Diageo’s £3.1bn profits boosted by emerging markets

By Mike Stones

- Last updated on GMT

Related tags Drinks giant diageo Revenue Scotch whisky

Selling more than a wee dram in emerging markets helped Diageo to its £3.1bn profit
Selling more than a wee dram in emerging markets helped Diageo to its £3.1bn profit
Strong sales in emerging markets helped drinks giant Diageo to a pre-tax profit of £3.1bn, up by 32% for the year to the end of June.

Sales climbed by 10% to reach £14.6bn. Net sales in emerging markets  –  which accounted for nearly 40% of Diageo’s business – grew by 15% and operating profit by 23%.

Investec analyst Martin Deboo concluded that Diageo had “delivered on its promises”.

He said: “The 8% increase in dividend reads encouragingly, and chimes with ceo Paul Walsh’s confidence that the business is very much ‘on track’ to deliver against medium-term guidance.”

Deboo noted modest revenue growth in the US, while growth in eastern Europe “continues to motor” ​with net sales up more than 16% on the previous reporting period.

‘Concerns around the UK’

But he questioned the firm’s performance at home. “We have some concerns around the UK, with an implied 6% decline in volumes,”​ said Deboo.   

But, overall Diageo was “a strong business​ [that was] on track”,​ said Deboo, repeating Investec’s ‘buy’ recommendation.

Diageo boss Paul Walsh said the business was “ getting stronger”.​ He said: “We have increased our presence in the faster growing markets of the world, through both acquisitions and strong organic growth.

“We have enhanced our leading brand positions globally, through effective marketing and industry leading innovation and we have strengthened our routes to market.”

Final dividend

Walsh added: Our confidence in the achievement of our medium-term guidance is underscored by the 8% recommended increase in our final dividend.”

In June Diageo announced plans to invest £1bn in Scotch whisky production, designed “to seize the opportunity for global growth” ​and to create hundreds of jobs.

To read the full story, click here​.

The globe’s biggest spirit manufacturer, Diageo makes Johnnie Walker, J & B and Bell’s whisky brands. It also produces a wide range of other spirits and operates 28 malt distilleries and employs more than 4,000
people in Scotland alone.

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