31st Jan 2019 13:49
LONDON (Alliance News) - Diageo PLC on Thursday announced an increase in share buybacks and said it remains on track for its annual guidance.
Included in the brewer and distiller's more than 200 brands are Baileys liqueur, Captain Morgan rum, and Bell's Scotch whisky, as well as Guinness stout.
Back in Late July, Diageo's board approved a share buyback programme to return up to GBP2.0 billion to shareholders in its year to June 30. Then, in December, it sold a portfolio of 19 brands to Sazerac Co for approximately GBP340 million, which will be returned through the programme, bringing to the total to GBP2.34 billion.
Diageo has now approved a GBP660 million incremental share buyback, taking the total buyback programme to GBP3.0 billion for its year to June 30.
Shares in Diageo were up 4.3% at 2,890.50 pence on Thursday.
The company posted an increased profit for the first half of its financial year, which ended December 31, with all regions contributing to growth. Overall, for the six month period, and the beer and spirits maker posted an increase in pretax profit to GBP2.63 billion from GBP2.20 billion the year before.
However, Chief Executive Ivan Menezes said Diageo had "benefited from some one-time and phasing gains" and so guidance would not be upgraded. Overall, Diageo's CEO said, the company is still expecting to "deliver mid-single digit organic net sales growth" in financial 2019 and operating margins are still expected to expand 175 basis points.
Diageo reported an increase of 5.8% in net sales to GBP6.91 billion in the first half from GBP6.53 billion a year before.
Asia Pacific net sales grew the most, up 13% on an organic basis with particularly strong growth in the Greater China region, where net sales increased 20%. On a reported basis, Asia Pacific net sales were up 8%.
In North America, net sales growth was 8.3% on a reported basis to GBP2.36 billion from GBP2.18 billion. In particular, the disposal of the 19 brand portfolio gave a 78 basis point boost to net sales growth in the region.
Net sales growth was 2% in Europe & Turkey, 4% in Latin America & the Caribbean, and 6% in Africa on a reported basis. On a reported basis, Asia Pacific net sales were up 8%.
The company also achieved volume growth to 130.5 million in the six months from 126.4 million a year before.
Diageo declared a 26.1p per share interim dividend, up 4.8% from 24.9p per share the year before.
"Diageo delivered broad-based volume and organic net sales growth across regions and categories. We continue to expand organic operating margins while increasing investment in our brands ahead of organic net sales growth," said Menezes.
"As we deploy our strategy, we remain focused on building the long-term health of our brands and ensuring we grow our business in a consistent and sustainable way," Menezes added.
Diageo has also announced the appointment of Susan Kilsby to chair of its remuneration committee. Kilsby succeeds Mervyn Davies, who steps down from the position but will stay on as a director and remuneration committee member.
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