Diageo’s £3.1bn profits boosted by emerging markets

Sales climbed by 10% to reach £14.6bn. Net sales in emerging markets  –  which accounted for nearly 40% of Diageo’s business – grew by 15% and operating profit by 23%.

Investec analyst Martin Deboo concluded that Diageo had “delivered on its promises”. ​

He said: “The 8% increase in dividend reads encouragingly, and chimes with ceo Paul Walsh’s confidence that the business is very much ‘on track’ to deliver against medium-term guidance.”​

Deboo noted modest revenue growth in the US, while growth in eastern Europe “continues to motor” ​with net sales up more than 16% on the previous reporting period.

‘Concerns around the UK’​​

But he questioned the firm’s performance at home. “We have some concerns around the UK, with an implied 6% decline in volumes,”​ said Deboo.   

But, overall Diageo was “a strong business​ [that was] on track”,​ said Deboo, repeating Investec’s ‘buy’ recommendation.

Diageo boss Paul Walsh said the business was “ getting stronger”.​ He said: “We have increased our presence in the faster growing markets of the world, through both acquisitions and strong organic growth.​

“We have enhanced our leading brand positions globally, through effective marketing and industry leading innovation and we have strengthened our routes to market.”​

Final dividend​

Walsh added: “​Our confidence in the achievement of our medium-term guidance is underscored by the 8% recommended increase in our final dividend.”​

In June Diageo announced plans to invest £1bn in Scotch whisky production, designed “to seize the opportunity for global growth” ​and to create hundreds of jobs.

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The globe’s biggest spirit manufacturer, Diageo makes Johnnie Walker, J & B and Bell’s whisky brands. It also produces a wide range of other spirits and operates 28 malt distilleries and employs more than 4,000
people in Scotland alone.