Spirits group Diageo has beaten expectations for full-year sales as it gears up the reopening of bars and nightclubs across Europe.
The booze business, which owns brands such as Guinness, Johnnie Walker and Smirnoff, reported net sales of £12.7bn in the year to the end of June, up 8.3 per cent on the previous year.
Diageo said the figures were driven by growth in all areas and benefited from lower inventory levels in the comparative period last year, though this was partially offset by adverse foreign exchange rates.
Reported operating profit increased 75 per cent to £3.7bn, largely due to a significant reduction in exceptional operating items.
As a result, Diageo lifted its final dividend by five per cent to 44.59p per share. The company’s shares pushed almost two per cent higher in morning trading.
The better-than-expected growth reflected the group’s shift to supermarket sales as the pandemic sparked widespread closures of pubs, bars and clubs.
Diageo recorded the strongest trading in its North American market, which booked organic growth of 20 per cent thanks to higher levels of stock replenishment.
“As the maker of Smirnoff, Guinness and Gordan’s it comes as no surprise that the shuttering of bars and nightclubs left Diageo with a nasty hangover of problems,” said Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown.
“However, 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.”
The London-listed company said it expected sales growth to continue into 2022 as bars and nightclubs reopen, though warned of ongoing volatility in the short term.
“While our business has recovered strongly in fiscal ‘21, with net sales growth on a constant basis ahead of fiscal 19 in three of our five regions, we expect near-term volatility in some markets,” said chief executive Ivan Menezes.
“However, I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumisation trends remaining strong.”