Diageo H1 Profit Up 36%; Hikes Interim Dividend

CEO Ivan Menezes said the results showed

CEO Ivan Menezes said the results showed"positive momentum

Net sales at the firm, who own brands including Gordon's, Smirnoff and Ketel One, rose 1.7 percent to £6.5 billion over the period, with operating profit up 6.1 percent to £2.2 billion.

While gin and tequila each account for a relatively small part of Diageo's portfolio (4% and 3% of net sales respectively), gin rose 16% while tequila grew 43% (organic net sales).

Americans leading a revival of the classic cocktail are giving a boost to Diageo, the world's largest distiller. Operating margin increased 204bps.

"Our financial performance expectations for this year remain unchanged", Diageo's chief executive Ivan Menezes said in a statement.

Basic earnings per share for the half-year increased 36% to 82.2p, though allowing for exceptional items EPS was up a lesser 9.4% to 67.8p, driven by higher organic operating profit and lower finance charges.

Further, the company announced that its interim dividend was increased by 5 percent to 24.9 pence per share.

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"By consistently delivering on our six strategic priorities, Diageo continues to get stronger: we have better consumer insight through superior analytics, improved execution on brand and commercial plans and have embedded everyday efficiency across the business through our productivity initiatives. This has enabled continued growth, improved agility, and consistent cash flow generation".

Diageo's net sales in Ireland.

Gin brand Tanqueray delivered strong double-digit net sales growth, while the company reported that Gordon's gin had benefited from the launch of its Pink variant. United Kingdom net sales were up 7%, driven by gin and beer.

North America and Africa recorded the slowest growth, both with 2% gains. This was despite India's roadside drinking ban and the effects of Hurricanes Irma and Maria that caused sales in the Caribbean and Central America to drop 6%. Scotch was up 2% thanks to Walker and Black & White. Meanwhile, sales of Captain Morgan grow by double digits. Strong Johnnie Walker sales were offset by a decline in Windsor sales in Korea.

A revival of the classic cocktail in its North America market helped Guinness-maker Diageo to a sparkling performance in the second half of a year ago, while sales of the black stuff rose 4 per cent globally.

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