Proactive Investors - British alcoholic spirits purveyor Diageo (LON:DGE) has reported net sales of £17.12bn in the 2023 financial year, representing 10.7% in year-on-year growth, supported by foreign exchange tailwinds (organic net sales grew by 6.5%).
Underlying earnings (EBITDA) came to £6.4bn, compared to £5.6bn in 2022.
Operating profit grew 5.1% to £4.6bn, though margins fell back a bit from 28.5% in 2022 to 27.1% in 2023.
Despite the growth in profits, free cash flow declined 35% to £1.8bn due to a surge in working capital outflows, tax payments, interest paid and capital investment.
Reported sales volumes also fell back by 7.4%, or 0.8% on an organic basis, suggesting price premiumisation has helped to drive sales during the economic downturn.
Basic earnings per share increased 17.6% to 164.9p.
Latin America and India were the fastest-growing regions during the reporting period, with new sales increasing 18% and 17% respectively, while Europe, North America and Asia Pacific all grew by 11%.
Tequila net sales pulled ahead with 19% growth year on year, reflecting strong performance of Don Julio and George Clooney’s Casamigos label, which grew 20% and 16% respectively.
Scotch net sales grew by 12% and beer by 9%, with rum and vodka growing in the low single digits.
Looking ahead to the 2024 financial year, Diageo expects premiumisation trends to drive operating profits and sales growth, though specific numbers were not provided.
“I expect operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty,” said chief executive Debra Crew, adding: “This requires us to move with greater speed and agility.
“My near-term opportunities to drive the business focus on bolder and faster innovation, stepping up operational excellence to meet consumers' evolving tastes and preferences while driving scotch, tequila and Guinness."