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Diageo – on course for the full year

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25th Jan 18 9:14 am

Figures out today show 

First half net sales hit £6.5bn at Diageo, with organic growth of 4.2 per cent, as improved volumes and increased pricing more than offset currency headwinds. Cost savings mean that resulted in a 6.7 per cent increase in organic operating profit to £2.2bn, with the board declaring an interim dividend of 24.9p, up 5 per cent last year.

The shares rose 1.4 per cent in early trading.

Nicholas Hyett, Equity Analyst, Hargreaves Lansdown

“Diageo is delivering pretty much exactly as promised – mid-single digit topline growth with cost savings boosting profit performance. It helps that the group is enjoying some fairly benign economic conditions, since sales of its premium spirits tend to reflect trends in global growth.

Tequila continues to enjoy runaway success – although coming from a low base, spectacular 37 per cent volume growth should be taken with a pinch of salt – while Fevertree investors  will be pleased to hear the gin boom shows little sign of slowing, with Gordon’s and Tanqueray supporting 18 per cent growth in volumes in the half.

The group will no doubt be disappointed that the more important Vodka category is having a tough time, with premium vodka particularly suffering. But in many ways that just illustrates the strength of Diageo’s position. Spirit popularity comes in waves, and Diageo’s wide-ranging portfolio means it should be well placed to catch the rising tide wherever it appears.”

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