The world's largest producer and distributor of alcoholic beverages, Diageo, has reported operating profits of £2.2 billion in the year to 30 June, meeting its 2008 target of 9-per cent growth on sales that jumped 7 per cent to £10.64 billion.
The company had scaled down its operating profit growth for the current financial year to between 7 per cent and 9 per cent, from the 9 per cent it expected previously. Net sales rose to £8 billion, up from £7.5-billion last year, while raising dividend 5 per cent to 34.35p.
Revenue rose because of the good sales of scotch in Latin America, beer in Africa and premium brands in North America, the company aid. Of its key brands, Johnnie Walker sales grew by 12 per cent, Smirnoff vodka by 10 per cent and Guinness by 6 per cent.
Johnnie Walker, the star performer in the group's various brands, became the first spirit drink to exceed annual sales of £1 billiion.
Diageo said its input costs rose 3 per cent for the year to 30 June, and it expects them to rise 5 per cent, or £150 million in the current financial year.
However, the company has cautiously forecast a growth of between 7 and 9 per cent for the current year and part of the reason being the rising cost of raw materials such as malt, hops, glass and slowing of the global economy would compel pub and bar goers to stay at home and drink.
Diageo, in the next year plans to raise prices of its key brands Johnnie Walker, Smirnoff Vodka and Guinness due to the escalating price of raw materials.
The falling beer markets in Britain and Europe has made Diageo increase its range of super-premium products, when they acquired a 50-per cent stake in Dutch vodka brand Ketel One. It has also added Zacapa rum and Rosenblum Cellars wine to its stable of brands.
The company operates in more than 180 markets and employs more than 22,000 people in 80 countries whose net value is estimated to be £24.6 billion holds an impressive variety of brands in its stable such as Johnnie Walker, Bushmills Irish Whiskey, Baileys Irish Cream, Smirnoff, Tanqueray Gin, Guinness, Crown Royal, Beaulieu Vineyard and Sterling Vineyards wines, and José Cuervo.
As shares in Diageo rose by 20½p to £10 on Thursday after the annual results were declared, chief executive of Diageo, Paul Walsh sold nearly £400,000 worth of shares, offloading 39,148 shares at at £10.01 each. Walsh continues to hold more than 644,000 shares.
Paul Walsh, chief excutive of Diageo, said, ''The combination of Diageo's leading brands and our global reach has delivered another year of strong organic growth with net sales up 7 per cent and operating profit up 9 per cent.
| ||Volume movement*% ||Reported net sales movement% ||Organic net sales movement%|
|Global priority brands || 4 ||8 ||6|
|Local priority brands ||2 ||10 ||4|
|Category brands || 1 ||8 ||10|
|Total || 3 ||8 ||7|
|Key spirits brands**: || || |
|Smirnoff ||8 ||12 ||10 |
|Johnnie Walker ||5 ||14 ||12|
|Captain Morgan ||8 ||10 ||13 |
|Baileys || 1 || 6 || 3|
|JeB ||5 ||15 ||9|
|Jose Cuervo ||(4) ||(5) ||(3)|
|Tanqueray ||1 ||2 ||4|
|Crown Royal – North America ||5 || 5 ||9|
|Buchanan's – International ||(2) ||15 ||5 |
|Windsor – Asia Pacific ||7 ||(17) ||(12)|
|Guinness ||1 ||9 ||6 |
|Ready to drink ||(7) ||(4) ||(5)|