Drinks giant Diageo, the owner of Johnnie Walker whisky and Guinness beer, beat analysts’ expectations for the financial year to the end of June with a particularly strong performance in North America, its largest market.
Profits at the FTSE 100 group increased by 7 per cent to £3.74 billion on sales which rose to £12.73bn, up from £11.7bn previously. In North America, sales were up by more than 20%.
The results pre-dated the suspension of US tariffs on single malts that were in place as part of a long-running trade dispute over aircraft subsidies. The tariffs are estimated to have cost the whisky industry as a whole more than £600m in exports.
Ewan Anderson, head of supply and procurement at Diageo, said it was “great” to have the dispute resolved as he welcomed the “dual growth opportunity” now available as pubs and restaurants begin to reopen. While this is kick-starting on-trade sales, the company is also anticipating continuing demand for premium brands for what Mr Anderson described as “easy socialising at home”.
Diageo said this fun-at-home trend meant its brands had generally performed well during the year, with notably solid sales of Scotch, Baileys liqueur, tequila and Chinese white spirits.
“I am most pleased actually with Scotch, particularly with the travel retail being closed and the restrictions we have seen in the on-trade,” Mr Anderson added. “We have been able to move with consumers with those at-home occasions.”
Analyst Sophie Lund-Yates at Hargreaves Lansdown said it remains to be seen whether there will be a permanent reduction in nightlife footfall: “The strength of the group’s brands means it was able to recoup some of its losses through a huge increase in supermarket trade in some key markets, and it’s come out of the pandemic in remarkably resilient shape,” she said.
Diageo employs 3,000 people across 50 sites in Scotland, including 28 malt distilleries. Its shares closed yesterday’s trading 27p higher at 3,540p.
Source: Kristy Dorsey | www.heraldscotland.com