Broad based improvement
Scotch up as Menezes hails ‘strong’ Diageo
Group sales were £12.05bn for the year ending 30 June, a rise of 4% on an organic basis. Operating profit rose to £3.6bn.
European net sales rose 4% and in Britain by 3% while net sales in Ireland were flat. Guinness net sales were up 2% driven by continued success of Hop House 13 Lager, offset by other beer brands where net sales declined 4%. Net sales growth in spirits of 10% was driven by Gordon’s and Smirnoff.
The company led the FTSE100 in early trading with shares up 5.5%.
Diageo has already committed to return up to £1.5bn to shareholders through a share buyback programme, and has recommended a 5% increase in the final dividend which would take the total payout for the year to 62.2p per share.
Ivan Menezes, chief executive, said: “We delivered a strong set of results including broad based improvement in organic net sales and operating profit.
“Our performance demonstrates the effective delivery of our strategy through disciplined execution of our six priorities put in place four years ago. We have delivered consistent strong performance improvement across all regions and I am pleased with progress in our focus areas of US Spirits, scotch and India.
“Our productivity work is delivering ahead of expectations allowing us to reinvest in our brands, drive margin improvement and generate consistent strong cash flow. Through productivity we have embedded an everyday efficiency mind set in the business and with improved data and insight we are making faster, smarter decisions on investment choices.
“Diageo is a strong company today and we are confident in our ability to deliver sustainable growth. We are raising our productivity goal to £700 million with two thirds being reinvested in the business. We continue to expect mid-single digit top line growth, and we are raising our operating margin expansion objective to 175bps over the three years ending 30 June 2019.
“Following three years of consistently improving cash flow generation the Board has approved a share buy-back programme of up to £1.5 billion.”