Flourishing Diageo reveals 15% hike in annual net worth despite sales dip
In recent business updates, Diageo, the colossal drinks manufacturer famed for its production of Guinness, Smirnoff and Johnnie Walker has announced a 15% rise in its annual net profit. The increase in profit is attributed to augmenting the price tags on goods to counterbalance the slump in sales fuelled by escalating costs of raw materials and wages amidst rampant inflation.
The British company stated that its profit after tax climbed to £3.73 billion ($4.76 billion) in the financial year stretching till the end of June. The figure stood at a considerable £3.25 billion the previous year.
The figures come even as the company saw a decline in the volume of sales by 7%, despite an increase in revenue by 11%, which touched £17.1 billion, as per the firm’s recent earnings report.
Diageo’s incoming Group CEO, Debra Crew stated, “Looking ahead… I expect operating environment challenges to persist, with continued cost-pressure and ongoing geopolitical and macroeconomic uncertainty.” Crew unexpectedly stepped into the shoes of the former long-standing head, Ivan Menezes, following his untimely demise in June post a stomach ulcer surgery.
Post earnings declaration, lingering uncertainty led to a minor fall in Diageo’s share prices during the London afternoon trading sessions.
Victoria Scholar, head of investment at Interactive Investor observed, “While alcohol tends to offer resilience against macroeconomic pressures, cost inflation and global uncertainty continue to be headwinds to be mindful of for Diageo.”
Diageo’s business operations saw a blip in June, marked by the end of its association with the renowned US rapper Sean ‘Diddy’ Combs. Accusations flew, with Combs alleging that the company had ignored their business agreement and was involved in racial discrimination. However, the multinational firmly refuted the claims, accusing Combs of misrepresenting the business dispute.
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