Diageo hails strong sales growth in second half of 2021

Diageo hails strong sales growth in second half of 2021

Scotch whisky giant Diageo has reported net sales of £8 billion, an increase of 15.8%, across all UK regions in the second half of 2021.

Organic net sales grew 20.0%, which the firm said was driven by strong double-digit growth across all regions, supported by effective marketing and excellent commercial execution.

Trade was strong in Britain, with an overall sales increase of 19%, including a 13% hike in spirits and a more than 30% rise in Guinness sales in the six months to the end of the year, compared with the same period in 2020.

Diageo said the growth reflected the continued recovery in the on-trade, resilient consumer demand in the off-trade and market share gains, and was underpinned by favourable industry trends of spirits taking a share of total beverage alcohol and premiumisation.

The firm’s operating profit increased by 22.5% to £2.7 billion, and reported operating margin increased 190bps, primarily due to growth in organic operating profit. Organic operating profit grew 24.7%, with growth across all regions.

Net cash flow from operating activities decreased £0.1 billion to £1.9bn, and free cash flow decreased £0.2bn to £1.6bn, primarily due to lapping an exceptionally strong working capital benefit in the first half of fiscal 21.

Ivan Menezes, chief executive, said: “I am very pleased with our financial results, which build on our growth momentum in fiscal 21. We delivered strong organic net sales growth across all regions and operating margin expansion. 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.

“We have made a strong start to fiscal 22. 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.

“Over the medium-term, from fiscal 23 to fiscal 25, we continue to expect organic net sales to consistently grow within a range of 5% to 7% and organic operating profit to grow sustainably within a range of 6% to 9%.”

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