In The Spotlight - Southern Europe pain fails to dampen Diageo's spirits
Paul Walsh called them a "solid" set of numbers and much of the media appeared to agree with Diageo's CEO, with only a few dents in the armour visible.
The drinks group reported a healthy rise in operating profits today as the business continues to defy the economic gloom in many regions. A familiar picture was apparent as growth in developing markets continued to offset challenges in Europe.
However, as Dow Jones noted, Europe "still accounts for 27% of its worldwide sales". "Fledgling growth from Eastern Europe, Russia and Turkey is now supporting the business, as Western and Southern Europe drag," it reported.
"Diageo has felt particular pain across Spain, Portugal, Greece and Italy, which represent 5% of its global sales," the report added. Overall sales slipped by 1% in Europe as profits rose by 3%.
But Walsh refused to talk down Europe in an interview with Sky News. "There are growth opportunities to be had in Europe. It's not easy, but nor can you write it off," he said. "It's a big market. It will come back."
He added: "It may take some time but for companies like us, our job is to mine those opportunities and that's what we're doing."
The group's results compared favourably to Heineken's this week, Reuters noted. "Exposure to fast-growing markets in Africa, Asia and Latin America meant Diageo outshone Dutch brewer Heineken, which posted a decline in first-half profit on Wednesday, hurt by weak European sales," it reported.
Meanwhile, the on-going rumours over Diageo's possible acquisiton of Tequila brand Jose Cuervo continued to occupy minds. The group's distribution deal with Jose Cuervo finishes next June, Reuters noted, and pointed to estimates that "the world's best-selling tequila brand could be worth around US$3.4 billion".
However, it appears we are no futher forward on the situation as Diageo's CFO, Deirdre Mahlan, was reported as saying: "We are continuing discussions with (owners) the Beckmann family given the end period for our distribution arrangement."
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