SHARES in Diageo fell more than 4pc yesterday after the drinks company reported lacklustre half-year results, with the Irish market continuing to weigh on the company.
For the six months up to December 31, the maker of Guinness, Baileys and a host of other brands, said organic sales rose by 4pc, compared with the expected 4.5pc, while 'organic profit' rose 2pc, compared with an expected 6.5pc.
The Irish business continued to struggle, with net sales declining by 5pc. Guinness net sales fell by 8pc due to continued falls in the on-trade, but market share remains constant at 32.5pc.
In a statement, Diageo said the drinks market in Ireland continued to decline over the last six months, but the rate of decline was slowing.
"The economic conditions continue to depress the drinks market. Latest volume data show that both long alcoholic drinks and spirits were in average decline, across the island. LAD fell 2.8pc while spirit volumes slipped 2.6pc, although the rate of decline has slowed. The shift from on-trade to off-trade has continued as off-trade beer has grown 3.7pc whilst on-trade beer and spirits have declined by 5.7pc and 7.3pc respectively." Unsurprisingly, given the problems in Ireland, Guinness's worldwide volumes fell by 3pc.
In contrast, Baileys returned organic growth of 3pc, driven by the North American and international market. In Europe, performance was negatively impacted by the slowdown in southern Europe and Iberia, where liqueurs suffered disproportionately, but Britain and Australia both grew volume.
"Diageo's business in Ireland is proving resilient despite the difficult economy," the company said. "We have grown share for the last several years and maintained our position as the leading total beverage alcohol business with 42pc of the alcohol market."