Endeavour Group has announced its FY22 results, with sales of $11.6 billion in its first financial year as an independently listed business. Revenue was flat year-on-year, while there was 11.2% net profit growth to $495million.

The company said profit was driven by premiumisation, higher margin new products and demand for Pinnacle Drinks products, as well as a lower level of promotional activity in the market.

The margin gains were strongest in the first half as supply chain costs increased in the second half and promotional activity started to increase.

It said growth in spirits and RTDs was a highlight, with innovative new products such as seltzers performing particularly well. Over the last three years, sales in these categories have grown over 40% as customers continue to seek out new, premium and craft offerings.

Endeavour said it had also seen an acceleration of low and zero alcohol products, with five of the top 10 fastest growing subcategories being in low and zero alcohol.

Endeavour Group Managing Director and CEO Steve Donohue (above) said it was a “strong trading result given we were again impacted by a complex and volatile trading environment”.

“We endured extensive temporary hotel closures and restrictions, particularly in the first half of the financial year which was very challenging for our Hotels business,” he said.

“At the same time, these closures created tailwinds for our retail business with an elevated at-home market. The effects of COVID-19 eased through the second half of the financial year.”

The Hotels business acquired five new hotels and completed 40 renewals, while the retail drinks network saw ongoing renewals and innovative new store formats, as well as 32 net new stores.

“We were also pleased to welcome Josef Chromy Wines to our Paragon Wine Estates portfolio and we’re proud of the achievements of our Pinnacle Drinks team who won hundreds of awards for quality in the year,” Donohue said.

Endeavour also saw online sales growth of 17% to $1billion, with online penetration reaching 10%

The outlook for Endeavour Group in FY23

Donohue said there had been continued recovery in the Hotels’ trading results in the first seven weeks of the new financial year, while the trends in retail are consistent with a return to normal patterns of trade.

Compared to the same period in FY20, which was before COVID-19 impacts, retail sales were up 12.7% and hotels were up 13.4%.

However he said sales comparisons to last year are not meaningful given the COVID-19 restrictions in place at the time.

“Looking ahead, we expect the retail drinks and hospitality markets will continue to return to normal over the course of F23,” he said.

“While the return of social connection and events are positive and this is reflected in our first seven weeks of trading, there are a variety of factors which may impact performance in the year ahead including inflation, limited team availability and the potential for supply chain disruption.

“Australians are returning to socialising in hospitality settings, and the trend towards discovering new drinks is continuing. While we anticipate that the operating environment will remain challenging, I’m confident our team of exceptional people, our customer-focused strategy, and our disciplined approach to financial management will enable us to continue to deliver for our customers, partners, team members and shareholders.”

Endeavour Group adds Josef Chromy Wines to its portfolio