SCOTCH whisky giant Diageo has signalled its expectation of “ongoing volatility and disruption”, notably in the on-trade, as it beat analysts’ forecasts to post a rise in underlying sales in the first half of its financial year.
The Johnnie Walker and Guinness maker reported a 1% rise in organic net sales for the six months ended December 31, despite a “significant impact” in the travel retail and on-trade sector linked to coronavirus restrictions. It reported a bumper 12.3% rise in sales in North America, which offset declines in other markets; performance in Africa was “broadly flat”.
Chief executive Ivan Menezes said: “We delivered a strong performance in a challenging operating environment, returning to top line organic sales growth during the half. We rapidly pivoted to the channels and occasions most relevant to consumers and invested behind new opportunities. This more than offset the impact of on-trade restrictions and the decline in Travel Retail. North America, our largest market, performed particularly strongly and ahead of our expectations.
“Consumer demand has been resilient and the spirits category continues to gain share of total beverage alcohol. Across other regions we delivered strong sequential improvement compared to the second half of fiscal 20. This reflects improved market share performance through excellent execution in the off-trade channel, and the partial re-opening of the on-trade channel in certain markets.”
He added: “I am proud of the creativity and adaptability of our people and their exemplary commitment to supporting our customers and communities. Our $100 million global commitment to support the recovery of the hospitality sector has already reached around 30,000 outlets in seven countries. We expect ongoing volatility and disruption in the second half of the year, particularly in the on-trade channel, which will make performance more challenging.”
Shares were up nearly 4% in early trading.