Diageo PLC on last week increased its annual dividend as sales and profit grew on higher alcohol prices despite a decline in volumes sold.
Diageo is a London-based brewer and distiller with brands including Baileys, Tanqueray, Johnnie Walker, Smirnoff and Captain Morgan.
In the year ended June 30, sales rose 4.8% year-on-year to GBP23.52 billion from GBP22.45 billion. Net sales rose 11% to GBP17.11 billion from GBP15.45 billion, or 6% on an organic basis.
Diageo said net sales grew in by double-digit percentages for scotch, tequila and Guinness stout on an organic basis, with its premium-plus brands contribution 57% of total organic net sales growth.
Volumes, however, fell 7.5% to 243.4 million equivalent units from 263.0 million, or by 1% on an organic basis.
“We delivered strong growth in four of our five regions, with Europe and Asia Pacific growing double-digit. North America delivered stable performance as the US spirits industry continued to normalise post-pandemic, and we lapped strong comparators, particularly in the second half of [financial 2023],” said Chief Executive Officer Debra Crew.
Net sales in the US – where the London listing generates around 40% of sales and close to 50% of its profit – rose 11%, though this was mostly driven by a favourable impact of the strong US dollar. A decline in volumes in the US was offset by strong price/mix growth, and the region held share of total beverage alcohol.
Across the group as a whole, pretax profit rose 8.0% to GBP4.74 billion from GBP4.39 billion.
“We expanded organic operating margin by 15 basis points in a challenging cost environment while continuing to invest in the business. These results demonstrate Diageo’s ability to consistently deliver resilient performance, even in challenging macro environments,” said CEO Crew.
Diageo recommends an interim dividend of 49.17 pence, bringing the full-year total to 80.00p, up 5.0% from the total payout of 76.18p.
It maintained its medium-term guidance of consistent organic net sales growth between 5% and 7%, and sustainable organic operating profit growth in the range of 6% and 9%.
“Looking ahead to [financial 2024], I expect operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty,” Crew continued.