Diageo cheered by strong H1 sales growth; reveals £600m buyback

31st Jan 2019 07:04

(Sharecast News) - Drinks giant Diageo said first half net sales rose 5.8% to £6.9bn with organic growth partially offset by unfavourable exchange as it announced a £600m share buyback.Reported operating profit at the Johnnie Walker maker was up 11% to £2.4bn, driven by organic growth, while pre-tax profits were up to £2.6bn from £2.2bn.Basic earnings per share fell 1.6% to 80.9p, with pre-exceptional EPS up 13.6% to 77p, driven by higher operating profit and lower finance charges, "which more than offset an increased tax charge largely as a result of lapping the positive impact of US tax reform in the prior period", Diageo said.The interim dividend was lifted 5% to 26.1p per share.The company said it was returning the net £340m proceeds of cash to shareholders after the sale of a portfolio of 19 brands to Sazerac last month.In India net sales increased 12% benefiting from lapping weak prior year performance due to the impact of a Supreme Court ruling prohibiting the sale of alcohol in certain outlets near state highways and route to market changes in certain states.Sales of prestige brands were up 17%, led by strong double digit growth in scotch, driven by Johnnie Walker and Black & White."This was supported by solid performance from McDowell's No. 1 enhanced by the launch of its new Platinum range and strong growth in Royal Challenge and Signature. Vodka net sales were up 10%, with Smirnoff expanding its distribution. Net sales in the popular brands segment increased 2%."