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(Alliance News) - Diageo on Thursday said it delivered strong net sales growth during its recent half year, amid resilient consumer demand, as the brewer and distiller said it will accelerate its capital return programme.
For the six months to December 31, net sales rose 16% to GBP7.96 billion from GBP6.87 billion the year before, and pretax profit was GBP2.72 billion, up 24% from GBP2.20 billion.
Operating profit jumped 23% to GBP2.74 billion from GBP2.24 billion, and the operating profit margin increased by 190 basis points.
Looking ahead, Diageo said that, from financial 2023 to 2025, it continues to expect organic net sales to consistently grow within a range of 5% to 7% per year, and organic operating profit to grow sustainably within a range of 6% to 9%.
Diageo raised its interim dividend 5% to 29.36 pence from 27.96p the year prior.
The Johnnie Walker scotch, Smirnoff vodka and Guinness beer maker said that during the half it also returned GBP500 million to shareholders via share buybacks as part of its GBP4.5 billion capital return programme. It has decided will accelerated the timeline of that programme, with the full return now to be completed during financial 2023.
Diageo shares were up 1.4% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,453.56
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Hang Seng: down 2.0% at 23,807.00
Nikkei 225: closed down 3.1% at 26,170.30
S&P/ASX 200: closed down 1.8% at 6,838.30
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DJIA: closed down 129.64 points, or 0.4%, at 34,168.09
S&P 500: closed down 0.2% at 4,349.93
Nasdaq Composite: closed up 2.82 points at 13,542.12
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EUR: down at USD1.1215 (USD1.1280)
GBP: down at USD1.3426 (USD1.3514)
USD: up at JPY114.69 (JPY114.34)
Gold: down at USD1,811.25 per ounce (USD1,832.19)
Oil (Brent): down at USD89.40 a barrel (USD90.27)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's key economic events still to come
1100 GMT UK CBI distributive trades survey
0830 EST US durable goods orders
0830 EST US fourth-quarter gross domestic product
0830 EST US jobless claims
1000 EST US pending home sales index
1030 EST US EIA weekly natural gas storage report
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UK Prime Minister Boris Johnson could still face MPs over a highly anticipated report into parties in No 10 before the week is out, a Cabinet minister has suggested, as No 10 braced for the results of the investigation which could determine Johnson's future. A report by senior official Sue Gray was expected to be handed to Downing Street on Wednesday but reports suggested the final document was still being pored over overnight. Tory MPs have held off until the publication of the report to pass judgment on their leader over multiple alleged parties across No 10 and Whitehall during coronavirus restrictions.There was speculation that after the report was not delivered on Wednesday, MPs and the public may have to wait until after the weekend for its publication, as Johnson had promised to address the Commons shortly after it was released.
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The number of cars built in the UK last year fell to the lowest total since 1956 as the industry suffered a "dismal" 12 months, new figures revealed. Production was down by 6.7% over 2021 to 859,575, and down by a third compared with the pre-pandemic 2019 figure. The Society of Motor Manufacturers & Traders said issues such as the shortage of semi conductors, the closure of Honda's Swindon factory, Covid-related issues such as staff shortages, and border controls following Brexit had all affected carmakers. Factories had to reduce or pause production as they waited for parts hit by the global pandemic. High energy costs are a growing problem for the industry, SMMT Chief Executive Mike Hawes warned.
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China's top diplomat spoke with his US counterpart, warning Washington to "stop interfering" in the Winter Olympics and stressing that Russia's security concerns in Europe should be "taken seriously". Beijing hopes to turn next week's Games into a soft power triumph. But the lead-up has been clouded by a US-led diplomatic boycott over China's human rights record, particularly towards its Uyghur Muslim minority in the Xinjiang region. "The most urgent priority right now is that the US should stop interfering in the Beijing Winter Olympics," Foreign Minister Wang Yi said during a call with Secretary of State Antony Blinken, according to a foreign ministry statement. He added that Washington must also "stop playing with fire" on the Taiwan issue.
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BROKER RATING CHANGES
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Jefferies cuts Gresnillo to 'hold' (buy) - price target 790 (1225) pence
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RBC cuts Fresnillo to 'sector perform' (outperform) - price target 575 (1025) pence
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RBC raises Experian to 'sector perform' (underperform) - price target 2850 (2500) pence
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COMPANIES - FTSE 100
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Wealth manager St James's Place had GBP153.99 billion in funds under management on December 31, up from GBP129.34 billion a year before. Net inflows in the fourth quarter of 2021 totalled GBP2.91 billion, up from GBP2.29 billion a year before, resulting in GBP11.04 billion in net inflows for all of 2021. Meanwhile, St James's Place said its retention rate in 2021 was the highest in company history. The retention rate was 96.4% in the fourth quarter, unchanged from the final quarter of 2020. The firm's number of advisers rose to 4,556 from 4,338 a year before, in response to what Chief Executive Andrew Croft called the continued long-term demand for face-to-face advice.
