Diageo delivers strong half-yearly sales

Diageo today reported strong growth in net sales and operating profit in the half year ended 31 December 2021.

Reported net sales at the leading spirit maker stood at £8 billion, an increase of 15.8 per cent, with strong organic growth partially offset by an adverse foreign exchange impact.

Organic net sales grew 20 per cent, driven by strong double-digit growth across all regions amidst continued recovery in the on-trade and resilient consumer demand in the off-trade.

The company said the growth also underpinned by favourable industry trends of spirits taking share of total beverage alcohol and premiumisation.

Reported operating profit of £2.7bnn represented an increase of 22.5 per cent, primarily due to growth in organic operating profit which rose by 24.7 per cent, with growth across all regions.

The company has seen broad-based growth across most categories, with particularly strong performance in scotch, tequila and beer. Premium plus brands contributed 56 per of reported net sales and drove 74 per cent of organic net sales growth.

“This performance demonstrates our world-class brand building capability, supply chain excellence and agile culture, and reflects the strength of our portfolio across geographies, categories and price tiers,” Ivan Menezes, chief executive, said.

“While we expect near-term volatility to remain, including potential impacts from Covid-19, global supply chain constraints and rising cost inflation, I am confident in our ability to successfully navigate these disruptions through the remainder of the year.”

Menezes said he expects organic net sales to consistently grow over the medium-term, from fiscal 23 to fiscal 25, within a range of 5 to 7 per cent and organic operating profit to grow sustainably within a range of 6 to 9 per cent.

In Britain, net sales increased 19 per cent, primarily driven by recovery in the on-trade and resilient consumer demand in the off-trade.

Spirits grew 13 per cent, with broad-based growth across vodka, Baileys and rum, partially offset by a decline in gin. Vodka grew 21 per cent, largely driven by Smirnoff No.21 Red and the launch of Smirnoff Raspberry Crush.

Guinness grew strongly as the on-trade recovered, with net sales growth of over 30 per cent. Ready to drink grew 34 per cent, reflecting positive category momentum and innovation.