Diageo reports ‘strong start’ for FY2022
Smirnoff owner Diageo has reported a ‘strong start’ to its 2022 fiscal year, but the company expects ‘near-term volatility’ to continue.
In a trading update today (30 September), issued ahead of the company’s annual general meeting, Diageo’s chief executive, Ivan Menezes, said the firm has seen “organic net sales momentum across all regions”.
“This reflects excellent execution, as we benefit from resilience in the off-trade and continued recovery in the on-trade,” Menezes continued. “However, we expect near-term volatility to remain, including the potential impact of any future waves of Covid-19.”
Furthermore, the company said its North American arm experienced a strong performance, despite “supply chain constraints”.
Diageo’s European business recovered faster than expected, as a result of “robust” off-trade demand and “good momentum in the on-trade”.
Menezes noted that the Africa, Asia Pacific, Latin America and Caribbean markets are “performing well, although volatility in these markets is likely to persist”.
Meanwhile, the travel retail business continues to face disruption.
“We expect organic operating margin to benefit from a further recovery in sales volumes, positive channel mix and premiumisation trends, while we are continuing to invest in our marketing and commercial capabilities,” Menezes added. “As previously indicated, we are managing rising inflationary pressures, which are partly due to supply chain constraints.”
Menezes added that he was “confident” in the firm’s ability to provide long-term sustainable growth and shareholder value.
For the year ending 30 June 2021, Diageo’s organic net sales soared by 16%, now ahead of 2019’s pre-pandemic levels by more than 6%.