Operating profit at Diageo up 25pc despite 'flat' Guinness sales

Judith Bessette
Julho 27, 2017

Drinks giant Diageo has toasted a brighter outlook after securing a hefty jump in sales and profits thanks to a leg up from the Brexit-hit pound.

Diageo hailed a strong performance in the United Kingdom, with sales up 3% partly thanks to the British love of Captain Morgan rum.

Diageo reported net sales that were up 15 per cent to £12.1 billion during the year with operating profit rising 25 per cent to £3.6 billion.

Baileys had a healthy Christmas with strong backing of flat white martinis in the on-trade proving a "major" contributor to sales.

Sterling's weakness laid the foundations for an extra lift for the Smirnoff vodka and Guinness-maker when translating overseas earnings back into pounds.

The group also announced a £1.5 billion share buyback program for the fiscal year ending in June 2018.

Chief executive Ivan Menezes hailed the "strong set of results" and added that the company had enjoyed improvements across all regions. "Following three years of consistently improving cash flow generation, the board has approved a share buy-back programme of up to £1.5bn in FY18".

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Diageo, which owns 200 brands across 180 countries, said Scotch sales rose by 5 per cent over the period, as Johnnie Walker and Buchanan's climbed by 6 per cent and 16 per cent respectively.

"We delivered a strong set of results including broad based improvement in organic net sales and operating profit".

The net sales growth rate was, however, a tad down from the first half performance of +4.4%.

Earlier this year Diageo bought Casamigos, the Tequila brand co-founded by Hollywood heartthrob George Clooney, for up to $1 billion as part of its push to gain from the growth in super premium Tequila.

Latin America and the Caribbean contributed to Bailey's growth with double-digit growth behind Mexico Mother's Day shopper platform and North America contributed with brand innovations.

He said: "Currency movements gave the company a big helping hand, but the underlying progress was strong too".

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