Diageo reports operating profits of £2.6bn

Drinks giant Diageo, currently facing a revolt over its plans to close plants in Scotland, has reported a 13 per cent increase in operating profits for the year to the end of June 2009.

Total reported turnover rose 15.6 per cent to £12.3bn, with operating profits up 13 per cent at £2.6bn and pre-tax profits down by nearly four per cent at £2.02bn.

Diageo said it would recommend a final dividend of 22.2p, making a total dividend for the year of 36.1p per share.

The spirits to beer producer said sales across Europe had been hit by the "worsening economic environment", with activity hit by a shift to the off-trade.

Diageo said its UK beer sales had declined one per cent, and overall UK net sales were up two per cent.

Despite delivering 30 months of consecutive volume share growth in the on-trade, second half net sales of Guinness were flat, Diageo said, caused by a switch to the off-trade and the rise in beer duty.

Paul Walsh, Diageo's chief executive, said the group's results "demonstrate the resilience of our business" in what had been a very challenging year.

"While the economic downturn has affected all markets, the response of customers and consumers has not been uniform and therefore the impact on our business has been varied. By region, International, North America and Asia Pacific have been stronger than Europe.

"By category, we have delivered growth in categories which account for over 50 per cent of our sales, primarily vodka, rum, tequila and beer. The gin and wine categories have been weaker and scotch and liqueurs have been most impacted by de-stocking.

Walsh said the group's Johnnie Walker whisky brand "faced a tougher market environment being at a relatively higher price point and saw more impact from de-stocking".

"While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery and the coming year will be challenging, as we lap a strong first quarter and a reasonable first half performance this year," Walsh added.

"That being recognised, we expect to deliver low single digit organic operating profit growth in fiscal 2010," he said.