UK: Europe remains tough for Diageo

Diageo has seen no improvement in trading at its European operations since June, a company senior executive  said today.

Speaking to analysts at a briefing, Andrew Morgan, President of Diageo Europe, said: "We've not seen any material changes in our trading since end of the financial year."

He added that the company expected the first half of this financial year to be tough, with the third and fourth quarters proving less so, thanks to easier comparatives figures.

In August, Diageo CEO Paul Walsh warned the company would struggle to cycle the first three months of the last fiscal year. "The first quarter (of the last fiscal year) was extremely strong," he said then. "July, August and September last year were good months for us, and we're going to have to comp that. We're still lapping very tough numbers.

"For us, it's really in the second half that we will start to expect real improvements in our categories and in our markets."

As reported in August, Diageo's net sales for the 12 months to the end of June were flat against the year before on a like-for-like basis, with like-for-like volume sales down 4%, as the global economic downturn put the stoppers on growth.

But, lower media rates and reduced operating costs in general enabled the group to increase like-for-like operating profits by 4%, meeting the lower end of its full-year guidance.

Net profits for the year rose to GBP1.72bn (US$2.8bn), against GBP1.6bn a year earlier. Before tax, profits fell to GBP2bn, against almost GBP2.1bn last year.