Diageo Sees Operating Profit Increase In First Half

By Steve Wynne-Jones
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Diageo Sees Operating Profit Increase In First Half

Drinks giant Diageo has posted a 15% increase in reported net sales in the first half of its financial year, of £12.05 billion. Organic sales growth was 4% for the period.

The Smirnoff and Johnnie Walker owner posted operating profit before exceptional items of £3.6 billion, up from the £3 billion it posted in the same period last year.

“We delivered a strong set of results including broad based improvement in organic net sales and operating profit," commented Ivan Menezes, Diageo chief executive.

"Our performance demonstrates the effective delivery of our strategy through disciplined execution of our six priorities put in place four years ago. We have delivered consistent strong performance improvement across all regions and I am pleased with progress in our focus areas of US Spirits, scotch and India."

Divisional Performance

In the group's Europe, Russia and Turkey division, net sales were up 4%, with Continental Europe and Great Britain the main contributors to this growth, with its Johnnie Walker, Baileys and Captain Morgan brands posting the most growth.


In North America, the group delivered net sales growth of 3%, with improvements in its US Spirits and Diageo Beer Company USA businesses. Scotch sales grew 8%, driven by Johnnie Walker Black Label, Buchanan’s and reserve variants, the company said.

Its Africa division posted net sales growth of 5%, with all markets performing strongly except East Africa, while Latin America and Caribbean delivered 2% growth in volume and 9% growth in net sales. Net sales in Asia Pacific were up 3%.

Ahead Of Expectations

"Our productivity work is delivering ahead of expectations allowing us to reinvest in our brands, drive margin improvement and generate consistent strong cash flow," said Menezes. "Through productivity we have embedded an everyday efficiency mind set in the business and with improved data and insight we are making faster, smarter decisions on investment choices."

Menezes added that he sees Diageo as a "strong company today and we are confident in our ability to deliver sustainable growth. We are raising our productivity goal to £700 million with two thirds being reinvested in the business. We continue to expect mid-single digit top line growth, and we are raising our operating margin expansion objective to 175bps over the three years ending 30 June 2019."

© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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