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May 30, 2022 View:

Global wine giant Diageo reports fiscal year 2020-2021

Recently, global wine giant Diageo released its fiscal year 2020-2021 report, covering the six-month period ending December 31, 2020.

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Diageo reported a 4.5% decline in net sales to £6.9 billion for the 2020-2021 financial year. Operating profit fell by 8.3% to £2.2 billion.

Net sales increased 1.0 percent, despite significant impacts from travel retail and trade restrictions. North America rose 12.3 percent, offsetting declines in all regions except Africa, which was essentially flat.

Growth in North America was driven by strong consumer demand, share growth in total beverage alcohol, a mix of liquor categories and replenishment of inventory by distributors and retailers.

Internal operating profit declined 3.4 percent, driven by channel and category mix. Productivity gains from day-to-day cost efficiencies largely offset the cost of goods from inflation.

Net cash from operating activities increased by £700 million to £2.0 billion and free cash flow increased by £800 million to £1.8 billion. This primarily reflects lower sales demand and lower cost containment measures due to the COVID-19 pandemic trigger at the end of fiscal 2020.

Diageo said it achieved a significant improvement in all regions compared to the second half of fiscal 2020 and expects to continue to be impacted by trade restrictions and travel retail disruptions in the second half of fiscal 2021.

In response, Diageo CEO Ivan Menezes said: "We delivered an excellent performance in a challenging operating environment, returning to sales growth in the first half of the year. We moved quickly to the channels and occasions most relevant to consumers and invested in new opportunities. Offsetting the impact of trade restrictions and reduced travel retail.

North America, our largest market, performed particularly strongly and exceeded our expectations. Consumer demand has been resilient and the spirits category continues to grow its share of the liquor market. In other regions, we achieved strong growth compared to the first half of the fiscal year, reflecting improved market share performance through excellent execution in the off-trade channel and the partial reopening of the on-trade channel in some markets.