The world’s biggest alcohol distiller Diageo announced Wednesday that it expects organic operating profit growth for the financial 2021 year to be at least 14% higher, slightly ahead of organic net sales growth. The company noted that in North America, its largest market, performance remained strong, reflecting resilient consumer demand, the breadth of the portfolio coupled with management described as effective marketing and innovation. With regards to Europe, management stated that the region has seen solid off-licence sales and a boost from hospitality beginning to reopen as lockdowns lift in some countries. Despite these green shoots, the key travel division remains under pressure due to the ongoing restriction on air travel.
Diageo also said that due to the strong performance, it will resume the plan to return cash to shareholders that was paused in April last year due to the coronavirus crisis. The group will therefore launch the second phase of the programme with £1bn of payments by the end of 2021-22, starting with £500m in share buybacks due by mid-November. The move comes as part of a wider long-term goal, initially launched in 2019, to return up to £4.5bn to investors, but the timescale has been extended by two years to 30 June 2024 due to the Covid pandemic.
Diageo, with brands such as Johnnie Walker, Bell’s, Tanqueray and Guinness, is held in both the Cratos BCI Worldwide Flexible Fund and Cratos Global Portfolios.