Diageo plc (DEO) Q4 2022 Earnings Call Transcript

Diageo plc (NYSE:DEO) FY2020 Earnings Conference Call July 28, 2022 4:30 AM ET

Company Participants

Ivan Menezes - Chief Executive Officer

Lavanya Chandrashekar - Chief Financial Officer

Conference Call Participants

Sanjeet Aujla - Credit Suisse

Celine Pannuti - JPMorgan

Simon Hales - Citigroup

Olivier Nicolai - Goldman Sachs

Laurence Whyatt - Barclays

Pinar Ergun - Morgan Stanley

Edward Mundy - Jefferies

Andrea Pistacchi - Bank of America

Trevor Stirling - Bernstein

Chris Pitcher - Redburn

Operator

Good morning and welcome to Diageo's 2022 Preliminary Results Q&A call. Your call today will be hosted by Ivan, Diageo's CEO and Lavanya, Diageo's CFO. [Operator Instructions]

We are now ready to start the call. Ivan, please go ahead.

Ivan Menezes

Hello, everyone. And thank you for joining our preliminary results call fiscal 22. Hope you've had a chance to read the press release, and watch our presentation webcast on diageo.com.

I am very pleased with the quality of our excellent results for fiscal 22. Our teams have executed with tremendous agility and resourcefulness despite stronger headwinds from supply chain disruptions and geopolitical events in the second half. Sales were up 21% with double digit growth across all regions. Growth was balanced with volume of 10% and price/mix growth was 11 points, with price contributing mid single-digit growth.

Diageo’s three year rate compound annual growth rate for the organic net sales was 9%. North America's three year CAGR was 12% and for Europe it was 6%. On a constant basis, Diageo is 28% bigger than it was pre-COVID in fiscal 19. Our share momentum continues. We gained or held off-trade share in the majority of our market. We have an advantage portfolio which we continue to actively share towards fast growing category and our Super Premium+ brands grew 31%.

We continue to invest; A&P grew 25% and we had a record year on CapEx spending over a £1 billion on capacity, sustainability, and setting the business upright for future growth. Our strategic pricing action across all regions and our supply productivity saving more than offset the absolute impact of cost inflation. We have strong gross margin expansion and leverage of operating costs growth, further significant improvements in operating margin while increasing our marketing spend ahead of net sales.

Our strong cash generation enables us to keep investing for the long term, including as I talked about production capacity, supply chain agility, digital capabilities and our Society 2030 goals.