Cheers … £2bn for Diageo investors

Jack Torrance

Oliver Gill

DIAGEO is to reward investors with £2bn worth of share buybacks after reporting a rise in revenue and profits, partly thanks to the booming popularity of gin.

The alcohol giant, which owns Guinness, Smirnoff and Johnnie Walker, saw revenues grow 1.7pc to £18.4bn in the year to June, slightly ahead of analysts’ expectations, despite the negative impacts of foreign currency swings. Pre-tax profits rose 5pc to £3.7bn.

The buyback programme follows £1.5bn returned to shareholders through the same means last year, and was accompanied by a 5pc increase in Diageo’s dividend to 65.3p per share.

Diageo’s growth was buoyed by a strong performance in the UK, where sales rose 8pc as a growing number of drinkers supped on Tanqueray and Gordon’s gin.

Ivan Menezes, chief executive, said Diageo had benefited from customers splashing out on higher quality tipples rather than buying more drinks overall.

Diageo’s shares closed down 0.9pc at £28.21 yesterday, which Neil Wilson, the Markets.com analyst, said could be the result of profittaking after they rose 20pc since the end of March.