Diageo in high spirits as company reports profit growth

Consumer goods giant Diageo posted profits in line with market expectations on Thursday as it unveiled its results for the final six months of 2012.

Diageo, whose brands include Guinness, Smirnoff and Johnnie, reported a 9.0% organic operating profit growth for the half year ended December 31st.

Earnings per share for pre-exceptional items rose 9.0% to 60.9p per share. Organic net sales growth climbed 5,0% with 1.0% organic volume growth. The group reported a 110 basis points of organic operating margin expansion.

Chief Executive, Paul Walsh, said results were driven by the strong performance of the company's alcoholic spirits in the US.

"These results reflect the global strength of our strategic brands, our leadership in the US spirits market and our increasing presence in the fastest growing markets of the world," he said.

"Our expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth, while net sales growth was driven by our pricing strategy and premiumisation, especially in the US. This drove gross margin expansion, which together with our continued focus on operating efficiencies, delivered operating margin improvement."

"This is a strong set of results, confirming our medium term guidance and supporting our decision to increase the interim dividend by 9.0%."

RD