand and governments that will raise less than they think as tax-weary drinkers sober up.

"We'll definitely raise prices accordingly" to compensate for tax increases, he said in a Feb. 13 interview.

Sluggish Sales

Pernod, the Paris-based maker of Ballantine's whiskey and Martell cognac, said first-half sales excluding acquisitions fell 2 percent in the U.S., where it gets a quarter of its profit. U.S. sales of Absolut vodka fell 2 percent by volume.

Diageo cut its forecast on Feb. 12 as demand for Johnnie Walker whisky and Smirnoff vodka stalled. The London-based liquor maker relies on the U.S. for a third of its earnings. Heineken said Feb. 18 that full-year sales at its U.S. unit declined 2 percent, in part because the company raised the price of its eponymous brand. Anheuser-Busch InBev NV, which has half the U.S. beer market, declined to comment.

If the last major recession-time tax increase is anything to go by, companies are in for more pain. A federal increase in 1991 doubled beer levies and raised spirits tax to $13.50 per gallon from $12.50, and led to volume declines of as much as 6 percent, says Bernstein's Trevor Sterling.

Distillers would have it especially tough, Stirling said. "They have less flexibility on price than the brewers."

Federal 'Big Whammy'

State taxes may not be the only threat. President Barack Obama might be tempted to raise federal levies to offset the aftermath of his $787 billion economic-stimulus bill, though observers such as Robertson Williams, senior fellow at the Tax Policy Center think tank in Washington, say it's unlikely.

"Any federal increase that singled out alcohol producers would only depress demand and would not be consistent with trying to revive the economy," while being "trivial" in terms of plugging the budget hole, he said.

European drinks analysts, however, refuse to rule it out, with Bernstein's Stirling calling federal action the "big whammy" danger to brewers and distillers.

Increasing all federal taxes to a standardized $16 per proof gallon would raise an extra $28 billion in revenue over five years, the Congressional Budget Office said in its 'Budget Options' report in December. Total federal alcohol revenue was $7.4 billion in 2008.

"The tougher the U.S. economy gets, the greater the chance of a federal excise duty hike," London-based UBS AG analyst Melissa Earlam said. "We believe an increase could happen in the second half of 2009 or early 2010, given the need to fund the deficit."

To contact the reporter on this story: Andrew Cleary in London at [e-mail].

Last Updated: February 22, 2009 19:01 EST

[mack7heknife] 18/2/2009 18:06

hi again !

[thetatrader] 12/2/2009 13:28

Closed short and reversed to long.

[grupo guitarlumber] 10/2/2009 17:14

EARNINGS PREVIEW: Diageo 1st Half Operating Profit Seen +17%





Diageo (DEO): 1H Earnings
Feb. 12 at 0700 GMT
DJSurvey of 10 Analysts
Average Oper Profit: GBP1.65B, up 17%(GBP1.41B in 1H 2008)
Average Revenue: GBP5.01B, up 18% (GBP4.23B in 1H 2008)

Note: While a robust performance is expected following a strong 1Q and aided by currency tailwinds, the market will be looking for any weakness over the key Christmas period. Any signs of trading down to cheaper brands and of destocking in the U.S. will be a negative. Analysts see a cut in FY operating profit growth guidance from the current 7%-to-9% target as a strong possibility. (MIC)


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[scotsman2] 09/2/2009 11:10

I'm a buyer at 850 if we see it

[donutulike] 08/2/2009 17:38

The weakness of the pound will make the numbers look good superficially but the organic growth may disappoint. So could be an initial jump - time to sell? - then rapid decline of some 5-10% over the following days.

[alitak] 02/2/2009 09:24

And the target is? I have a short as a hedge and expect it will retest nov low. I would be surprised if it hits the oct low . I would be adding to my position if we see 800 again.

[thetatrader] 02/2/2009 01:17

DGE Swing Trade
===============


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[wad collector] 23/1/2009 12:59

Quiet BB.When you consider the rest of the market, being 20% below all time high is a strong performance.

[wad collector] 24/12/2008 10:48

Tipped in IC last week.(always worries me that!)

[queeny2] 13/11/2008 16:38

JasRon - quite agree. Very expensive given EM exposures.