Diageo, the maker of Guinness and Tanqueray gin, has narrowly surpassed full-year earnings expectations by capitalising on increased sales of its premium liquor brands, compensating for lower volumes.
According to the company’s preliminary results for the year-ending June, its net sales increased by 10.7% to €20 billion despite volume declining by 7.4%. The company said the growth in net sales was driven by strong organic growth and favourable foreign exchange impacts.
Diageo reported a 6.5% increase in organic net sales, slightly surpassing the 6.4% analyst consensus. The company attributes this growth to a strong performance in the first half of the year.
The company’s operating profit grew by 5.1% to €4.6 billion compared to the previous financial year. Notably, Diageo’s most expensive brands contributed to 57% of the company’s overall organic net sales growth.
Diageo witnessed a 20% growth in Guinness sales across Europe and gained market share in the on-trade segment in the UK and Ireland. The company’s overall net sales in Ireland soared by 16%, driven mainly by the growth of Guinness and reflecting gains in the recovering on-trade business.
Diageo’s new CEO Debra Crew said: “Looking ahead to fiscal 24, I expect operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty. This requires us to move with greater speed and agility. My near term opportunities to drive the business focus on bolder and faster innovation, stepping up operational excellence to meet consumers’ evolving tastes and preferences while driving scotch, tequila and Guinness.”
Crew was appointed CEO in June after the death of long-time boss Ivan Menezes.