North America drives the stock down

North America looks to be a concern following what seems to be a clear slow down. Nevertheless, overall organic net sales exceeded the consensus, as did operating profit. Tomorrow’s report from Remy tomorrow will help to draw some conclusions.

Spirits are still all the rage

A reassuring end to the year, with a FY22 beat. The cautious tone for FY23 had been expected given the elevated levels for 2022, but the mid-term (FY23-25) guidance was reiterated. In our view, Diageo remains a core holding given its superior execution and capital allocation.

The good momentum seems intact

The slight sales and EBIT beat is praised. The absence of FY21 guidance slightly darkens the picture but, overall, the figures send a good signal for the industry.

Everything should go well

We were impressed with Diageo’s presentation as it once again demonstrated its ability to outperform the spirits market, which is itself in a strong position to outperform the drinks industry. Buy and hold.

Diageo's solid FY 2021 wasn't enough for the market

It seems that Diageo’s solid FY21 wasn’t enough to keep the share price up (-2.5% at the opening), but this does not extinguish our confidence in the group. Admittedly, the guidance, which is only qualitative, may seem insufficient and, yes, Diageo is the first spirits group to express concerns about a future decline in the off-trade (ultimately not very surprising!), but we believe that the current positive momentum should continue to drive sales levels above those of 2019 in the months to come

The US strongly helped (and will continue to do so)

The H1 results came in ahead of consensus, helped by Greater China and an exceptional US performance. No FY21 guidance for now, but H2 should show positive growth thanks to strong comparables. We reaffirm our strong confidence on the stock.

Missed FY20 expectations with H2 slightly worse

FY20 top and bottom line missed expectations and Diageo didn’t provide guidance for next year. Improvements expected in the coming months thanks to lockdown restrictions easing, though the margin should still be under pressure for the next six months.

Lowered FY20 sales guidance does not really taint our confidence

Diageo reported H1 results just ahead of peers. However, the lowered FY20 sales guidance and the shy volume growth (+0.2%) have slightly darkened the picture. The strong metrics, still ahead of peers, and the still growing return to shareholders still make it a quality stock for us.

Emerging markets continue to drive the spirits industry

The full year was, once again, driven up by emerging markets, as well as the buoyant Gin and Tequila. The new mid-term guidance expects further improvement regarding the operating profit. In parallel, the return to shareholders continues to be one of the group’s priorities, having announced it is to return a further £4.5bn to shareholders over the next three years.

Stronger and stronger

Key financials: Net sales were up +5.8% to £6.9bn on a reported basis, +7.5% organically, pushed by all regions. Organic volume grew by 3.5% Reported operating profit reached £2.4bn (+11%), organic operating profit grew by 12.3% Pre-exceptional EPS was 77.0p (+13.6%), while basic EPS was 80.9p, down by 1.6% due to the recent disposals FCF at £1.3bn (+£317m yoy) Interim dividend up by +5% to 26.1p per share Following this strong set of results, the company has approved an incremental sh

Reports better H2, announces share buy-back

Strong set of numbers as the performance in the second half accelerated. The announced share buy-back should please investors.

H1: resilient organic performance, FX headwinds mount

The company delivered another period of very solid organic growth in both top line and operating profit. We see business as resilient. Our Add recommendation is maintained.

Walking Briskly in The Far East – Asia Pacific Update

Diageo’s (DGE LN, HOLD, T/P 2700p) brunchtime conference call with Sam Fischer, President of Diageo Greater China and Asia yesterday was interesting. The region – Diageo’s third largest at 20% of net revenue – should deliver the fastest pace of organic growth for the group in the next 2 years. The call confirmed our expectations of brisk sales growth and pointed further margin expansion for the region. We roll over our price target from calendar 2017 2018 and increased it from 2250p to 2700p.

FY: Raises guidance and launches share buy-back

FY preliminary results: volumes were up +1.1% (cons. 1.6%). Sales grew organically by +4.3% (cons. +4.2%, H2: +4.2%). On reported figures, sales were up +15% helped by FX tailwinds. FY organic net sales by region: North America 3% (cons. 3%, H2: +3%), Europe 5% (cons. 4.5%, H2: +5%), Africa 5% (cons. 5%, H2: +6%), LatAm 9% (cons. 10.9%, H2: +7%), and Asia Pacific 3% (cons. 2.6%, H2: +3% ). The operating margin before exceptional items was up 244bp on reported figures (cons. +130bp) and 37bp on

Hybridan Small Cap Feast - 17 Jan 23

17 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Hybridan Small Cap Feast - 30 Jan 23

30 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Hybridan Small Cap Feast - 01 Feb 23

01 February 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objec

Hybridan Small Cap Feast - 31 Jan 23

31 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

SHORE CAPITAL - Wynnstay Group+ (WYN) - House Stock, 534p - Record FY22A results; well-positioned

SHORE CAPITAL - Greencore+ (GNC) House Stock, 76p

Treatt - Back to steady growth

Treatt’s AGM trading update suggests a more normal and steady pattern of trading has resumed, following the setbacks that caused the profit warning last August. Management has clearly taken rapid steps to address the issues that were identified, and indeed this was already evident in October’s FY22 pre-close trading update. Performance remains in line with management expectations and our forecasts are unchanged.

SHORE CAPITAL - Cranswick+ (CWK) - House Stock, 3140p - Robust Q3 delivery – cost inflation remains a headwind

LIBERUM: Cake Box* - A tough period in H1 but the outlook is much improved

LIBERUM: Hotel Chocolat* - Outstanding trading over peak

Hybridan Small Cap Feast 17/11/22

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Long Term Assets Limited (LTA), a Guernsey investment company, intends to join the Specialist Fund Segment of the Main Market of the London Stock Exchange. The initial portfolio is made up of a diversified range of assets, recently valued in the region of £160m, comprising a complete selection of the Disruptive Capital’s family office private asset portfolio. LTA aspires to be a “best-in-cl

Premier Foods+ (PFD) - House Stock at 113p - Acquisition of The Spice Tailor - a hand-in-glove growth driver - 1Y EPS enhancement

SHORE CAPITAL - Cake Box Holdings+ (CBOX) - House Stock at 179p

SHORE CAPITAL - Cake Box Holdings+ (CBOX, House Stock at 109p)

SHORE CAPITAL - Premier Foods+ (PFD, House Stock at 114p)