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Whitbread said it has promoted Hemant Patel to chief financial officer starting on March 21 when current CFO Nicholas Cadbury steps down. Cadbury is moving to British Airways-owner International Consolidated Airlines Group, and IAG confirmed early Thursday that Cadbury will join on March 21. Patel joined Whitbread in 2018, and since then has been finance director of the UK Premier Inn & Restaurants business. Prior to joining Whitbread, Hemant was finance director of Greene King Pub Co and held a number of senior finance and commercial roles at grocer Asda and confectioner Mars.
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COMPANIES - FTSE 250
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Budget airline easyJet said its first-quarter loss almost halved on an annual basis, but the Omicron variant of Covid-19 was taking its toll on bookings in the short term. For the three months that ended December 31, easyJet posted a headline pretax loss GBP213 million, narrowed from a GBP423 million loss in the first quarter the year before. easyJet said the first quarter financial performance was in line with management expectations despite the changing environment which saw increased travel restrictions at the end of the quarter to combat Omicron. The Luton-based carrier noted October and November saw an improved performance as load factors continued to strengthen, with both months above 80%. However, Omicron paused this momentum which resulted in the load factor declining in December to 67%. Looking ahead, easyJet said it expects that Omicron will continue to hurt short-term performance in the second quarter. Chief Executive Officer Johan Lundgren said: "Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on 5 January, which have been sustained and then given a further boost from the UK government's decision earlier this week to remove all testing requirements. We believe testing for travel across our network should soon become a thing of the past. We see a strong summer ahead, with pent up demand that will see easyJet returning to near 2019 levels of capacity with UK beach and leisure routes performing particularly well."
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Convenience food firm Greencore said first-quarter revenue was back above pre-Covid levels despite the spread of the Omicron variant in the UK during December. For the 13 weeks to December 24, revenue was GBP389.0 million, up 24% on an annual basis and up 7.5% from the similar period pre-Covid. The UK's largest sandwich maker said the underlying recovery in food-to-go categories continued. This was supported by the onboarding of new business wins and continued growth in the distribution component of the business. Looking ahead, Greencore said: "The uncertainty regarding the duration and impact of Covid-19 variants on the group's trading environment, particularly on demand in its food to go categories, has made it more difficult to predict 2022 performance. To date, there has been some impact on the group's revenue momentum in what is its seasonally quieter period of the year. "Though these challenges persist, the group continues to anticipate a 2022 outturn in line with market expectations. This assumes no material resumption of mobility restrictions or lockdowns arising from increasing Covid-19 infection rates in the UK. Profitability will be heavily weighted towards the seasonally important second half of the year."
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Boot maker Dr Martens reported third-quarter revenue of GBP307.0 million, up 11% on a year before and up 15% at constant currency. The result for the period, which ended December 31, was in line with company expectations. Revenue was up 21% from two years before. CEO Kenny Wilson said the company is confident in achieve market expectations for the full year.
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COMPANIES - MAIN MARKET AND AIM
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Online electricals retailer AO World has launched a strategic review of its business in Germany, citing tough market conditions that saw third-quarter revenue fall by 24% on a year before there. The review will evaluated a "range of options". In the three months that ended December 31, group revenue was down 14% on a year before, but up 45% on two years before. In the UK, those comparisons were down 12% and up 47%; in Germany, they were down 24% and up 35%. AO World said competition in the online market in Germany has intensified of late even as online penetration has returned to pre-pandemic levels. Meanwhile, digital marketing costs have increased, and the supply chain remains gummed up, AO World said.
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Thursday's shareholder meetings
Aberdeen Standard Asia Focus PLC - AGM and GM re changes to investment policy
Britvic PLC - AGM
Critical Metals PLC - AGM
Greencore Group PLC - AGM
Henderson European Focus Trust PLC - AGM
InnovaDerma PLC - AGM
Intermediate Capital Group PLC - AGM
Ironveld PLC - AGM
Sunrise Resources PLC - AGM
Yellow Cake PLC - GM re share allotment authority
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By Tom Waite; thomaslwaite@alliancenews.com
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