Diageo Reports Rise in Pretax Profit for Fiscal 2023

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Diageo, the alcoholic drinks company, announced its pretax profit for fiscal 2023, which slightly missed the market expectations. However, it still showcased strong organic net sales growth and price increases, and reaffirmed its guidance.

Financial Performance

Diageo achieved a pretax profit of £4.74 billion ($6.08 billion) for the year ended June 30, compared to £4.39 billion the previous year. Although this figure fell short of the consensus estimate taken from FactSet, which predicted a pretax profit of £5.06 billion.

Net sales saw a significant increase, rising to £17.11 billion from £15.45 billion in the previous year. This growth was driven by a combination of a 0.8% contraction in organic volume offset by a positive price mix of 7.3 percentage points. The consensus estimate expected net sales to reach £17.22 billion.

Diageo reported an impressive organic net sales growth of 6.5%, surpassing the consensus forecast of 6.4% from the company’s website. This growth was achieved despite a 0.8% contraction in organic volume, which was counterbalanced by a positive price mix of 7.3%.

Key Contributions and Regional Performance

Chief Executive Debra Crew highlighted the success of Diageo’s premium-plus brands, emphasizing that they contributed to 57% of the overall organic net sales growth. Notably, scotch, tequila, and Guinness experienced double-digit organic net sales growth.

Despite the ongoing normalization process post-pandemic in the U.S., Diageo maintained stable organic revenue in North America. On the other hand, Europe and Asia Pacific regions delivered organic growth, further adding to the positive performance of the company.

Dividend and Future Outlook

In addition to its financial results, Diageo declared a final dividend of 49.17 pence per share, bringing the total dividend for the year to 80.0 pence, compared to 76.18 pence in fiscal 2022.

Diageo also reaffirmed its guidance for the period from 2023 to 2025. The company aims for annual organic net sales growth of 5% to 7% and organic operating profit growth of 6% to 9%.

It is worth noting that Diageo’s peer, Heineken, recently adjusted its full-year outlook after reporting lower earnings in the first half, primarily due to decreased volumes in the profitable Asia Pacific region.

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