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Diageo reports an 8% rise in annual profits

Press Release   •   Jul 31, 2013 15:13 BST

The world's biggest distiller of Scotch whisky, Diageo, has reported an 8 percent rise in annual profits driven partly by US spirits sales, and growth from emerging market.

Emerging markets sales rose 11 percent and operating profits rose 18 percent, as increased scale led to operating margin expansion. Sales from the region make up 42 percent of Diageo's business.

Pre-tax profit for the year to the end of June was £3.5bn compared with £3.2bn in 2012.

The company said performance was strong in North America with net sales up 5% and operating profit up 9%.

Sales in Western Europe fell by 4 percent and operating profit in the region, which accounts for 20 percent of sales, tumbled by 18 percent to £625m.

"Price increases in each region, positive mix in North America and Latin America and the rigour we have in managing our cost of production and controlling our overheads drove significant expansion in operating margin," said chief executive Ivan Menezes.

In 2011, Diageo said it would target organic sales growth of an average 6 percent in the "medium term" as well as seeking to widen its operating margin by 2 percentage points over three years.

"This year we have again made a strong business stronger and we remain on track to deliver our medium term guidance," Menezes added.

Diageo makes Johnnie Walker whisky as well the Guinness, Smirnoff and Baileys brands.

The company said for the first time the Johnnie Walker brand sold 20 million cases, double what it sold ten years ago, making it the most important spirit brand in the world by value. The company's single malt business grew 17% over the year.

For more information on Diageo, see the latest research: Diageo

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