Diageo share price rallies as group delivers rise in sales

Group flags hefty currency charge

Diageo share price rallies as group delivers rise in sales

Shares in Diageo (LON:DGE) have jumped in London in today’s session, as the owner of the Johnny Walker and Smirnoff brands posted a rise in sales for the six months ended December 31. The company, however, has flagged a hefty currency impact on its full year results.

As of 09:32 GMT, Diageo’s share price had added 1.32 percent to 2,576.00p. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.13 percent higher at 7,653.49 points.

Diageo posts results

Diageo announced in a statement this morning that its reported net sales had climbed 1.7 percent to £6.5 billion in the first half of its financial year, while its operating profit had come in 6.1 percent higher at £2.2 billion. The company enjoyed strong performance in its tequila segment, with organic sales rallying 43 percent. Vodka sales, however, dipped three percent.

“These results demonstrate continued positive momentum from the consistent and rigorous execution of our strategy,” Diageo’s chief executive Ivan Menezes commented in the statement, adding that the group’s financial performance expectations for the year remained unchanged. The company, however, cautioned that it was expecting the exchange rate movement for the year ending June 30 to adversely impact net sales by approximately £460 million and operating profit by about £60 million.

Analysts divided

“Diageo is a business in change,” Jefferies analyst Ed Mundy wrote in a note to investors, as quoted by Bloomberg. “We see a perfect blend of productivity and top-line growth.”

City A.M., however, quoted Liberum as pointing to the impact of vodka’s decline, and saying that the FTSE 100 group was ‘less attractive’ than others in the drinks space.

The results come after Diageo inked a deal last year to acquire George Clooney’s Casamigos tequila business for up to $1 billion.

As of 10:01 GMT, Thursday, 25 January, Diageo plc share price is 2,565.00p.

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