Shares in Diageo (LON:DGE) have surged in London in today’s session as the maker of Johnny Walker and Smirnoff announced a rise in interim sales and profit. The company further said that it was returning £660 million to investors via a share buyback.
As of 14:28 GMT, Diageo’s share price had added 4.11 percent to 2,886.00p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.55 percent higher at 6,979.95 points. The group’s shares have added just under 14 percent to their value over the past year, as compared with about a 7.4-percent fall in the Footsie.
Diageo posts interim results
Diageo announced in a statement today that its reported net sales had climbed 5.8 percent to £6.9 billion in the six months ended December 31, with organic growth partially offset by unfavourable exchange. Reported operating profit meanwhile rose 11 percent to £2.4 billion. The blue-chip group further posted free cash flow of £1.3 billion, up £317 million.
“Diageo delivered broad-based volume and organic net sales growth across regions and categories,” the FTSE 100 company’s chief executive Ivan Menezes commented in the statement. “This half has benefitted from some one-time and phasing gains in both organic net sales and operating profit, and therefore we continue to expect to deliver mid-single digit organic net sales growth for the year.”
Diageo further said that it had approved a further share buyback of £660 million, bringing the total programme to up to £3 billion for the year ending June 30.
Analysts weigh in on update
“Unsurprisingly, for a group that turns water into something stronger than wine, Diageo generates a lot of cash and the company threw off another £1.3bn in these last six months alone,” Hargreaves Lansdown’s Steve Clayton commented, as quoted by Proactive Investors, adding that the figures showed “the underlying strength of Diageo, with good growth across the board, despite a volatile macro-economic backdrop”.
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.