As reported in The Business Post, Diageo – the Guinness, Tanqueray gin and Smirnoff vodka owner – is responding to a request for information from the US Securities and Exchange Commission (SEC).
The group stated, ‘Diageo is responding to this information request, but is currently unable to assess whether the inquiry will evolve into any enforcement action or, if this were to transpire, to quantify meaningfully the possible loss or range of loss, if any, to which any such action might give rise.’
Responding to a query from The Business Post, a spokeswoman for Diageo said, “We have received an information request and are responding to it.”
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A spokesman from the SEC told the newspaper that the agency “does not comment beyond public filings”.
In 2020, Diageo was fined $5 million after the SEC found that it was “materially misleading” investors about demand for its drinks by concealing sales of unwanted stock to distributors.
The US agency noted that the North American arm of the world’s largest spirit-maker had been charged with violating securities law by failing to disclose key information to shareholders.
It noted that Diageo had pushed distributors, who act as middlemen in America’s ‘three-tier’ system of alcohol sales, to accept excess inventory to help it meet sales targets. Diageo then failed to disclose the overstocks in its most profitable unit to investors, making its market filings ‘materially misleading to investors with respect to its financial results’, according to the SEC.
The SEC accepted an offer from Diageo to settle the charges, which related to the 2014 and 2015 fiscal years, by paying a $5 million penalty and agreeing to cease and desist from further violations, without admitting or denying the SEC’s findings.
Diageo 2021 H2 Results
In its interim results for the latter half of 2021, the drinks giant posted 27 per cent overall growth in organic sales in Europe, with this territory contributing 22 per cent of Diageo’s reported net sales.
It recorded 44 per cent growth in beer sales in Europe, while spirit sales grew by 27 per cent.
Diageo posted an overall operating-profit rise of 22.5 per cent, to £2.7 billion, in the six months to 31 December, while reported net sales grew by 15.8 per cent, to £8.0 billion.