Diageo plc

Good morning and welcome to Diageo's 2022 Interim Results Q&A call. Your call today will be hosted by Ivan, Diageo CEO, and Lavania, Diageo CFO. This conference is being recorded. To ask a question today, please press star 1 on your telephone keypad. We are now ready to start the call. Ivan, please go ahead.

Hello, everyone, and thank you for joining our interim results call for fiscal 22. I hope you've had a chance to read our press release and watch our presentation webcast on theadjo.com. I'm very pleased with our results for the first half of fiscal 22. It builds on our strong momentum in fiscal 21 and demonstrates world-class brand building, supply chain excellence, and agile culture. Organic net sales were up 20%. All five regions delivered double-digit growth and exceeded net sales in the first half of fiscal 19. Growth was broad-based across categories, and I was particularly pleased with the strong growth in scotch, up 27%. The continued outperformance in tequila, up 56%, and the recovery in beer, up 22%. We also delivered a significant improvement in operating margin, up 131 basis points, while increasing our marketing spend ahead of net sales growth. And we achieved this while managing higher cost inflation and ongoing disruption from global supply chain constraints. Our advantage portfolio combined with effective marketing, excellent commercial execution, and successful innovation enabled us to gain or hold off-trade share in the majority of our markets. And we also gained share in the on-trade as it continued to recover. We are investing in long-term growth, including production capacity, digital capabilities, and our society 2030 goals. And we're delivering consistent returns for shareholders, increasing our interim dividend by 5%, and accelerating the timeline for completion of our return of capital program to 2023. While we expect continued volatility in the near term, I'm optimistic about the growth prospects for our industry and for Diageo. We believe we are well positioned for resilience in the off-trade and further recovery in the on-trade. We expect to continue benefiting from the rapid premiumization of the spirits category and its share gains within total beverage alcohol. And our premium differentiated brand Guinness is well positioned for key growth trends in beer. I am confident in our strategy and our ability to execute strongly through the remainder of fiscal 22 and beyond. I'll now hand the call back to the operator to open the phone line for your questions. Lavanya and I are both in our London Park Royal head office as we take this call.

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will now take our first question from Pinar Nguyen from Morgan Stanley. Please go ahead.