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Diageo follows-up strong interim results with 25% rise in operating profit

Published:  27 July, 2017

Diageo continues to accelerate in the fast lane by growing market share in both the on and off-trades in the UK over the past year.

Diageo began with a promising start to 2017 with a better than expected rise in sales helped by improvements in its US business and its Scotch portfolio.

In its 2017 interim results released today, the spirits giant saw organic operating profit (excluding currency movements and acquisitions,) once again beating expectations and rising by 5.6% for the year to June 30.

Operating profit inclusive of currency movements and acquisitions was up by 25% to £3.6bn and net sales rose by 15% to £12.1bn over the same period.

The results released this morning marks the third strong set of results in a row for Diageo.

On the back of increased momentum, Diageo offered investors a 1.5 billion pound share buyback, and also raised its cost-cutting program target from £500mn to £700 mn by the end of the financial year 2019.

Charles Ireland, general manager for Great Britain, Ireland and France, attributed strong sales to a focus on building its core brands, the reserve section of the business which is in double digit growth, and “ongoing work to innovate on new and existing brands to provide UK consumers with new propositions to match their evolving tastes”.

Baileys had a healthy Christmas with strong backing of flat white martinis in the on-trade proving a “major” contributor to sales.

Smirnoff remains the biggest vodka in the UK and grew share in a falling category, the company said, while Gordon’s continues its run of double digits in both value and volume.

Financial analysts pointed out Diageo’s 5.5% rise in share price this morning, with Fiona Cincotta, senior market analyst at www.cityindex.co.uk, commenting to Harpers that the drinks powerhouse might be celebrating after shares reached a new record high of £23.90.




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