By Andy Young

Diageo has reported an unexpected decline in sales for the last quarter and for the nine months of the financial year so far.

In the nine months ended 31 March 2015, net sales declined 0.3% on an organic basis and were down 0.7% in the quarter, with volume down 1.7% in the nine month period and 0.8% in the quarter.

Declines in Asia Pacific as well as Europe plus Latin America and Caribbean offset the growth that Diageo experienced in North America and Africa.

In reporting the figures, Diageo said: "Asia Pacific performance in the quarter was broadly in line with the first half as net sales in South East Asia continued to be impacted by the decision to reduce inventory levels held by distributors.

"In addition, regulatory changes to the sale of beer in the off trade are to be introduced in Indonesia and this impacted performance in the quarter. In the Middle East, political tensions and Diageo\'s decision to hold prices resulted in a decline in net sales in the quarter.

"In mainland China, net sales grew 13%, driven by the recovery of Diageo\'s baijiu business."

Ivan Menezes, chief executive of Diageo said that the figures highlighted the tough conditions facing the company in both established and emerging markets.

Menezes said: "Our performance in the quarter reflects continued tough conditions in the emerging markets and subdued consumer demand in some developed markets. However it also reflects the actions we have taken to ensure we are building a stronger business. Of key importance is that depletions continue to outpace shipments as we embed our sell out culture.

"In addition, our decision to destock some wholesale channels in South East Asia and West LAC will improve our ability to track consumer and customer trends and reduce future volatility.

"Our route to consumer focus, momentum in reserve and successful innovations have each contributed to building a stronger business although lower inflation and weak economies will lead to subdued net sales growth in the current year despite these improvements."

Menezes added that despite the sales result so far this year, Diageo will continue to strengthen and will improve its performance in the future.

"We will continue to strengthen Diageo. We are investing in our brands, enhancing our route to consumer, introducing great innovations such as Crown Royal Regal Apple and Orijin, winning in reserve and focusing on cost and cash. We can realise Diageo\'s full potential and deliver our performance ambition," Menezes said.

Diageo Australia was contacted but told TheShout that they do not comment on the company\'s quarterly results.

Source | The Shout.