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Sept 28 (Reuters) - Diageo, the world's largest
spirits maker, said on Monday it has made a strong start to its
fiscal year 2021, with many countries easing their COVID-19
restrictions and its U.S. business performing ahead of
expectations.
"Our outlook for the first half of fiscal '21 has improved
since the year-end, reflecting the good start to the year,
particularly for our US business," CEO Ivan Menezes said in a
statement ahead of the company's annual general meeting.
The company's shares jumped 6%.
Alcoholic drink makers have been hurt by the closure of bars
and restaurants during the coronavirus pandemic. Sales have been
helped by some reopening of venues and strong demand from people
drinking at home.
The company's U.S. business - which represents about 45% of
group profits, according to Barclays analysts, is performing
ahead of expectations, helped by "resilient" demand and people
increasingly choosing spirits over wine or beer.
It's "an encouraging start to the year," Barclays said.
Diageo cited the risk of additional restrictions in Europe,
where infection rates are rising, and noted that in China, while
bars and restaurants are recovering, large banquets - once a
mainstay of Chinese spirits consumption - are returning more
slowly.
Travel retail continues to be severely impacted, it said.
The maker of Johnnie Walker whisky and Smirnoff vodka said
it continues to expect sequential improvement in organic net
sales and operating profit compared to the second half of fiscal
2020, which ended on June 30. However, year on year, it expects
lower sales and margins compared to the first half of fiscal
2020.
In August, Diageo reported an 8.4% drop in organic sales for
the year, its worst performance in more than a decade.
(Reporting by Muvija M in Bengaluru and Martinne Geller in
London; Editing by Ramakrishnan M. and Jason Neely)
Diageo (DGE)
