* Diageo Q1 sales up 3 pct; below analysts' estimates
* SABMiller Q2 lager volume up 3 pct, above expectations
* China weighs on Diageo, Remy but not SABMiller
* SABMiller, Diageo's shares up; Remy Cointreau down
By Martinne Geller
LONDON, Oct 17 China's crackdown on corruption,
and with it luxury gift-giving, has again hit quarterly sales of
spirits, European drinks groups Diageo Plc and Remy
Cointreau SA said on Thursday.
In contrast, brewer SABMiller Plc said sales of
lager in the last three months jumped 10 percent by volume in
China, one of the markets that helped the maker of Peroni and
Grolsch beers post a 6 percent rise in net sales by value, up
from a 2 percent rise the previous quarter.
"We see this as a solid result in tough market conditions,"
said Numis Securities analyst Wyn Ellis.
Stifel Nicolaus analyst Mark Swartzberg also said SABMiller
was "navigating better than Diageo".
Diageo, the world's biggest spirits company as well as the
maker of Guinness and Red Stripe beers, posted a 3.1 percent
rise in sales for its first quarter, ended Sept. 30, which
analysts said fell short of their expectations for a 4 percent
rise. Sales rose 5 percent in the previous quarter.
Meanwhile Remy, which generates 40 percent of its operating
profit from cognac sales in China, said wholesalers were
reducing inventories after sales fell short of expectations
during the Chinese New Year.
Remy said revenue declined 5.3 percent on a like-for-like
basis to 294.4 million euros ($397.2 million) in the three
months to Sept. 30, its second quarter, compared with a 2.3
percent decline in the previous quarter.
Remy's shares were down 3 percent at 71.48 euros by 1239
GMT, when shares in Diageo were up 0.3 percent at 1944 pence and
shares in SABMiller were up nearly 4 percent at 1358 pence.
Despite the slowdown in the last three months, Diageo stood
by its medium-term outlook calling for annual sales growth of 6
But several analysts questioned whether the maker of Johnnie
Walker whisky and Smirnoff vodka would be able to meet it.
"We would be sceptical of Diageo delivering that ... and
expect consensus sales estimates to drop," said analysts at
While Diageo's sales in the last quarter rose 10.9 percent
in Latin America and the Caribbean and 5.1 percent in North
America, they grew only 1.3 percent in Africa, Eastern Europe
and Turkey and 0.6 percent in Asia Pacific - markets whose
growth drinks firms have been relying on as austerity-hit
Western Europe struggles.
Sales in Western Europe fell 1.1 percent. Other particular
problem areas were Russia, where the company faced tough
comparisons with double-digit growth a year ago, and Nigeria
and Ghana, which the company said should improve later this
A recent weakening of various currencies against the U.S.
dollar has also hit results. Diageo, which made a net profit of
2.59 billion pounds ($4.13 billion) in the year to June 30, said
that, based on spot rates, foreign exchange factors would reduce
2014 operating profit by 165 million pounds.
SABMiller also said foreign exchange would hurt its results,
but noted that its financial performance was in line with
In the quarter ended Sept. 30 revenue rose 4 percent in
Latin America, 3 percent in North America and 5 percent in
Asia/Pacific. It rose 12 percent in Africa and was flat in
"Despite current prevailing uncertainties about developing
market economies, we remain confident in the long term growth
prospects for the group," said Chief Executive Alan Clark.