Diageo’s profits boosted by US sales

By James Ridler contact

- Last updated on GMT

Diageo has posted a boost to profits, thanks to successful expansion in the US
Diageo has posted a boost to profits, thanks to successful expansion in the US

Related tags: Johnnie walker

Alcoholic beverages giant Diageo has posted operating profits of more than £2bn in its interim report released yesterday (January 26), boosted by improved performance in the US.

The company’s operating profit grew by 28% to £2.06bn in the six months to December 31 2016, up from £1.7bn for the same period in 2015.

Diageo’s sales grew 4% to £6.4bn, with 27% of its sales coming from its Scotch whisky products. US sales rose by 3%, while sales in Latin America and the Caribbean grew 11%.

Ivan Menezes, chief executive, said the results showed improvement in volume and top line growth and demonstrated the firm’s continued commitment to grow in the US market.

“Highlights this half include improved performance in our US spirits business and across our Scotch portfolio, driven by our focus on marketing with impact, innovating at scale, expanding our route to consumer, and winning in reserve ​[premium and luxury drinks],”​ said Menezes.

‘Improved performance’

“Progress on productivity supports growth, margin improvement and consistent strong cash flow generation as well as improving our agility.”

North American whisky, Scotch and tequila delivered the strongest category performance for Diageo.

North American whisky net sales grew 15% as Crown Royal and Bulleit continued to gain share in a vibrant category.

Scotch whisky growth was driven by reserve variants and Johnnie Walker Black Label, with net sales up 11% and 9%, respectively.

Scotch whisky growth

The interim statement said: “Scotch represents 27% of Diageo’s net sales and was up 6% in the half with growth in North America, Europe, Africa and Latin America and Caribbean driven by Johnnie Walker and Buchanan’s.”

Reports of Diageo’s improved performance in the US came as environment secretary Andrea Leadsom revealed Burns Night had delivered a multimillion-pound global boost for Scottish alcoholic beverages.

Whisky exports grew by 1.5% to £2.8bn between January and September 2016, while exports of beer rose 16% to £479M. Gin exports rose 11% to £392M.

Diageo interim results – at a glance

In the six months to December 2016:

  • Operating profit grew by 28% to £2.06bn
  • Sales grew 4% to £6.4bn 
  • 27% of its sales came from its Scotch whisky products
  • US sales rose by 3%

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