Diageo today attributed its net sales increase of 5.8% (£6.9 billion) in first half financial results to organic growth partially offset by unfavourable exchange.
The drinks giant reported an operating profit increase of 11% (£2.4 billion) which it also said was driven by organic growth, according to its 2019 Interim Results, half year ended 31 December 2018, which it published today.
“Diageo delivered broad-based volume and organic net sales growth across regions and categories," Ivan Menezes, chief executive, said. We continue to expand organic operating margins while increasing investment in our brands ahead of organic net sales growth.
"These results are further evidence of the changes we have made in Diageo to put the consumer at the heart of our business, to embed productivity and to act with agility to enable us to win sustainably."
Strong Cash Flow
Cash flow continued to be strong, with net cash from operating activities at £1.6 billion, up £356 million and free cash flow at £1.3 billion, up £317 million.
"At £1.3 billion, we delivered another period of strong free cash flow. As a result the board approved an incremental share buyback of £660 million, bringing the total programme up to £3 billion for the year ending 30 June 2019," Menezes added.
The first half has benefitted from some one-time and phasing gains in both organic net sales and operating profit, and therefore we continue to expect to deliver mid-single digit organic net sales growth for the year and to expand operating margins in line with our previous guidance of 175 bps for the three years ending 30 June 2019."
Looking ahead, Menezes said that as the group deploys its strategy, Diageo 'will remain focused on building the long-term health of its brands' and 'ensuring it grows its business in a consistent and sustainable way'.
© 2019 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click subscribe to sign up for the Checkout print edition.