By Andrew Starke

Diageo has surpassed market expectation by revealing a 5 percent rise in full-year operating profits for the year to June 20 and setting ambitious future growth targets.

Volume growth was largely driven by the 16 percent increase posted by the company’s scotch brands in emerging markets while its reserve brands portfolio achieved 24 precent growth in developed markets.

The world's biggest spirits company was rewarded by investors for its robust numbers with Diageo’s share price rising sharply in trading yesterday (Aug 25).

"Diageo is a strong business as these results show. Our leading brands and superior routes to market have delivered volume growth, positive price/mix, gross margin expansion and strong cash flow,” said Diageo CEO, Paul Walsh.

”While Diageo is not immune from a fragile global economy, this is a strong platform.”

Increased sales of higher-priced brands such as Johnnie Walker whisky, Kenel One vodka and Tanqueray No. 10 gin underpinned Diageo’s brand growth, while strong sales in Asia and other emerging markets compensated for reduced demand in some European countries.

In Asia Pacific, gross margin was broadly flat, as the strong growth of scotch in markets such as Korea and Southeast Asia offset pricing pressure in China and Australia.

Diageo said the strong growth of scotch in emerging markets, especially Johnnie Walker, growth of Cîroc in North America and its beer brands throughout Africa were the biggest contributors to volume upside.


The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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