Diageo profits despite weak Europe sales
DIAGEO, the world’s biggest spirits group, said it has beaten its medium-term targets, as strongly growing emerging markets and a slow recovery in North America helped to offset weakness in Europe in the first half of the year.
Chief executive Paul Walsh said while he “remained cautious” about Diageo’s future, the firm was well placed to meet its medium-term financial targets for six per cent annual sales growth, margin expansion and earnings growth of more than 10 per cent.
The owner of Johnnie Walker whisky and Smirnoff vodka reported a seven per cent rise in operating profits to £1.87bn in the six months to December 2011 as underlying sales grew seven per cent.
Diageo said it expects the emerging markets of Latin America, Africa and Asia to continue to grow and was encouraged by North America, while Europe had now stabilised with flat sales.
Its emerging market business grew net sales by 18 per cent and now accounts for almost 40 per cent of the business, driven by strong performances from Johnnie Walker whisky especially in Brazil, China and South Africa.
In Europe, the group saw a strong performance from Germany and France but suffered a decline in net sales in Britain, as well as Spain, Greece and Ireland.
Shares rose 0.44 per cent to 1,468p.