UK: Sales up in value, less so in volumes for Diageo in H1

• Six-monthly net sales rise by 4.9% to GBP6.04bn (US$9.52bn) on 1% lift in volumes
• Operating profits climb by 11% to GBP2.05bn
• Volumes flat, up by 1% with Europe dragging on performance
• Net profits in six months to end of December leap by 57.1% to GBP1.60bn on year-earlier tax charge

Diageo has posted rises in both net sales and operating profits in its fiscal first half, with volumes inching up in the period.

The UK-based drinks company said earlier this morning (31 January) that operating profits in the six months to the end of December came in 11% up on the corresponding period a year ago, at GBP2.05bn (US$3.23bn). The profit rise came on the back of a 4.9% increase in net sales, to GBP6.04bn, although volumes in the six months were up by only 1%.

Net profits leapt by 57.1% to GBP1.60bn, although the firm was cycling a one-off tax charge a year ago. The company's reported tax rate in its H1 was 18.4% compared to 45.2% in the six months to the end of December 2011.

In volume terms:

• North America was up by 1%, helped by the US. Canada was flat
• Europe came in 3% down, due to continuing struggles in the west of the region (-5%). Russia & Eastern Europe rose by 9%
• Africa increased by 3%, although beer, which dominates Diageo's presence in the region, was flat
• Latin America & Caribbean increased by 7%, with Mexico the star performer (+16%)
• Asia Pacific inched up by 1% although India came in 5% down due to “weakness of the vodka category and a reduction in stock in trade”. Greater China was up by 5%

Diageo noted that “faster growing” markets accounted for 42% of its half-yearly net sales, delivering organic net sales growth of 14% and operating profit growth of 21%.

“These results reflect the global strength of our strategic brands, our leadership in the US spirits market and our increasing presence in the fastest-growing markets of the world, said company CEO, Paul Walsh. “Our … net sales growth was driven by our pricing strategy and premiumisation, especially in the US.

“This is a strong set of results, confirming our medium term guidance and supporting our decision to increase the interim dividend by 9%.”

As of 0945 GMT, Diageo's share price was up by 0.5% at GBP18.615.

To read the company's official statement, click here.

For just-drinks' coverage of Diageo's Q1 results, click here.