Diageo sees sales growth

19th Oct 2011 10:40

Diageo, the FTSE 100 drinks company behind such brands as Guinness, Red Stripe and Baileys, saw sales growth of 9% in the three months to 30 September.The company admits that some of the performance can be attributed to one off comparisons with the previous year which are unlikely to reoccur including destocking in its European markets and poor performance in 2010 in the US.One of the most striking elements is the net borrowings figure which stands at £8,358 million having been £6,450 million at 30 June 2011. This exceeds net assets by £1.7bn. Diageo says much of this debt is from its acquisition of Turkish company Mey Içki for £1.3bn.Today's interim management statement also warns that foreign exchange movements are expected to reduce reported profit for the year by approximately £35 million, more than previously forecast.Chief executive Paul Walsh said: "Net sales growth was marginally ahead of expectations and the quarter did benefit from some one-off factors which are not expected to reoccur in the second quarter. We continue to expect that net sales growth for the first half will improve on that delivered in fiscal 2011."He added: "We are alert to any impact which the fragile global economy may have on trading patterns as we continue to build our brands with consumers and enhance our relationships with customers."Shares in Diageo were up 3.4% in morning trading.BS