Diageo has reported that its performance in the three months to 30 September 2014 was in line with expectations, with organic net sales down 1.5% and volume down 3.5%.
Organic net sales in Europe during the period declined 1.4% which the company said was impacted by declining net sales in Russia and Eastern Europe as a result of weak consumer confidence and the uncertainty arising from events in Ukraine.
In Western Europe net sales declined 1%.
Diageo said that consumer trends across the region were broadly unchanged, however the quarter was affected by a weaker performance in Benelux, following price increases there and continued weakness in Germany which is not expected to improve until the second half.
It reported a 0.1% rise in organic sales in North America, where it stated that consumer trends are broadly unchanged and the performance in the quarter reflected the comparison against a very strong first quarter last year in US Spirits & Wines, partially offset by sale of bulk stocks and a modest rise in stock levels which will be reversed in the next quarter.
Net organic sales in its Asia Pacific division declined 7.4% during the quarter, which it said reflected the decision to reduce inventory levels in South East Asia and the continued challenging trading environment in mainland China.
The company said that net assets increased £0.8bn from £7.6bn at 30 June 2014 to £8.4bn at 30 September 2014, primarily as a result of the profit for the period and the full consolidation of United Spirits Limited (USL), which was partly offset by the accrual for the final dividend payable in respect of the year ended 30 June 2014.
Net borrowings increased £1,997m from £8,850m at 30 June 2014 to £10,847m at 30 September 2014, primarily as a result of the £1,107m consideration paid for an additional 26% investment in USL and the consolidation of net borrowings of USL estimated at £765m.
