Profits at Diageo increase following price rises and higher premium sales

Diageo increased prices on a pint of Guinness by 12c back in February. 

Despite a drop in sales volumes, Guinness-owner Diageo has posted strong growth in operating profit as it increased sales of premium drinks and increased prices, new financial results show.

According to the company’s preliminary results for the year-ending June, reported net sales increased by 10.7% to £17.1bn (€20bn) despite volume declining by 7.4%. The company said the growth in net sales was driven by strong organic growth and favourable foreign exchange impacts.

Diageo’s operating profit grew by 5.1% to €4.6bn compared to the previous financial year.

In February, the company increased prices on pints of Guinness by 12c.

These latest results are up until the end of June which means the latest price increase announced in July - which increased prices by 4c on a pint of Guinness - was not included in these results.

Debra Crew, chief executive of Diageo, said there were double-digit net sales growth across scotch, tequila, and Guinness with their premium-plus brands contributing 57% of overall organic net sales growth.

Diageo - which also sells Johnnie Walker whisky, Captain Morgan's rum and Ketel One vodka - said organic net sales rose by 6.5% marginally beating analysts forecasts of 6.4%.

The company said its organic sales growth was driven by higher prices and sales of more premium drinks.

Looking to the next fiscal year, Ms Crew said she expects operating environment challenges to persist, with “continued cost pressure and ongoing geopolitical and macroeconomic uncertainty”.