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Diageo on track for sales and profit targets

The drinks maker is on its way to achieve sales and profit growth targets for the 2020-22 financial years
Diageo on track for sales and profit targets

At its capital markets day in May, Diageo (DGE) announced new performance targets, aiming for mid-single digit organic net sales growth and organic operating profit growth within a range of 5 per cent to 7 per cent over the 2020-22 financial years. While these targets are not centred on the reported period, the drinks maker would have achieved its goals had they been, with organic net sales growth of 6.1 per cent during the year to June and organic operating profit growth of 9 per cent.

IC TIP: Buy at 3,277p

The latter metric grew at a faster rate than the top line thanks to an improved price mix and productivity benefits from cost efficiencies, although this was partially offset by cost inflation and higher spend on marketing. Sales of gin and tequila were particularly strong, with sales growth of 22 per cent and 29 per cent, respectively, while the company also benefitted from a version of its Johnny Walker whiskey brand inspired by the hit television show Game of Thrones.

Analysts at Liberum forecast underlying earnings per share of 133p during the year to June 2020, increasing to 142p in FY2021.

DIAGEO (DGE)   
ORD PRICE:3,277pMARKET VALUE:£ 77.7bn
TOUCH:3,276-3,277p12-MONTH HIGH:3,501pLOW: 2,513p
DIVIDEND YIELD:2.1%PE RATIO:25
NET ASSET VALUE:353p*NET DEBT:118%
Year to 30 JunTurnover (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)
201510.82.9395.056.4
201615.62.8689.559.2
201718.13.5610862.2
201818.43.7412265.3
201919.34.2413168.6
% change+5+13+7+5
Ex-div:08 Aug   
Payment:03 Oct   
*Includes intangible assets of £12.6bn or 529p per share