Diageo, the owner of Guinness and Smirnoff, has reported a 10% fall in global pre-tax profits to £2.2bn and a 5% drop in sales to £6.9bn for the half-year, as the coronavirus pandemic continues to impact its business. Despite the decline, the company maintained its policy of annual dividend increases, raising the payout by 2% to 27.96p per share.
The spirits giant said a surge in home drinking helped offset the closure of pubs, bars and restaurants. In the UK, off-trade sales, including those from shops and online, rose by more than 30%, more than compensating for the loss of hospitality venues. Spirits sales in the UK were up 15%, and online and supermarket purchases doubled over the period.
Diageo’s CEO, Ivan Menezes, noted changing consumer habits, such as making cocktails at home, which he expects some to persist. However, he highlighted a strong consumer desire to return to socialising outside the home, suggesting a rebalancing of sales as restrictions ease.
Analysts pointed to Diageo’s global reach as a buffer. Russ Mould of AJ Bell said results could have been worse given ongoing disruption, while Julie Palmer of Begbies Traynor noted that sales in the US and China helped offset European weakness.
