Diageo warns on global economy

For the quarter net sales increased 9% against the previous year, with volumes up 5%.

The group said that sales in Europe over the three months rose by 6%, which compared to a 30% rise across Latin America and Caribbean markets, a 14% increase in its Asia Pacific operations, a 9% rise in Africa and a 5% rise in North America.

It said that the wine category in Europe remained weak and beer was broadly flat. The company said that double digit growth in Russia and Eastern Europe, in Germany and the Nordic markets and in Spain, where performance benefited from the comparison to a destock there in the prior period, drove net sales growth in Europe.

It also said that there was some price/mix erosion as a result of the continued difficult consumer environment.

The maker of Johnnie Walker and Guinness said that performance had been driven by the growing economies of Africa, Asia Pacific and Latin America, where it continues to increase its marketing spend.

Paul Walsh, chief executive, said: “Diageo has delivered a good start to the new financial year. Net sales growth was marginally ahead of expectations and the quarter did benefit from some one-off factors, which are not expected to reoccur in the second quarter. Consumer trends are broadly unchanged.

"We have delivered positive price/mix in North America, an improvement in net sales growth in Europe and we have driven strong growth in the developing markets with net sales up 20%. We continue to expect that net sales growth for the first half will improve on that delivered in fiscal 2011.

“We are alert to any impact which the fragile global economy may have on trading patterns as we continue to build our brands with consumers and enhance our relationships with customers.

"The sharpened focus we have brought to our investment in marketing, innovation and sales to build the strength of our brands and our routes to market underpins our confidence in the performance of the business.”