Diageo profits up 32% thanks to emerging markets

Posted on 23 Aug 2012 by Tim Brown

Diageo, the world's largest producer of spirits including Johnnie Walker and Captain Morgan, has reported a big increase in annual profits off the back of strong sales growth in emerging regions.

Pre-tax profit for the year to the end of June was £3.1bn, up 32% on the £2.4bn the company made in 2011 while sales in Latin America and Africa increased by 60% and 40% respectively.

In its report, Diageo said that the European economy remains very uneven but the company delivered good sales and profit growth in Europe’s emerging markets such as Russia, Eastern Europe and Turkey, as well as a good performance across Northern Europe. Southern Europe, it said, remained challenging.

Diageo’s strongest category Scotch, led by Johnnie Walker, delivered sales growth of 12% and represented 29% of the Diageo portfolio by net sales and the firm has proposed an 8% dividend rise.

The company also made a number of acquisitions throughout the year including Mey İçki, the leading spirits company in Turkey. Mey İçki is a clear market leader in the Raki category, the main spirits category in Turkey.

Paul Walsh, Diageo CEO“Diageo is a strong business, getting stronger and the results we released this morning show that very clearly,” said Chief Executive Paul Walsh. “We have increased our presence in the faster growing markets of the world, through both acquisitions and strong organic growth. We have enhanced our leading brand positions globally, through effective marketing and industry leading innovation and we have strengthened our routes to market.”

Diageo was formed in 1997, following the merger of GrandMet and Guinness, and is headquartered in London. The word Diageo comes from the Latin for day (dia) and the Greek for world (geo) which the company says reflects the idea that every day, everywhere, people celebrate with its brands.