Strong growth for drinks group
Diageo weathers exchange rate to beat forecasts
Drinks group Diageo, the Guinness to Johnnie Walker producer, reported strong top line growth and an increase in its dividend in half-year figures, despite adverse exchange rates. The figures beat analysts expectations.
- 1.8% organic net sales growth, on 1.0% organic volume growth
- 2.4% organic operating profit growth
- Adverse exchange and the impact of the disposal of non core assets, reduced net sales by £400 million and operating profit* by £156 million to £5,606 million and £1,717 million, respectively
- Free cash flow £0.8 billion up £140 million on comparable period
- eps of 56.1 pence, up 7%. Pre-exceptional eps 51.3 pence, down 4%
- Interim dividend up 5% to 22.6 pence per share
*Before exceptional items
Ivan Menezes, chief executive, said: “Diageo has become a stronger, more competitive business. We have delivered volume growth, a stronger top line, improved the performance of our key brands, driven cost productivity and continued to generate strong cash flow.
“While trading conditions remain challenging in some markets, Diageo’s brands, capabilities in marketing and innovation and our route to consumer have proved resilient. I am confident that Diageo can deliver improved, sustained performance.
For the full year we expect volume growth to drive stronger top line performance, margin to slightly improve and strong cash conversion to continue. This will set us up to deliver better momentum in F17, with productivity gains supporting margin expansion and investment in growth. We remain confident of achieving our objective of mid-single digit top line growth and 100bps of organic operating margin improvement in the three years ending fiscal 19.”