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Drinks group profits surge

Low pound helps boost Diageo at half-way

Johnnie Walker ChristinaOrganic growth and the low pound helped whisky distiller Diageo report a 28 rise in operating profit to £2.06 billion on a 14.5% rise net sales to £6.4bn for the first half of the year.

The Johnnie Walker to Guinness company said volume grew 1.8% while it reported good progress on productivity offset by implementation costs and the profit on sale of the UB shares in the prior period

The company has declared a 5% increase in the interim dividend to 23.7p per share.

Ivan Menezes, chief executive, said:  We have delivered a strong set of results with broad based improvement in both organic volume and top line growth and this positive momentum demonstrates continued effective execution of our strategy.

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

“Diageo is building a stronger, more consistent, better performing company. We are identifying consumer trends faster, expanding the reach of our products across markets and developing trade channels to capture these growth opportunities.

“Our productivity work is on track, driving efficiency and effectiveness across the business. Our work on trade and marketing spend gives us better data enabling smarter, quicker decisions that generate higher returns.

“Our expectations of delivering stronger financial performance this year are unchanged. We are confident of achieving our medium term objective of consistent mid-single digit top line growth and 100bps of organic operating margin improvement in the three years ending 30 June 2019.”

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