GLOBAL: Strong sales in Diageo HY, but guidance remains static
Diageo has reaffirmed its full-year guidance in its latest trading update.
The drinks giant said today (28 June) that organic operating profit growth for this year should reach the anticipated 8%, despite what it called a "strong trading performance" in the first six months of this year.
"While Diageo's total organic net sales growth in the full year is expected to be higher than in the first half, operating profit growth will be in line with the first half performance of 8%," said Diageo's CEO, Paul Walsh.
In North America, the company said it performed strongly as consumers continued to trade up to premium brands. "Diageo's focus on premium brands therefore continues to generate top line growth and support the implementation of further price increases," the company said.
Meanwhile, in Europe, investment behind growth opportunities identified in continental and Eastern Europe, together with strong growth in Russia, led to an improvement on top line performance in the second half. The company also noted that marketing investment has been increased in the second half "behind proven growth drivers".
Turning to International, Latin America and Africa both continued to deliver strong growth. In Latin America this has been led by the growth in Scotch and RTDs and in Africa by the growth in beer and RTDs. Finally, in Asia Pacific, net sales growth was stronger in the second half than in the first half of the year as Diageo increased further its marketing spend in key markets.
Looking at sector performance, the company credited its Scotch brands with good performances worldwide, while beer produced a good showing through the continued success of Guinness and the lager brands in Africa. In RTDs, growth in Brazil and South Africa has offset further decline of the segment in Europe. Finally, wine produced strong results in Sterling Vineyards and French agency wine brands in the US.
The company warned, however, that the impact of exchange rate movements on operating profit will cause a negative impact of GBP90m (US$180.2m).
Diageo is set to reveal its full year results - to the end of June - on 30 August.
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