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Guinness is good for Diageo

Published:  23 July, 2008

Strong growth in the US spirits market and rising Guinness sales in the UK helped Diageo to report a 5.3 per cent increase in pre-tax profits to 1.37bn in the six months to December 31 2007.

Operating profits rose by 8 per cent to 1.41bn. Underlying growth was 9 per cent and it is confident it can maintain this throughout the second half.

Paul Walsh, chief executive of Diageo, said: "While we continue to watch for any impact that recent financial market volatility may have on broader trading conditions, we are maintaining our guidance for 9% organic operating profit growth for the current fiscal year."

Johnnie Walker, Sminoff and Captain Morgan delivered double-digit net sales. Guinness has also improved with net sales up 6% and share gains in Great Britain and Ireland.

Increased marketing budgets and a "simplified Christmas pricing strategy" for Smirnoff, Baileys and Guinness all led to strong sales in the UK with Smirnoff up 6% by volume, Baileys up 11% and Guinness up 3%.

North America which accounts for a third of the group's profit saw profits up just 1% to 491m, Growth was driven by US spirits where net sales were up 8%.

However, Diageo has been hit by exchange rates in the first half, reducing operating profit by 13 million.

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