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| Johnnie Walker maker Diageo toasts £460m boost from Brexit vote | |
| (about 4 hours later) | |
| The company behind Johnnie Walker, Smirnoff and Guinness has enjoyed a £460m increase in operating profit, as the sharp drop in the value of the pound since the Brexit vote ramped up revenues from the US and other foreign countries. | The company behind Johnnie Walker, Smirnoff and Guinness has enjoyed a £460m increase in operating profit, as the sharp drop in the value of the pound since the Brexit vote ramped up revenues from the US and other foreign countries. |
| Diageo shares rose by 4.6% to £22.40, the best performer in the FTSE 100, after the company said favourable exchange rates would flatter full-year sales by about £1.4bn and operating profit by about £460m. | Diageo shares rose by 4.6% to £22.40, the best performer in the FTSE 100, after the company said favourable exchange rates would flatter full-year sales by about £1.4bn and operating profit by about £460m. |
| The drinks multinational does well from weak sterling because a high proportion of its earnings are taken in dollars from overseas sales. Shares have risen by about one-fifth since the EU referendum last June. | The drinks multinational does well from weak sterling because a high proportion of its earnings are taken in dollars from overseas sales. Shares have risen by about one-fifth since the EU referendum last June. |
| In the first half of Diageo’s financial year to the end of December, a struggling pound helped drive up sales by 14.5% to £6.4bn. Profit increased by 28% to £2.1bn. | In the first half of Diageo’s financial year to the end of December, a struggling pound helped drive up sales by 14.5% to £6.4bn. Profit increased by 28% to £2.1bn. |
| Stripping out the impact of the exchange rate boost, sales and profit were up by 4.4%, beating analysts’ expectations, as consumers splashed out on their favourite tipples. | Stripping out the impact of the exchange rate boost, sales and profit were up by 4.4%, beating analysts’ expectations, as consumers splashed out on their favourite tipples. |
| Ivan Menezes, the Diageo chief executive, said its US spirits business and scotch brands performed particularly well in the first half, helped by marketing campaigns and an improvement in logistics. In the UK, sales were broadly flat, but revenues rose by 11% in continental Europe. | Ivan Menezes, the Diageo chief executive, said its US spirits business and scotch brands performed particularly well in the first half, helped by marketing campaigns and an improvement in logistics. In the UK, sales were broadly flat, but revenues rose by 11% in continental Europe. |
| “We are identifying consumer trends faster, expanding the reach of our products across markets and developing trade channels to capture these growth opportunities,” Menezes said. | “We are identifying consumer trends faster, expanding the reach of our products across markets and developing trade channels to capture these growth opportunities,” Menezes said. |
| Despite the boost from the pound, Diageo left results expectations unchanged for the full financial year. | Despite the boost from the pound, Diageo left results expectations unchanged for the full financial year. |
| Steve Clayton, a fund manager at Hargreaves Lansdown, said the results reflected a solid underlying performance that was “hugely flattered” by lower sterling. | Steve Clayton, a fund manager at Hargreaves Lansdown, said the results reflected a solid underlying performance that was “hugely flattered” by lower sterling. |
| “Consumers around the world have been faced with a series of extraordinary events, from Brexit to the election of President Trump and even the demonetisation of the Indian economy. Whatever the events, it appears their reaction was to pour a larger than usual measure while they sat back and tried to figure out what on earth was going on,” he said. | “Consumers around the world have been faced with a series of extraordinary events, from Brexit to the election of President Trump and even the demonetisation of the Indian economy. Whatever the events, it appears their reaction was to pour a larger than usual measure while they sat back and tried to figure out what on earth was going on,” he said. |