Diageo PLC (LSE:DGE), the world's largest spirits maker, has reported strong growth in sales and profits at the interim stage benefiting from favourable currency movements, higher prices, and consumers drinking more premium brands.
The Johnnie Walker owner reported net sales of £9.4bn in the six months to 30 December 2022, up 18.4% with growth driven by its “diversified footprint, advantaged portfolio, strong brands and underpinned by favourable industry trends of premiumisation.”
Operating profits grew by 15.2% to £3.2bn although the operating margin declined by 92 basis points (bps) with organic margin expansion more than offset by exceptional operating items and foreign exchange, the company said.
The FTSE 100 listed group said price increases and supply productivity savings more than offset the impact of absolute cost inflation on gross margin.
Growth was delivered across most categories, primarily scotch, tequila and beer with premium-plus brands contributing 57% of reported net sales and driving 65% of organic net sales growth.
EPS rose to 100.9p from 84.3p last year and a dividend of 30.83p, up 5%, was declared. Diageo pledged to return up to an additional £0.5bn of capital to shareholders in fiscal year 2023.
In the results statement, Ivan Menezes, Diageo chief executive, said: “As we look to the second half of fiscal 2023, whilst the operating environment remains challenging, I remain confident in the resilience of our business and our ability to navigate volatility.
“We believe we are well-positioned to deliver our medium-term guidance of consistent organic net sales growth in the range of 5% to 7% and sustainable organic operating profit growth in the range of 6% to 9% for fiscal 2023 to fiscal 2025.”