Diageo reports strong half-year financials with 18.4% rise in net sales and growth across all regions

UK – Diageo, the brand owner of Johnnie Walker, Guinness, Tanqueray, and Smirnoff, has posted a bullish half-year performance with a rise in net sales and growth across all regions.

Its net sales had an 18.4 rise to £9.4 billion, primarily reflecting strong organic net sales growth as well as favorable impacts from foreign exchange, mainly due to the strengthening of the US dollar.

Growth was delivered across most categories, primarily Scotch, Tequila, and beer, while Diageo’s “premium-plus brands” contributed 57% of reported net sales and drove 65% of organic net sales growth.

According to Diageo, organic net sales grew 9.4%, with growth in all regions enabled by its diversified footprint, advantaged portfolio, and strong brands and underpinned by favorable industry trends of premiumization.

Diageo chief executive Ivan Menezes said: “We have made a strong start to fiscal 23. Organic net sales grew 9%, with growth across all regions, organic volume grew 2%, and organic operating profit grew 10%. In a challenging cost environment, our organic operating margin increased 9 basis points whilst we also continued to invest for the future.”

“We are investing in world-class brand building, digital and data capabilities, and our ambitious 2030 sustainability plan to create a stronger and more resilient business for the long term. As we look to the second half of fiscal 23, whereas the operating environment remains challenging, I remain confident in the resilience of our business and our ability to navigate volatility.” 

The results show how Diageo has gained or held a share in 75% of the total net sales value in its measured markets as well as having delivered targeted price increases across all regions.

Menezes believes Diageo is well-positioned to deliver its 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 23 to fiscal 25.

Meanwhile, the company has revealed it provided a £1 billion (US$1.2 billion) credit facility to two of its pension funds amid the UK liquidity crisis last year.

The British alcoholic beverage company disclosed the interim payment, which was made in October, in its interim results.

The £1 billion was split into two separate agreements, with £850 million for the Diageo Pension Scheme and £150 million for the Diageo Lifestyle Plan. The provision was made “to support temporary liquidity challenges until 29 December 2022,” the update said.

As of March 31, the Diageo Pension Scheme had £6.8 billion in assets and a £752 million deficit. The Diageo Lifestyle Plan had £433 million in assets and a £14 million deficit as of Jan. 1, 2021 — the most recently available information on the pension fund website.

However, in the new update, the alcoholic beverage behemoth said as of Dec. 31, “the outstanding balance due from the scheme under the credit facility” was zero.

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