Diageo plc

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 Levania, Diageo's 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 thanks for joining our Preliminary Results call for fiscal 2022. Hope you've had a chance to read the press release and watch our presentation webcast on diagio.com. I'm 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 up 10% and price mix growth was 11 points, with price contributing mid-single-digit growth. Diageo's three-year compound annual growth rate for 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 markets. We have an advantage portfolio, which we continue to actively shape towards fast-growing categories, and our super premium plus brands grew 31%. We continue to invest. A&P grew 25%, and we had a record year on CapEx, spending over a billion pounds on capacity, sustainability, and setting the business up right for future growth. Strategic pricing action across all regions and our supply productivity savings more than offset the absolute impact of cost inflation. We have strong gross margin expansion and leverage of operating costs drove further significant improvements in operating margins, 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's 2030 goals. Now, while we expect the operating environment to be challenging in the near term with several headwinds, including ongoing volatility related to COVID-19 and a potential weakening of consumer spending power, I'm confident in our ability to navigate that. We're staying very close to our consumers, leveraging our digital tools and data capabilities to quickly spot trends and respond with speed. I'm also confident in the resilience of our business With our advantage portfolio, effective marketing, strong commercial execution, and successful innovation, we're well positioned for the continued premiumization of the spirits category and its share gains within total beverage alcohol. And our iconic global brand Guinness is beautifully positioned for growth trends within the category of the premium year. So with that, Lavanya and I are here in Soho, in our London headquarters, and I'll open up the line for questions.

Thank you, Ivan. As a reminder, to ask a question, please signal by pressing star 1. Our first question comes from Sanjit Auzla from Credit Suite. Please go ahead.