TOP NEWS: Diageo Sees Improving Sales Amid Re-Opening Of Bars, Hotels

(Alliance News) - Johnnie Walker whisky maker Diageo PLC on Monday said it has made a good start ...

Alliance News 28 September, 2020 | 8:32AM
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(Alliance News) - Johnnie Walker whisky maker Diageo PLC on Monday said it has made a good start to financial 2021 with improvements in its performance across all regions following the gradual re-opening of the on-trade channels such as in bars and hotels in most markets.

The FTSE 100-listed company continues to expect an improvement in organic net sales and operating profit for first half ending December 31 versus the second half of financial 2020, which ended on June 30. However, compared to the first half of financial 2020 - the six months from July to December 2019 - it still expects lower organic net sales and margin dilution.

Diageo shares were up 5.5% at 2,660.68 pence each in London on Monday morning. Year-to-date the stock has shed 17% in value.

The London-based brewer and distiller, which is holding its annual general meeting on Monday, said the pace of recovery from the Covid-19 pandemic and easing of government restrictions varies by market.

Diageo said its US business is performing strongly and ahead of expectations in the first half, reflecting resilient consumer demand. Spirits continuing to gain share within the total beverage alcohol market. Increased retailer confidence is resulting in some re-stocking in the off-trade channel, it noted.

In Europe, off-trade demand - meaning retail outlets - remains robust and the on-trade channel - meaning bars and restaurants - has largely re-opened with the easing of lockdown measures in most countries, Diageo said. However, it noted the risk of additional restrictions remains where infection rates are worsening.

In China, the on-trade channel continues to recover, although larger banqueting occasions are returning more slowly. While the on-trade has also begun to re-open in Africa, India and Latin America and the Caribbean, the company expects the pace of recovery in those markets to be more gradual, Diageo noted.

Looking ahead, Diageo said the outlook for the first half of financial 2021 has improved since the year-end, reflecting the good start to the year, particularly for the US business.

"I am pleased with the resilient performance of our business in the current challenging operating environment and encouraged by our progress. While the pace of recovery is uncertain, I am confident in our strategy, the long-term fundamentals of our business and Diageo's ability to emerge stronger," Chief Executive Officer Ivan Menezes said.

By Tapan Panchal; tapanpanchal@alliancenews.com

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