Diageo tweaks profit gain from global sales

Diageo PLC, parent company to Red Stripe Jamaica and the world's biggest spirits maker, said Thursday that its full-year profit rose 1.5 per cent as sales in emerging markets fuelled a rebound from a weak first half.

For the year ending June 30, the maker of Johnnie Walker whisky, Smirnoff vodka and Guinness stout reported a net profit of £1.63 billion (US$2.54 billion), compared to £1.61 billion a year earlier, the company said.

In the first half of the year, Diageo reported a 10 per cent drop in profit. It did not break out results for the second half in Thursday's report.

Revenue for the full year rose two per cent to £9.78 billion on a comparable basis, which strips out currency fluctuations, acquisitions and disposals.

Diageo said this year's gains came from a strong performance in emerging markets, while North American and European markets were weak.

The company raised its final dividend by six per cent to 23.5 pence per share.

"Although the outlook statement appears to be relatively positive, we believe that in terms of the share performance today the issue is likely to be how much the market was factoring in growth ahead of the two per cent reported in 2010," said Phil Caroll, analyst at Shore Capital.

"We suspect this statement is not as strong as some investors would have liked."

Diageo shares were down 0.5 per cent at £106 in early trading on the London Stock Exchange.

"The impact of the global economic crisis varied by market and the strength of the recovery appears to be equally variable," said Chief Executive Paul Walsh.

"However, as we demonstrated this year, the global diversity of our business, together with the strength and range of our brands and the agility we have demonstrated, gives us confidence that in fiscal 2011 we will be able to improve on the organic operating profit growth we have delivered this year."

The company's international division, including Latin America, Africa and the Middle East, racked up a 13 per cent gain in net sales - excluding excise taxes - and a 25 per cent boost in operating profit. The Asia-Pacific region reported a six per cent rise in operating profit on a one per cent gain in net sales.

North America net sales were down three per cent and operating profit was flat.

In Europe, net sales fell two per cent and operating profit dipped one per cent.

- AP