Pay uplift call as drinks giant Diageo reports profits cheer

GMB says profits show firm can afford to reward workers

Union leaders have called on Diageo to improve conditions for Scottish workers after the drinks giant posted increased profits.

Preliminary results for the year to June 30 show the group – which is one of Fife’s largest private-sector employers with more than 1,000 staff at its Leven, Cameronbridge and Cluny sites – generated statutory pre-tax profits of £3.74 billion on sales of £18.43bn.

In 2017, the Edinburgh headquartered group – whose brands include Johnnie Walker whisky, Smirnoff vodka and Guinness – acheived a pre-tax profit of £3.55bn on sales of £18.11bn.

Scotch represents around a quarter of the group’s total net sales.

Global revenues for the spirits category grew 2% year on year, bolstered by a marginal uplift in Scotch and liqueurs and strong growth (16%) in gin due, largely, to higher demand in Europe for Tanqueray and Gordon’s.

Tequila sales grew by 40%, although overall beer sales fell by 1% in the year.

“Diageo has delivered another year of strong, consistent performance,” group chief executive Ivan Menezes said.

“Organic volume and net sales growth is broad based across regions and categories.

“We have expanded organic operating margin while increasing investment behind our brands ahead of organic net sales growth.

“These results reflect the high performance culture we have created in Diageo, the ongoing rigorous execution of our strategy, our focus on the consumer and our ability to move swiftly on trends and insights.”

During the year the group returned £1.5 billion to shareholders through a share buyback programme.

That is to continue in the current year with a further £2bn of buybacks.

Mr Menezes added: “The changes we have made in the business and the shifts in culture we continue to drive, ensure we are well placed to capture opportunities and deliver sustained growth.”

The GMB union said it was currently negotiating with the firm over its members’ annual pay increase for 2018/19.

GMB Scotland organiser Keir Greenaway said: “These financial results leave Diageo in a great position to reward their hardworking and loyal staff with a pay rise in proportion with the eye-watering profits they have made in 2018.”

Diageo stock closed down 27p at 2,820.50p.

Diageo group chief executive Ivan Menezes.