UK – Diageo, the owner of the iconic Johnnie Walker and Guinness brands reported a 4.2% growth in net sales to £7.2 billion (US$9.35bn) during its first half ending 31 December, 2019.
The alcoholic beverages leader saw its operating profit hit £2.4 billion (US$3.12bn), an increase by 0.5%, driven by organic growth offset by unfavourable exchange, exceptional operating items and acquisitions and disposals.
Diageo noted that all regions contributed to broad based organic net sales growth, up 4.2%, with organic volume up 0.2%.
The company’s organic operating profit grew 4.6%, ahead of organic net sales, propelled by productivity benefits from daily cost efficiencies and strong price/mix, partially offset by cost inflation and upweighted marketing investment
Basic earnings per share (eps) during the six months was 79.2 pence, a 2.1% decrease due to prior year exceptional gains. Pre-exceptional eps grew 4.2% to 80.2 pence, driven by higher operating profit and the capital return programme.
During the half, the Diageo returned £1.1bn (US$1.43bn) to shareholders via share buybacks, as part of the company’s plan to return up to £4.5 bn (US$5.86bn) of capital to shareholders for the period Fiscal 20 to Fiscal 22.
Ivan Menezes, Chief Executive, commenting on the results said: “Diageo has delivered another good, consistent set of results in the first half, with broad based organic net sales growth across regions and categories.
“We have continued to increase investment behind marketing and growth initiatives, while expanding organic operating margins.
“These results reflect the changes we are making in the business to drive shifts in our culture. They are in line with our current mid-term guidance and have been delivered in the face of increased levels of volatility in India, Latin America and Caribbean and Travel Retail.
For the full year, the beverage giant expects organic net sales growth to be towards the lower end of our 4 to 6% mid-term guidance range and expects organic operating profit to grow roughly one percentage point ahead of organic net sales.
“There is ongoing uncertainty in the global trade environment and we would not be immune from further policy changes,” Menezes added.
“We remain focused on building the long-term health of our brands, supported by data-led insights and a culture of everyday efficiency.
“With the consumer at the heart of the business and with greater agility and discipline in the execution of our strategy, we are growing Diageo in a consistent, sustainable way.”