Diageo, the multi-national beer and spirits company, has reported largely positive half-year figures however it warns that expected exchange rate movements are likely to knock full-year sales.
The company estimates exchange rates will adversely impact net sales by approximately £460m and operating profit by approximately £60m.
The company, whose brands include Johnny Walker and Smirnoff reported net sales (£6.5bn) and operating profit (£2.2bn) up 1.7% and 6.1%, respectively, as organic growth was partially offset by adverse exchange rates.
Whisky and gin
UK sales rose 7%, boosted by higher sales of Tanqueray gin and Guinness. Global sales of Scotch whisky, Diageo’s biggest product, grew 3%, while vodka sales fell 6%. Increased sales of tequila were primarily down to the Don Julio brand, which Diageo acquired in 2015.
Cash flow continued to be strong and in line with last year, with net cash from operating activities at £1.2bn and free cash flow at £1bn
Basic eps of 82.2p was up 36.3% and the interim dividend increased 5% to 24.9p per share
Commenting on the latest results Ian Menezes, Chief Executive, said:" We have increased investment behind our brands and expanded organic operating margin through our sustained focus on driving efficiency and effectiveness across the business.”
He added: “Our financial performance expectations for this year remain unchanged. We are confident in our ability to deliver consistent mid-single digit top line growth and 175bps of organic operating margin improvement in the three years ending 30 June 2019."
The company’s share price fell slightly in early morning trading (0.45%) to 2562.