Diageo announces 18% sales growth in 2023 interim results
The British multinational alcoholic beverage company, Diageo, has reported net sales of £9.4 billion in the half-year ending 31 December 2022, an increase of 18.4% on the same period in 2021.
According to Diageo, the sales growth can be attributed to favourable impacts from foreign exchange, mainly due to the strengthening of the US dollar.
The company also reported an organic net sales growth of 9.4%, most notably in Asia Pacific (27%), Latin America Caribbean (20%) and Europe (19%).
Ivan Menezes, CEO of Diageo, 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 by nine basis points whilst we also continued to invest for the future.
“Today, Diageo is 36% larger than it was prior to Covid-19, reflecting the strength of our diversified footprint and advantaged portfolio. I want to thank my nearly 28,000 colleagues for their tireless work, focus and agility which has helped us to achieve these results.”
Despite increased cost inflation, Diageo's reported operating profit grew 15.2% to £3.2 billion. An operating margin decline of 92bps was more than offset by exceptional operating items and foreign exchange.
Furthermore, price increases and supply productivity savings more than offset the impact of absolute cost inflation on gross margin, according to the report.
Menezes continued, “Sales growth was supported by our continued focus on premiumising our portfolio, bolstered by strong global premiumisation trends, with our super-premium-plus brands growing organic net sales by 12%. As category growth trends continue to normalise following Covid-19, winning quality market share remains a key focus. I am pleased to say that we gained or held share in 75% of total net sales value in our measured markets, demonstrating our strong commercial execution.”
Growth was delivered across most categories, primarily scotch, tequila and beer. Premium-plus brands contributed 57% of reported net sales and drove 65% of organic net sales growth.
Diageo’s strong portfolio and premiumisation drove market share growth – the total trade market share grew or held in over 75% of total net sales value in measured markets.
New acquisitions also played their part, including Mr Black, a leading Australian premium-priced coffee liqueur, and Balcones Distilling, a Texas craft distiller and one of the leading producers of American single malt whisky.
Diageo has also recently announced an agreement to acquire Don Papa rum, a super-premium, dark rum from the Philippines.
Menezes added, "We have delivered targeted price increases across all regions, enabled by our expertise in revenue growth management and supported by strong consumer demand for our brands. This, combined with our culture of everyday efficiency, has allowed us to increase our investments. 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, whilst the operating environment remains challenging, I remain confident in the resilience of our business and our ability to navigate volatility. We believe we are well-positioned to deliver our 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.”
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