UK – British multinational alcoholic beverage company, Diageo, has reported a 10.7% rise in net sales for the fiscal year 2023 to £17.1 billion (US$ 18.78Bn), primarily reflecting strong organic net sales growth and favorable impacts from foreign exchange.
The maker of Johnnie Walker, Tanqueray, and Guinness sustained a 5.1% increase in operating profit. The group’s business in North America, Europe, and Asia Pacific posted an 11% net sales surge to £663milion (US$728.17M), while North America’s 4% volume growth.
Africa had an 8% volume growth with a 1% growth in net sales to £ 17 million (US$ 18.67M) while Latin America and Caribbean posted a 3% volume growth and a double-digit net sales growth of 18% to £ 274 million.
Debra Crew, Chief Executive, said: “We have delivered strong fiscal 23 full-year results, with organic net sales growth of 6% and organic operating profit growth of 7%, both within our medium-term guidance. We expanded the organic operating margin by 15 basis points in a challenging cost environment while continuing to invest in the business.”
“These results demonstrate Diageo’s ability to consistently deliver resilient performance, even in challenging macro environments. I want to thank my colleagues, nearly 30,000 globally, for their dedication, creativity, and agility in delivering these results. “
She added that the company drove double-digit organic net sales growth in scotch, tequila, and Guinness, with its premium-plus brands contributing 57% of overall organic net sales growth.
Diageo attributed its expanded margin in its 2023 financial year to “disciplined cost management”. It saved £450m in the year, up from its historic average of £400m in savings annually.
As well as savings made in areas like procurement, logistics, and manufacturing, marketing effectiveness was highlighted as an area where savings were made.
Globally, the alcoholic giant believes it gained or held a share in over 70% of total net sales value in its measured markets in fiscal 23.
Looking ahead to fiscal 24, Diageo expects operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty.
Crew, who replaced long-serving boss Ivan Menezes earlier than expected following his death in June in the wake of surgery on a stomach ulcer, said her near-term opportunities to drive the business focus on bolder and faster innovation, stepping up operational excellence to meet consumers’ evolving tastes and preferences while driving scotch, tequila, and Guinness.
In the first half of fiscal 24, despite a tougher comparator, the company forecasts a gradual improvement from the second half of fiscal 23 in organic net sales and a further acceleration in the second half of fiscal 24, given the softer comparator.
In a challenging, albeit moderating, inflationary environment, Diageo continues to expect organic operating margins to benefit from premiumization trends and operating leverage while investing strongly in marketing.
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