Wednesday 21 February 2018

Guinness and gin profits drive Diageo shares boost

Ellie Donnelly

Ellie Donnelly

Shares in Diageo rose by almost 2pc on the London Stock Exchange yesterday, after the company announced that its operating profit rose by over 6pc to £2.2bn (€2.5bn) in the six months to 31 December.

The performance was driven by strong organic growth, with organic operating profit increasing by 6.7pc, as higher marketing investment was offset by efficiencies from its productivity, Diageo said.

Net sales were £6.5bn, an increase of 1.7pc, with all regions contributing to the company's sales growth.

In Europe, net sales rose by 4pc largely driven by sales in Britain and continental Europe.

Growth was broad-based across all key categories, but primarily driven by gin, where the Tanqueray brand gained share in a growing category, and the Gordon's brand benefited from the launch of its Pink variant. Meanwhile sales of Guinness were up 4pc in Europe.

In the company's North American market net sales increased 2pc on the back of a strong performance from spirits.

"We have delivered broad-based improvement in both organic volume and net sales growth. We have increased investment behind our brands and expanded organic operating margin through our sustained focus on driving efficiency and effectiveness," said Diageo CEO Ivan Menezes.

Looking forwards, the company said that its financial expectations for the year remained unchanged.

Meanwhile Irish-listed recruitment firm CPL Resources recorded double-digit growth in revenue in the six months to 31 December 2017.

Profit before tax was €9m in the six-month period, an increase of 11pc on the same period last year.

Revenue at the company was €256.7m during the six months, an increase of 12pc year-on-year. The company's recent acquisition of UK-based RIG Healthcare Group contributed to the increase in revenue.

In addition, CPL said that the proportion of its fee income that is made up of temping fees had increased to 68pc from 63pc in the same period last year, driven primarily by RIG's revenue mix, but also by organic growth across the company's sectors.

"This shift in our business model is reflective of a global move toward the "gig economy" and greater flexibility for client and candidate alike," John Hennessy, chairman of CPL, said.

Irish Independent

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