'Positive momentum' at drinks giant
Gin and beer sales drive UK growth at Diageo
Gin sales are rising in Britain
Gin’s growing popularity has helped drive sales higher at drinks giant Diageo.
Net sales in the UK grew 7% over the half year, primarily driven by growth in gin and beer.
Tanqueray delivered strong double digit net sales growth and Gordon’s gin benefitted from the launch of its Pink variant.
Guinness net sales increased 8%, driven by a strong performance in Guinness Draught and Hop House 13 Lager.
Scotch whisky net sales were up double digit mainly driven by scotch malts and Johnnie Walker supported by the seasonal “Christmas lights” campaign.
Reserve brands continued to deliver double digit growth, with strong performance across brands, led by increased distribution in Cîroc and the launch of Cîroc French Vanilla.
The business also partially benefited from lapping prior year working capital efficiencies, including inventory reductions.
Group half-year net sales rose 1.7% to £6.5 billion, but currency movements and other issues such as curbs on sales in India trimmed growth.
The company said that “as for most multinationals the current tax environment is creating increased levels of uncertainty.”
Operating profit before tax rose from £2.06bn to £2.19bn in the six months to 31 December 2017. The interim dividend is increased 5% to 24.9p per share.
Ivan Menezes, Chief Executive, said: “These results demonstrate continued positive momentum from the consistent and rigorous execution of our strategy. We have delivered broad based improvement in both organic volume and net sales growth.
“We have increased investment behind our brands and expanded organic operating margin through our sustained focus on driving efficiency and effectiveness across the business.
“By consistently delivering on our six strategic priorities, Diageo continues to get stronger: we have better consumer insight through superior analytics, improved execution on brand and commercial plans and have embedded everyday efficiency across the business through our productivity initiatives.
“This has enabled continued growth, improved agility, and consistent cash flow generation.
“Our financial performance expectations for this year remain unchanged. We are confident in our ability to deliver consistent mid-single digit top line growth and 175bps of organic operating margin improvement in the three years ending 30 June 2019.“