TOP NEWS: Diageo annual profit soars even as awaits on-trade bounce

(Alliance News) - Johnnie Walker whisky maker Diageo PLC on Thursday posted improved annual ...

Alliance News 29 July, 2021 | 9:49AM
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(Alliance News) - Johnnie Walker whisky maker Diageo PLC on Thursday posted improved annual profit, upped its payout, and said it is "well-positioned" as Covid-19 curbs ease and bars and clubs reopens.

In the financial year that ended June 30, the brewer and distiller's pretax profit rose 81% to GBP3.71 billion from GBP2.04 billion the year before.

Sales, excluding excise duties, rose 8.2% to GBP19.15 billion from GBP17.80 billion. Net sales, factoring in the levy, rose 8.3% to GBP12.73 billion from GBP11.75 billion. Organically, net sales rose by 16%.

Volumes rose by 10% to 238.4 million equivalent units from 217.0 million the year before. Organically, the increase was 11%.

Diageo's operating margin improved dramatically by 1,112 basis points to 29.3% from 18.2%. The organic improvement was 46 basis points, driven by reduced overheads and one-off expenses not repeating. This was partially offset by a decline in gross margin and more marketing spending. Gross margin slipped by 40 basis points.

Diageo declared a 72.55 pence total dividend, up 3.8% from 69.88p in financial 2020.

"We delivered organic net sales growth across all regions, led by a strong performance in North America, and we held or gained off-trade market share in over 85% of our business. These results demonstrate the strength and relevance of our brands and the extraordinary efforts of our talented people," Chief Executive Ivan Menezes said.

Looking ahead, Diageo expects "organic net sales momentum to continue" in the new financial year.

The FTSE 100 listing added: "We believe we are well positioned to continue to benefit from resilience in the off-trade and recovery in the on-trade. However, we expect near-term volatility to remain, including the potential impact of any future waves of Covid-19, and for disruption in travel retail to continue."

Off-trade refers to retail outlets such as supermarkets, while on-trade venues include bars, clubs and hotels.

Diageo shares were 0.1% higher at 3,518.00p each in London on Thursday morning.

By Eric Cunha; ericcunha@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Diageo PLC 3,458.00 GBX -0.26

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