UK: Diageo says trading for Q1 is in line with targets

Diageo, the world's biggest alcoholic drinks group announced on October 18 that trading in its first-quarter of July-September was in line with its sales and profits growth targets and it could contain current cost pressures, according to Reuters.

Johnnie Walker whisky and Guinness beer said in a trading statement ahead of its annual general meeting that its expectations for its full year to June 2006 were unchanged from those given in September.

At its full-year results in September, Diageo stated it expected underlying sales would rise 4 percent and operating profits increase 7 percent in the year to June 2006, despite higher growth in marketing spend and higher pension costs, in line with the rises achieved in the year to June 2005.Diageo shares edged higher after the update and were up 0.3 percent to 831-1/2 pence by 1320 GMT, valuing the group at 24.3 billion pounds. The shares have risen nearly 12 percent so far this year.

The group announced that its business in North America gained share in a growing spirits market, but it continued to suffer from tough trading in Europe and expects overall volumes to be down on the previous year, with the fall in sales of ready-to-drink products such as Smirnoff Ice hitting sales growth.Volume growth remains strong in its international region outside Europe and North America, while markets such as Korea, Taiwan and Nigeria were recovering.

"The current oil price has led to higher costs for all consumer goods companies. Diageo is not immune to this, but our cost structure does reduce our exposure, and therefore we currently expect to contain these cost pressures within our overall guidance," stated in the trading statement the Chief Executive Paul Walsh.

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