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Diageo Restarts Capital Return Plan After Strong Recovery

Diageo is expecting organic operating profit growth of at least 14% in the current fiscal year, the spirits maker said on Wednesday while restarting its capital return plan following a strong recovery led by North America.

The UK-listed company, which makes Johnnie Walker whisky and Smirnoff vodka, started the second part of its capital-return plan of up to £1 billion ($1.41 billion) and expects to buy back shares starting today, it said, after pausing it last year because of the COVID-19 crisis.

Shares of the company rose 3% to £32.72 on the FTSE 100 blue-chip index by 0703 GMT.

'Hammered Sales'

The pandemic had hammered sales at spirits makers as restaurants, bars and other entertainment avenues were closed to contain the outbreak, but restrictions are being gradually lifted in major countries this year amid vaccination drives.

Diageo chief executive officer Ivan Menezes said the company's performance in its largest market, North America, had remained particularly strong on the back of resilient consumer demand, its diverse portfolio and efficient marketing.

The robust showing comes after Diageo surprised markets in January by returning to organic sales growth for the six months to December 2020, thanks to a jump in demand for premium tequila and bourbon at U.S. retail stores. Organic operating profit had shrunk 3.4% for the first half.

News by Reuters edited by Donna Ahern Checkout. For more drinks stories click here. Click subscribe to sign up for the Checkout print edition.

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