Diageo grows volume and sales in 2nd half of 2012

Global operating profits at Diageo plc grew 9% to £2.03 billion (€2.37bn) in the six months to 31st December 2102 as the company grew its organic sales volumes by 1% with net organic sales up 5% to £6.04 billion (€7.05bn) from £5.76 billion (€6.72bn) in the same period the previous year according to its Interim Results just published.

Marketing spend increased from £896 million (€1.05bn) to £926 million (€1.08bn).

The ‘faster growing markets’ accounted for some 42% of Diageo’s net sales in  that time which delivered organic net sales growth of 14% and a growth in operating profits there of 21%.

Against this, Europe witnessed a decline in volume of 3% with a decline in net sales of 2% as the company pulled back on its marketing spend by a similar 2% as Diageo  continued to focus investment on strategic brands.

Western European sales witnessed a  5% decline in volume and a 6% decline in organic value.

“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 in the world,” commented Diageo Chief Executive Paul Walsh, “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, “ he concluded.


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