UK: Diageo issues buoyant trading update

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Diageo has today (29 June) said it expects annual profits to be up 7% after seeing its global flagship brands drive sales during the second half of the year.

The UK drinks giant issued a trading statement in advance of the publication of its full-year results at the end of August. Diageo said organic operating profit was set to rise 7% with net sales up 6%.

The company said that rising sales of Johnnie Walker Scotch whisky and Smirnoff vodka had driven earnings. Diageo also enjoyed growth from its international markets, including Brazil and China.

Diageo CEO Paul Walsh said: "We have successfully delivered on our objectives. We are building a superior position in North America, investing strongly behind our brands in International and continuing to reduce costs in Europe. As our excellent top line growth shows, we are gaining share in many markets."

The company saw "double-digit" sales growth from its "major hubs" internationally, including Latin America, Africa and Asia, but said it was Latin America that was "the key driver" of growth outside of North America and Europe.

Diageo warned that European markets remained "subdued" and blamed increased regulation on the continent for hitting alcohol sales. The picture in Europe remains mixed for Diageo with a slowdown in Spain's Scotch whisky market and problems with the introduction of a new duty regime in Russia offsetting gains made by Guinness in the UK and J&B Scotch in France.

However, Diageo saw buoyant performances across its business in North America as consumers continued to demand more premium products.

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