Diageo reports 9% profits rise

Published: 28 August, 2008

Diageo has reported a 7% rise in new sales and a 9% rise in operating profit, but admits that it is entering the new financial year facing slowing profit growth.

Diageo has reported a 7% rise in new sales and a 9% rise in operating profit, but admits that it is entering the new financial year facing slowing profit growth.

In an announcement of its year-end results today, the drinks giant said that sales of scotch in Latin America, premium brands in North America and beer in Africa had been the main drivers of top and bottom level growth, and helped account for a 2.7% increase in full year net profit.

Net sales in Europe were up 3%, accounted for by growth in the UK, eastern European and Russian markets. Despite losing its Korean licence for part of the year, Diageo said it had still grown its top line by 2% in the Asia Pacific region, by gaining share in China and expanding in India and South East Asia.

Net sales of Guinness, a brand which Diageo has been rumoured for some time to be looking to offload following flagging sales in recent years, were up 3% in the UK and Ireland.

The company said that price rises, mix improvement and a reduction in marketing spend in the ready to drink sector had helped to cover increased input costs across the board.

Diageo chief executive, Paul Walsh, said: "We enter the new financial year facing slowing global GDP growth and more challenging global economic trends, but given the strength and diversity of Diageo's business we believe we can deliver organic operating profit growth for the coming year within our range of 7% to 9%."

Diageo's net earnings for the year-end June 30 were £1.52 billion pounds, up from £1.48 billion a year ago. Revenue rose 8% to £8.09 billion, up from £7.48 billion last year.

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