UK: Diageo maintains full year guidance
Diageo has maintained its full year guidance of 9% organic operating profit growth, in a trading statement released today (16 October).
The company said that organic net sales have grown 5% in the three-month period ended 30 September.
However, the combined impact of two changes in the quarter has reduced organic net sales growth by over one percentage point, the company said.
The UK-based drinks group said that the incremental net sales arising from price increases made in Venezuela to reflect the movement in the parallel exchange rate are now excluded when calculating organic net sales growth. In addition, as previously announced, the required change in Diageo's route to market in Korea has also impacted organic net sales growth. Diageo is now selling to a third party distributor at a net sales value per case which is lower than last year as the distributor is responsible for the marketing and distribution costs previously incurred directly by Diageo in Korea.
That said, the statement added that the anticipated full year operating profit impact of both these changes was included in the fiscal 2008 organic operating profit growth guidance of 9% which Diageo gave at the time of its 2007 preliminary results in August 2007.
There has been no material change in the financial position of the group during the period, the statement said.
Paul Walsh, CEO of Diageo said: "At our results presentation in August I said that Diageo's strengths are the quality and diversity of our brands, our routes to market and our global reach. Trading since the beginning of the year has again demonstrated these strengths. The second quarter is a key selling period for us and although we continue to watch for any impact that recent financial market volatility may have on broader trading conditions we are maintaining our guidance for 9% organic operating profit growth for the current fiscal year."
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