Diageo third quarter boosted by acquisitions - UPDATE

18th Apr 2013 07:16

Beverages behemoth Diageo delivered robust sales growth in its third quarter thanks to acquisitions and its diverse sales mix and said it remained on track to meet targets.Decanting results for the three-month period to the end of March, the group reported 4.0% organic net sales growth against the same point the year before, which was slightly below consensus analyst expectations of 5%, but total net sales bubbled up 7.0% thanks to acquisitions. Reported net sales growth for the Guinness-owning group in the nine months to end-March was 6.0% against the comparable prior period.Chief Executive Paul Walsh said the quarter was "robust" and continued to demonstrate the group's global and product reach. "Despite consumer weakness in three markets, Korea, Nigeria and Brazil, Diageo's performance for the nine months is in line with the first half and our expectations," he explained. This was thanks to strong performance from the company's biggest business, US spirits, backed up by continued growth of spirits in Africa, market share gains in Asia Pacific and double digit growth of Johnnie Walker, Crown Royal, Buchanan's and Tanqueray. Diageo's net borrowings rose to £8.4bn at the period end, up from from £7.9bn at the end of the calendar year. Walsh added: "Given our market positions and geographic diversity we remain confident that Diageo's performance continues to be in line with our medium term guidance."Analysts at broker Jefferies said that, with the third quarter being a "relatively small quarter", they were confident of better momentum in the final quarter of the year "and beyond".A note from the broker cited Latin American, Africa and the US providing a "favourable geographic growth footprint medium term, combined with good cost control and M&A upside optionality". Diageo remains Jefferies top pick in European spirits, with current share price weakness "a good entry point for a quality name".OH