Diageo PLC (LSE:DGE) said the current year started well with North America performing strongly despite supply chain problems and Europe recovering ahead of expectations after the lifting of Coronavirus (COVID-19) restrictions.
However, the spirits maker expects market volatility to persist in the near term due to potential future waves of COVID-19 and said it is facing rising inflationary pressures, partly because of supply chain constraints.
In a trading statement issued ahead of its AGM, Diageo said its businesses in Africa, Asia Pacific and Latin America and the Caribbean are performing well, while its Travel Retail operation continues to be disrupted.
Off-trade demand is robust and there is good momentum in the on-trade, the company noted.
Organic operating margins are set to benefit from a further recovery in sales volumes, positive channel mix and premiumisation trends in fiscal 2022.
Chief executive Ivan Menezes said: "We have made a strong start to fiscal 22, with organic net sales momentum across all regions. This reflects excellent execution, as we benefit from resilience in the off-trade and continued recovery in the on-trade. However, we expect near-term volatility to remain, including the potential impact of any future waves of Covid-19.”