UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
09 April 2020
Commission File Number: 001-10691
DIAGEO plc
(Translation
of registrant’s name into English)
Lakeside Drive, Park Royal, London NW10 7HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F X
Form
40-F
Indicate
by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule
101(b)(1):
Indicate
by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule
101(b)(7):
Diageo PLC – Trading update – Impact of COVID-19
outbreak
Dated
09 April 2020
Trading update - Impact of
COVID-19 outbreak
On 26 February 2020, we updated on the impact of COVID-19 in
Greater China, certain other Asia Pacific markets and Travel
Retail, mainly in the Asia Pacific region. We are now providing
additional information due to the spread of COVID-19 to most of our
other markets. Widespread containment actions put in place by
governments across the globe in March, including the closure of
bars and restaurants, are having a significant impact on the
performance of our business.
Our people and our stakeholders
The safety of our people remains our highest priority. We have
stringent safety protocols across all sites, including heightened
sanitation measures and restrictions on movement to and from our
sites and all employees who can work from home are doing
so.
We are working closely with our suppliers and customers to minimise
business disruption. We are donating alcohol to make more than
eight million bottles of sanitiser for frontline healthcare workers
around the world, while providing support packages for bartenders
and others impacted by COVID-19 related closures. We will continue
to actively help our industry and communities.
Current trading environment
Social distancing measures, including the closure of the on-trade
channels, have been introduced in most of our markets. We are
tracking changes in consumer behaviour during this time and
adjusting our plans and resources in response.
In mainland China, we are beginning to see a very slow return of
on-trade consumption, as restaurants and bars have started to
gradually re-open. The significant impact on global Travel Retail,
referred to in our 26 February update, has extended beyond Asia
Pacific into other markets in March due to a steep drop in
passenger numbers, as well as new travel restrictions imposed by
many countries.
In North America, where the on-trade channel accounts for
approximately 20% of US Spirits' net sales, most States closed bars
and restaurants in March. In Europe, there have been significant
closures of on-trade premises in most countries. This channel
accounts for approximately 50% of Europe net sales, although the
size of the on-trade channel varies significantly between
individual countries. In both of these regions, we have seen some
pick-up in the off-trade channel (retail stores) in recent weeks,
although it is unclear whether this will be sustained.
In India, a nationwide lockdown has closed the on and off-trade
channels, as well as production facilities across most industries,
including United Spirits' supply operations, for an initial period
of three weeks until 14 April 2020.
In our main markets in Africa, the on-trade channels have also been
impacted, and we have closed two of our production sites in
Nigeria. South Africa has imposed a nationwide lockdown for an
initial period of three weeks until 16 April 2020. Governments
have also placed restrictions on the on-trade in a number of
countries in Latin America and the Caribbean.
Cost mitigation and cash management
In the short term, we are reducing discretionary expenditure and
reallocating resources across the group. As part of these
mitigation measures, we are stopping A&P spend that will not be
effective in the current environment. We are also tightly managing
working capital and deferring discretionary capital expenditure
projects. We are providing an appropriate level of support to our
key suppliers and customers to ensure we are strongly positioned
for a recovery in consumer demand.
Financial guidance
Given the global nature of the COVID-19 pandemic, and the
uncertainty around the severity and duration of the impact across
multiple markets, we are not in a position to accurately assess the
impact of this on our future financial performance. We are
therefore withdrawing our guidance on group organic net sales
growth and organic operating profit growth for fiscal
2020.
Balance sheet and liquidity
We have a strong balance sheet and at 31 December 2019, our
adjusted net debt to EBITDA ratio was 2.8 times. There are no
financial covenants attached to our outstanding short or long-term
debt.
We are taking actions to ensure we maintain good liquidity
including, as previously announced on 24 March 2020,
completing the issuance of new euro and sterling bonds totalling
approximately £1.9 billion. We also have available the
committed bank facilities of £2.8 billion, which are subject
to a single financial covenant of a minimum of two times interest
cover.[1]
Returns to shareholders
On 30 January 2020, we announced an interim dividend of 27.41 pence
per share to be paid to holders of ordinary shares and ADRs on the
register as of 28 February 2020. The ex-dividend date was
27 February 2020 and the interim dividend will be paid to
ordinary shareholders as scheduled on 9 April 2020 and to US
ADR holders on 14 April 2020.
On 25 July 2019, the Board approved a return of capital programme
with up to £4.5 billion to be returned to shareholders over
the three-year period to 30 June 2022. Under the first phase of the
programme, which ended on 31 January 2020, we returned £1.25
billion via share buybacks. We have not initiated the next phase of
the three-year programme and we will not do so during the remainder
of fiscal 2020.
Ivan Menezes, Chief Executive, said:
"During this challenging time, our top priority is to safeguard the
health and well-being of our people, while taking necessary action
to protect our business. I am confident in Diageo's long-term
strategy and our ability to move quickly in this difficult
environment. We will continue to execute with discipline and invest
prudently to ensure we are strongly positioned for a recovery in
consumer demand. I am proud of the resilience and commitment of our
people as they work hard to support our partners, customers and
communities."
For further information please contact:
Investor relations:
Vinod
Rao
+44 (0) 7834 805 733
Andy
Ryan
+44 (0) 7803 854 842
Lucinda
Baker
+44 (0) 7974 375 550
Media relations:
Dominic
Redfearn
+44 (0) 7971 977 759
Jessica
Rouleau
+44 (0) 7925 642 561
press@diageo.com
About Diageo
Diageo is a global leader in beverage alcohol with an outstanding
collection of brands across spirits and beer categories. These
brands include Johnnie Walker, Crown Royal, JeB, Buchanan's and
Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas,
Captain Morgan, Baileys, Don Julio, Tanqueray and
Guinness.
Diageo is a global company, and our products are sold in more than
180 countries around the world. The company is listed on both the
London Stock Exchange (DGE) and the New York Stock Exchange
(DEO).
Celebrating life, every day, everywhere
Cautionary statement concerning forward-looking
statements
This document contains 'forward-looking' statements. These
statements can be identified by the fact that they do not relate
only to historical or current facts. In particular,
forward-looking statements include all statements that express
forecasts, expectations, plans, outlook, objectives and projections
with respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of changes in interest or exchange rates, the availability
or cost of financing to Diageo, anticipated cost savings or
synergies, expected investments, the completion of any strategic
transactions or restructuring programmes, anticipated tax rates,
changes in the international tax environment, expected cash
payments, outcomes of litigation or regulatory enquiries,
anticipated changes in the value of assets and liabilities related
to pension schemes and general economic conditions. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could
cause actual results and developments to differ materially from
those expressed or implied by these forward-looking statements,
including factors that are outside Diageo's control. Any
forward-looking statements made by or on behalf of Diageo speak
only as of the date they are made. Diageo does not undertake
to update forward-looking statements to reflect any changes in
Diageo's expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statement is
based.
An explanation of non-GAAP measures, including organic movements,
is set out on page 49 of Diageo's interim results for the six
months ended 31 December 2019 published on 30 January
2020.
Diageo plc LEI: 213800ZVIELEA55JMJ32
[1] Defined as the ratio of
operating profit before exceptional items, aggregated with share of
after tax results of associates and joint ventures, to net
interest.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Diageo plc
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(Registrant)
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Date:
09 April 2020
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By:___/s/
James Edmunds
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James Edmunds
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Deputy Company Secretary
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