23rd Sep 2015 06:18
LONDON (Alliance News) - Diageo PLC Wednesday said its new financial year has started well and that performance is in line with company expectations, although operating profit for the full year may decline if current exchange rates are maintained.
The drinks giant, which is holding its annual general meeting Wednesday, said that volume has grown into the mid-single digits reflecting both improved volume growth trends and a weak comparative period at the start of the prior year.
However, it warned that while it has continued to deliver a positive sales mix, price increases have been muted, and it faces a tougher comparison in the US in the rest of the first half, leaving its first-half guidance for Diageo North America unchanged at an organic net sales decline of 2%.
A positive sales mix means selling more premium products.
Diageo added that stronger volume growth in financial 2016 will lead to improved top-line performance and modest organic margin improvement, although reported results will be hit by adverse exchange rate movements, which at current rates will reduce operating profit by about GBP150 million for the full year, the company said.
"As we achieve our productivity gains, from financial 2017 we expect to deliver mid-single digit organic top-line growth on a sustained basis and operating margin expansion of 100 basis points over three years. Our brands, our global footprint and our people give me confidence that Diageo can deliver strong and sustained performance," Chief Executive Ivan Menezes said in a statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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