• Second-half recovery boosts profits
  • Weakness in Europe, US offset by emerging markets
  • CEO expects more profits growth
Diageo upbeat on profits for year ahead

Diageo upbeat on profits for year ahead

Diageo has said that it expects profits momentum to continue after cost controls and an improved performance in recent months helped the drinks giant to increase sales and earnings for it fiscal year.

Diageo said today (26 August) that net sales rose by 2% on a like-for-like basis to GBP9.78bn (US$15bn) for the 12 months to the end of June. A strong showing from Johnnie Walker, particularly in Latin America, as well as slight gains for the firm in Asia, helped to offset sales declines in Europe and North America.

Cost controls throughout the business helped the Smirnoff and Guinness owner to increase like-for-like operating profits by 2% on the previous year, to GBP2.57bn. At the same time, like-for-like marketing spend rose by 14% in the second half of the year - although, advertising and promotion spend was broadly flat as a percentage of sales over the 12 months.

The results underline that Diageo's year has been a tale of two halves. Like-for-like sales fell by 2% in the first six months, with operating profits down by 6%.

Diageo's CEO, Paul Walsh, said that he expects profits momentum to continue following the second-half recovery. "The global diversity of our business, together with the strength and range of our brands and the agility we have demonstrated gives us confidence that in fiscal 2011 we will be able to improve on the organic operating profit growth we have delivered this year," he said.

The group has recommended a 6% inrease in its full-year dividend to shareholders. Net profits for the year increased by 2% to GBP1.74bn.

For the full announcement, click here.