Diageo reported an 18.4% increase in half-year net sales to £9.4 billion, but said demand for its drinks is slowing in some key markets, including North America.
Net sales increased 9.4% on an organic basis in the first half of fiscal year 2023, reflecting price increases, premiumization, and 1.8% organic volume growth. According to Reuters, the increase exceeded analysts’ expectations of a 7.9% increase.
While Diageo saw growth in all regions, its North America business, which accounts for nearly 30% of total sales, fell short of analysts’ expectations, according to Reuters. Organic growth of 3% was significantly lower than the predicted 6% increase. Meanwhile, volume fell 4% on an organic basis as Diageo absorbed strong demand in the prior year.
Diageo’s operating profit increased 15.2% to £3.2 billion in the six months ending December 31, 2022.
The ‘premium-plus’ brands accounted for 65% of the company’s organic net sales growth.
“Organic net sales grew 9%, with growth across all regions, organic volume grew 2%, and organic operating profit grew 10%,” said Diageo CEO Ivan Menezes. In a cost-constrained environment, our organic operating margin increased by 9 basis points while we continued to invest for the future.”
“Sales growth was supported by our continued focus on premiumising our portfolio, which was bolstered by strong global premiumisation trends, with our super-premium-plus brands growing organic net sales 12%,” he added.