Right spirit for Diageo

Guinness-to-Johnnie Walker drinks giant Diageo yesterday said it had seen "some signs of recovery" after 12 per cent sales growth in the first quarter of 2010.

But the performance was flattered by sales comparisons with the depths of the recession and the firm added that "consumer trends remain difficult to predict".

Diageo – which was also helped by an early Easter holiday and buying brought forward to avoid alcohol duty hikes – left its forecast of "low single digit" profits growth for the year to June unchanged.

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Chief executive Paul Walsh added: "While we have seen some signs of recovery, albeit fragile in the mature markets and stronger in the emerging markets, our performance in the quarter benefited from comparison against a weak third quarter last year."

Diageo is also behind brands including Smirnoff vodka, Captain Morgan rum, Tanque-ray gin and Jose Cuervo tequila.

Despite the company's caution, Evolution analyst Simon Hales said the performance was "impressive" with upgrades to full-year results likely following the update.

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