Diageo CFO predicts continued strong performance in emerging markets
Spirits maker reports solid results in Latin America, Africa and Asia
By CFOWorld.co.uk | CFO UK | Published 10:19, 09 February 12
Diageo's chief financial officer said she expected the alcohol group's strong performance in emerging markets to continue and help it meet its 2012 targets.
The group's results announced on Thursday showed underlying half-year sales growing at 7 percent, leaving it well-placed to meet its medium-term financial targets for 6 percent annual sales growth, margin expansion and 10-percent plus earnings growth. Its emerging market business grew 18 percent in the half year, and now accounts for nearly 40 percent of its business.
Deirdre Mahlan (pictured), the spirit maker's FD, said the strength in the emerging markets of Latin America, Africa and Asia showed no signs of slowing down and was encouraged by the data in North America. The European market was stabilising and becoming more predictable, she added. A 10 percent plus growth in Germany, Russia and eastern Europe offset declines in the southern eurozone states.
The London-based group is expanding into fast-growing emerging markets with recent deals in China and Turkey and expects half its turnover to come from these markets by 2015
Chief Executive Paul Walsh said in a statement: "We are cautious as to the consumer and economic trends we will face in 2012 but these first-half results have positioned us well."
Diageo shares dipped 0.6 percent to 1,453 pence by 9:10 a.m. after a sharp rise of 36 percent since its annual results in late August 2011 and hit a new record high of 1,484 pence on Wednesday.
Diageo, which makes Johnnie Walker whisky, Smirnoff vodka, Captain Morgan rum and Guinness beer, saw 9 percent underlying profit growth for its July-December half year, helping drive underlying earnings up 16 percent to 55.9 pence a share, above a company-compiled consensus of 54.8p and a ThomsonReuters I/B/E/S forecast of 54.8p.
Its half-year dividend rose 7 percent to 16.6 pence a share.
Mahlan reiterated the group was looking for a "deeper interest" in the Jose Cuervo tequila brand if the owning Beckmann family desire this as Diageo's long-term distribution deal with the Beckmann's comes to an end in June 2013.
Analysts estimate the world best-selling tequila could be worth around £2.1 billion.
Diageo's arch rival and world No. 2, Pernod Ricard, reports its half-year results on Feb 16.
Photo credit: Reuters
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