World: Diageo�s half-year sales grow almost 10%

Diageo, supplier of Johnnie Walker and Guinness, has reported its half-year results to 31 December 2022 showing an overall sales growth of almost 10%.

The British alcoholic beverage company detailed that its organic net sales (excluding the effect of acquisitions and currency moves) grew 9.4%, due to volume growth of 1.8% and increased prices in stores.

Organic operating profit also grew 9.7%, with margins �modestly higher,� Diageo said.

Looking to the future, over the medium-term from fiscal 23 to fiscal 25, Diageo expects organic net sales to consistently grow within a range of 5% to 7%, and organic operating profit to grow sustainably within a range of 6% to 9%.

�This is a solid performance from Diageo, underlining the strength and diversity of its brand portfolio,� head of equities at leading UK investment service Wealth Club, Charlie Higgins said.

He said that while not immune from economic headwinds and inflationary pressures, Diageo looks �better placed than most to weather the storm.�

Higgins added: �It is much easier to raise prices on a bottle of Johnnie Walker than on a bottle of shampoo or deodorant. So Diageo ought to have more pricing power than most consumer goods peers. This is a key reason for its resilient margins.

�If the economy hits the rocks, Diageo may see some downtrading to less expensive brands. But it�s unlikely consumers will cut back significantly on alcohol. And long-term premiumisation trends are unlikely to abate.

�Overall, Diageo is demonstrating why it is considered a high quality long-term compounder. While short-term blips can�t be ruled out, investors who abide by the famous Guinness slogan � �Good things come to those who wait� � could be rewarded,� Higgins commented.

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