UK: Diageo maintains outlook for 7.0% profit growth

International drinks group Diageo maintained June 29 its outlook for 7.0 percent growth in operating profits for the fiscal year ending June 30, and said it expects profits for the year to June 2007 to grow by at least the same rate, AFP communicated June 29.

Diageo said it expected net sales of its current line of products to grow by 6.0 percent in both fiscal years.

"The second half of the financial year has seen continued strong growth by the global priority brands, in particular Johnnie Walker and Smirnoff," the company said.

The group, which returned £1.4-billion to shareholders during the year, plans to return another £1.4-billion in the new financial year, chief executive Paul Walsh said.

"As the year closes we have successfully delivered on our objectives. We are building a superior position in North America, investing strongly behind our brands in International and continuing to reduce costs in Europe.

"As our excellent top line growth shows, we are gaining share in many markets," the chief executive said.

Diageo said its international business arm benefitted from strong sales led by growth in its priority spirit brands, ready-to-drink and new products. Latin America, Africa and Asia all delivered double-digit sales growth, with Latin America the key driver.

In addition to Johnnie Walker whiskey and Smirnoff vodka, Diageo's brands include Baileys liqueur, Guinness beer and Captain Morgan rum.

The North American operations are seeing consumers turn to premium brands, and Diageo's priority spirits brands continued to experience strong growth and outperform the market, the company said.

But in Europe, a subdued consumer environment and increased regulation had a negative impact on alcohol sales. Sales growth at the European division was in line with that achieved in the first half, it added.

Diageo is to announce its results for the year to June 30 on August 31.

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