The Courier & Advertiser (Angus and Dundee)
Global thirst for whisky is a tonic for drinks giant
PRODUCTION: Diageo getting stronger, says chief executive as half-year profits rise
Shares in Diageo pushed ahead early yesterday after the drinks giant reported a rise in first-half sales and profits.
The group, which is one of Fife’s largest employers with more than 1,000 staff based at Cameronbridge distillery, the Leven bottling plant and the Cluny Bond at Kirkcaldy, said growth in the six months to December 31 had been broad based.
Net sales in the period came in at £6.53 billion – a 1.7% increase on the prior year – while operating profits before exceptionals was 6.1% ahead at £2.19 billion.
However, volumes in the period were 2% lower.
The firm moved to declare a 5% increase to 24.9 pence in the interim dividend to shareholders.
“These results demonstrate continued positive momentum from the consistent and rigorous execution of our strategy,” chief executive Ivan Menezes said.
“We have delivered broad-based improvement in both organic volume and net sales growth.
“We have increased investment behind our brands and expanded organic operating margin through our sustained focus on driving efficiency and effectiveness across the business.”
The figures show Scotch whisky represented 27% of total sales in the period, a rise of 3%, with sales of its flagship Johnnie Walker brand up 6%.
Demand was strong in all regions apart from Africa where sales were impacted by challenges within the third party distributor network.
Tanqueray gin had a strong period with sales up 15% and the group also saw good demand for Guinness, with net sales 2% higher.
The update shows the firm made significant headway with a £1.5bn share buyback programme announced in late July.
In total, the group bought back 29.5 million shares worth £760m in the period through to Hogmanay.
Mr de Menezes continued: “By consistently delivering on our six strategic priorities, Diageo continues to get stronger: we have better consumer insight through superior analytics, improved execution on brand and commercial plans and have embedded everyday efficiency across the business through our productivity initiatives.
“This has enabled continued growth, improved agility, and consistent cash flow generation.
“Our financial performance expectations for this year remain unchanged.
“We are confident in our ability to deliver consistent mid-single digit top line growth and 175bps of organic operating margin improvement in the three years ending 30 June 2019.”
Shares in Diageo closed the day down 5.50 at 2,537.00.
business@thecourier.co.uk