Shares in drinks-maker Diageo (DGE) gained 3.4% to an all-time of £39.48 ahead of the firm’s first capital markets day since the onset of the pandemic.
In a press release to preview the event, the producer of Johnnie Walker scotch, Don Julio tequila and Tanqueray gin set out some ambitious new short-and-medium-term sales growth targets along with a 10-year sustainability action plan.
Chief executive Ivan Menezes said ‘We believe our sales growth trajectory has accelerated, underpinned by the strength of our advantaged position across geographies, categories and price tiers’, adding he still saw ‘significant headroom for growth’.
NEW TARGETS
For the first half of the current financial year, which began in June, the company is now targeting organic net sales growth of at least 16% and even faster organic operating profit growth.
In the medium term, that is from June 2022 to June 2025, the firm expects organic net sales growth to moderate to a range of between 5% and 7%, with organic operating profit growth expected to be between 6% and 9% per year.
Looking further out, the firm wants to raise its share of the global alcoholic beverage market from 4% in 2020 to 6% by 2030, in other words a 50% increase.
SELF-SUSTAINING
Chief financial officer Lavanya Chandrashekar said the firm would continue to invest in its brands and strategic growth opportunities while expanding its margins.
‘This self-sustaining growth model gives us confidence that we can accelerate our organic net sales growth’, said Chandrashekar, adding ‘While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains.’
The firm has benefitted from a resilient off-trade, selling through shops and supermarkets, and a marked recovery in the on-trade as pubs and bars have reopened around the world.
