By Scott Wright
SCOTCH whisky giant Diageo has warned of “ongoing volatility” linked to geopolitical events, inflation, and Covid as it highlighted an encouraging start to its current financial year.
The Johnnie Walker and Bell’s distiller underlined its “resilience” and “ability to navigate these headwinds” yesterday while declaring it remains “well positioned” to meet its medium-term guidance for sales and profits growth.
The drinks giant, which owns a vast portfolio of brands including Guinness, Gordon’s, Tanqueray, and Baileys, told the City that it expects to grow organic operating profit “sustainably in the range of 6% to 9%” in the next two years.
READ MORE: Scotch whisky giant Diageo hails ‘star’ Johnnie Walker as sales recover
Chief executive Ivan Menezes said: “We have made a good start to fiscal 23, with organic net sales growth across all regions, reflecting our advantaged portfolio, our continued investment in brand building and our agile supply chain and culture. I would like to thank my colleagues for their continued creativity and drive.
“We expect the operating environment to remain challenging with ongoing volatility due to geopolitical uncertainty, a weakening of consumer spending power, inflationary pressures and disruption related to Covid-19.
“However, I am confident in the resilience of our business and our ability to navigate these headwinds while executing our strategic priorities, including our ambitious 2030 sustainability plan.
“We remain well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.”
The update comes after Diageo highlighted a “star” showing by Johnnie Walker in July as the company reported a 21.4 per cent rise in net sales to £15.5 billion for the year to June 30.
The distiller said it sold more than 21 million cases of its flagship Scotch whisky brand over the period, representing a 34% rise in sales, helped by the recovery of the on-trade from the pandemic.
Last month, Diageo announced that it had sold the Archers Peach Schnapps brand to De Kuyper Royal Distillers of the Netherlands.
The company said that as part of the transaction it had agreed a 24-month manufacturing supply agreement with the new owner.
Shares in Diageo closed the day up 22.64p at 3,804.14p.
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