Diageo profits 'in line', target lowered

27th Aug 2009 07:07

A 4% drop in full-year profit at Diageo was pretty much in line with expectations, but the alcoholic drinks giant has cut current year growth targets.The group, which owns the Smirnoff, Captain Morgan and Guinness brands, said pre-tax profit fell £78m to £2.015bn in the year ended 30 June on underlying sales little changed at £9.3bn.Chief executive Paul Walsh said the International, North American and Asia Pacific businesses have been stronger than Europe. Net sales were up 1% in North America and 7% at the International business, but down 5% in Europe and 4% in Asia Pacific.Vodka, rum, tequila and beer, which account for over 50% of sales, all delivered year-on-year growth, although gin and wine sales weakened and scotch and liqueurs were hurt by destocking.'While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery and F10 will be challenging, as we lap a strong first quarter and a reasonable first half performance this year,' said Walsh. 'That being recognised, we expect to deliver low single digit organic operating profit growth in fiscal 2010.'It had hoped for between 4% and 6% previously.Diageo expects that in fiscal 2010 it will benefit from cost reductions of £120m as a result of a global restructuring initiative.It has already announced plans to close its plants in Kilmarnock and Port Dundas plants with the loss of 900 jobs. The final dividend rises 5% to 22.2p a share.