Operating profits at Diageo, the world’s largest spirit maker, jumped 18 per cent to £4.4 billion (€5.2 billion) in the 12 months to the end of June, off the back of the pub sector’s recovery and “resilient consumer demand” for off-sales. The Guinness maker’s net Irish sales also increased 71 per cent in the year, wiping out a Covid-related decline in 2021 and mostly driven by sales of the stout.
Published on Thursday, year-end results for the drinks giant show sales across its product range increased by more than 21 per cent globally to £15.5 billion (€18.4 billion) in the London-listed company’s latest financial year. The Smirnoff and Gordon’s Gin maker said the figures reflect “strong double-digit growth” across all regions, underpinned by favourable industry trends including the growth of premium spirits brands.
Europe, where Diageo’s net sales increased 26 per cent, led the charge as pubs and bars reopened across the Continent. Spirits net sales grew 24 per cent, Diageo said, with “broad-based growth across scotch, vodka, Baileys, gin, rum and raki”.
Beer net sales, meanwhile, grew 63 per cent, following a 21 per cent decline in Diageo’s 2021 financial year, “with strong growth in Guinness driven by the on-trade recovery in Ireland and Britain, as well as growth from innovation”.
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Diageo’s net sales in Ireland increased 71 per cent, “lapping a significant decline” in 2021, the company said, and driven “by strong growth in Guinness” as pubs and bars reopened.
The company, which announced plans in June to wind down its Russian operations by the end of the year on foot of Russia’s invasion of Ukraine, said its eastern European sales were up 18 per cent more than the period. However, sales in Russia were down, it said, and Diageo took a £19 million impairment charge for the year in relation to its Smirnoff operations in the country.
In a statement attached to the results, Diageo chief executive Ivan Menezes said he was pleased with the company’s performance.
He said: “In a year of significant global supply chain disruption, our double-digit volume growth demonstrates the tremendous agility and resourcefulness of our teams. Our net sales growth was across categories.
“Looking ahead to fiscal ‘23, we expect the operating environment to be challenging, with ongoing volatility related to Covid-19, significant cost inflation, a potential weakening of consumer spending power and global geopolitical and macroeconomic uncertainty. Notwithstanding these factors, I am confident in the resilience of our business and our ability to navigate these headwinds.”
