Sales growth at Diageo strengthened by US, spirits

31st Jul 2013 08:06

Diageo, the beverages company behind the Guinness, Baileys and Smirnoff brands, achieved solid growth in sales in the year to June 30th but said trading still remained depressed in Western Europe. Net sales, which is total revenue minus excise duties, rose 6.0% from £10.76bn to £11.43bn during the 12-month period, up 5.0% on an organic basis, helped by four percentage points of positive price/mix. Volumes were up 5.0% at 165m equivalent units, up 1.0% organically as growth in the spirits category offset weakness in beer, wine and ready to drink.Profit before tax was more or less flat on the year at £3.1bn.The company raised its final dividend by 9.0% to 29.3p per share, lifting the full-year payout to 47.4p a share, also up 9.0% from the year before.The top line grew strongly in North America - the region accounted for around a third of group net sales - with sales up 5.0% driven by the strength in the US spirits market which benefited from positive demographics and "consumers' wish to premiums", the firm said.African, Eastern Europe & Turkey - classified as one newly formed region - saw sales increase 11% and is now Diageo's biggest contributor to net sales growth. Latin America & Caribbean and the Asia Pacific regions also performed well.However, conditions in the Western European markets continue to be "challenging", with sales down 5.0%, dragged lower by weakness in Southern Europe and Ireland."We have delivered 5.0% net sales growth reflecting the strength of our US spirits business and continued double-digit growth in the emerging markets, despite weakness in some markets," said new Chief Executive Ivan Menezes who joined the board at the start of July."This year we have again made a strong business stronger and we remain on track to deliver our medium-term guidance."The stock was down 1.23% at 1,965p in early trading on Wednesday.BC