Scotch whisky sales drive growth at Diageo
Strong sales of Scotch whisky helped the spirits and beer group Diageo post strong first half results and accelerate its £4.5 billion return of cash to shareholders.
The company reported a 15.8% rise in net sales to £8 billion in the six months to the end of December. Operating profit was 22.5% higher at £2.7 billion.
With bars and restaurants closed for periods during the year, the group saw a switch in consumer demand to home sales and a particular appetite for top-of-the-range brands.
Net sales of spirits across the group’s portfolio grew by 20%, with Scotch up 27% and Johnnie Walker up 31%. Tequila was the fastest-growing drink for the business, with sales up 56% as its Don Julio and Casamigos brands enjoyed rising popularity
Vodka sales were up 14% and gin by 21% while beer grew 22%, driven by rising demand for Guinness in Ireland, Britain and Africa.
The board declared an interim dividend of 29.36p, up 5%.
Ivan Menezes, chief executive, said: “We have made a strong start to fiscal 22. While we expect near-term volatility to remain, including potential impacts from Covid-19, global supply chain constraints and rising cost inflation, I am confident in our ability to successfully navigate these disruptions through the remainder of the year.”
Richard Flood, investment manager at Brewin Dolphin, said: “Diageo has produced a great set of results with a strong increase in sales, margin, and profits over the past six months.
“The continuing shift by consumers to spirits consumption has benefited the company, as this is a sector of the drinks market that it dominates.
“Diageo has been able to successfully navigate the challenges of Covid with its strong presence in both the off-trade, as well as the pubs sector – or on-trade – which is expected to recover further as Covid fades, leaving Diageo well positioned for the future.”