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Global markets boost Diageo

Diageo has announced a pre-tax profits increase of 12% to £2.24 billion in the year to the end of June.

The world’s biggest drinks group, which owns brands including Guinness, Smirnoff and Johnnie Walker, put the rise down to success in emerging markets, which helped to off-set weaker performance in western Europe and the US.
The continued growth in other global markets has left the company confident over its future growth prospects.Exposure to a wide range of markets left it confident for future growth, it added. Diageo’s overall sales grew 5% to £9.9bn.

The firm saw strong growth in Latin America, Africa and Asia, which together account for roughly a third of group earnings.

It has a large Scotch business in South America and a significant beer business in Africa through brands such as Tusker, as well as Guinness. Growth in those markets has remained steady despite the global economic downturn.

It is also building up a market in China, particularly with Johnnie Walker.

Demand in Europe and North America, however, was weak. About 34% of Diageo’s sales come in North America and more than a quarter from Europe, including the UK.

Diageo has been cutting jobs in the UK as part of a restructuring programme to trim £120m in costs.

For a full analysis of the Diageo figures, see tomorrow’s Finance on Friday.

Alan Lodge, 26.08.2010

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