Guinness owner set to reveal strong growth as economy opens up

Diageo makes Guinness, Johnnie Walker, Smirnoff and Captain Morgan

Analysts are predicting pre-tax profits of €2.87bn for Diageo, a 9% rise. Picture: Gareth Chaney/Collins

Drinks giant Diageo is expected to reveal a boost in profits close to pre-pandemic levels, as the company updates the stock market on how it fared in the second half of 2021. 

Analysts are predicting pre-tax profits of £2.4bn (€2.87bn)- a 9% rise on the £2.2bn (€2.63bn) recorded during the six months to the end of December 2020. It saw pre-tax profits of £2.46bn (€2.94bn) in the same period before the pandemic hit. 

The company, which makes Guinness, Johnnie Walker, Smirnoff and Captain Morgan, struggled during the pandemic as lockdowns and restrictions saw sales in pubs, bars and restaurants dry up. But hopes remain high that strong supermarket sales could continue to offset the drops elsewhere.

Analysts Russ Mould and Danni Hewson at AJ Bell said investors will also want to hear more about whether Diageo will restart its share buyback programme, pointing out the company has only spent £1.5bn (€1.79) of the committed £4.5bn (€5.38bn) on shares before halting it when the pandemic hit.

They said: "Analysts will no doubt look for any indication of how the remaining £2bn (€2.39bn) will be spread across 2022, 2023 and 2024, and to chief executive Ivan Menezes for any financial guidance for the rest of the year to June 2022."

The analysts also said the market will be looking to see a dividend increase of 5%, following a 4% rise last year, and expected Diageo to look forward to the return of duty-free shopping as international travel starts to increase.

PA