Diageo eyes stronger profits growth

DRINKS giant Diageo today said it was hopeful that profits growth will be stronger over the next year as it benefits from a rebound in trading.

The Guinness-to-Johnnie Walker group has been encouraged by sales trends in the six months to June 30, when growth in developing markets helped to offset continued trading pressure in North America and most of Europe.

Operating profits rose by two per cent to 2.75bn in the year to June 30 and this rate should strengthen in the new financial period, the company added.

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While Europe has remained a challenging region for Diageo, it said British drinkers proved the exception as volumes rose nine per cent and net sales lifted five per cent amid strong growth in sales of spirits and wine.

It said Guinness outperformed the beer category in Britain with broadly flat sales following the success of its Bring it to Life and 250th anniversary marketing campaigns.

Diageo said price pressure in Britain was driven by the faster growth of sales in the grocery sector, with "its competitive promotional environment".

The company is also behind brands including Smirnoff vodka, Captain Morgan rum, Tanqueray gin and Jose Cuervo tequila.

The group was created through the merger of Grand Metropolitan and Guinness in 1997 and has more than 20,000 staff and offices in 80 countries.