Drinks giant Diageo has posted a net sales increase of 5% to £10.8 billion in its full year results, according to results filed this morning (30 June). Organic sales at the drinks firm were flat, however.
Operating profits were 3% higher in the year to 30 June, at £2.8 billion.
Diageo's performance over the period was lifted by its acquisition of United Spirits, which it said gave it "unparalleled access to one of the world’s most attractive spirits markets."
Commenting on the group's performance, Ivan Menezes, chief executive said the performance "reflects the challenges we have seen on top line growth. However, it does not diminish my confidence in what we can achieve in F16 and even more so beyond that. Diageo has an enviable position, by geography, by brand and by category range, in an attractive consumer market place with strong long term growth drivers.
"This year we made further changes to build strong, sustained performance including embedding our sell out discipline, improving cash conversion and strengthening our route to consumer. We have consistently applied a long term perspective in making these changes, despite the short term challenges we have faced from an external environment where currency volatility continues to impact the emerging market consumer."
In terms of some of its key brands, global net sales of Guinness were unchanged, although the brand did see a 3% growth in the US, and a 2% increase in its home market of Ireland.
Organic net sales of Baileys were down 4% globally, Johnnie Walker was down 9%, and Smirnoff fell 2%.
Jeremy Cunnington, Senior Alcoholic Drinks Analyst at Euromonitor International commented that the decline in Diageo's spirits performance came about as a result of "too much focus pre-2008 economic crisis on a few core markets in North America and Western Europe. This has meant many of its core brands such as Smirnoff, Baileys and Captain Morgan have struggled for growth as the brands mature in these markets.
"With weak global conditions there is little Diageo can do when core emerging markets such as Brazil and Russia are universally suffering."
© 2015 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones.