Diageo’s Bullish Forecast

At its AGM on October 18 Diageo reported that trading in the first quarter of the new financial year (fiscal 2006) supports guidance given at the results presentation in September that it expects to continue top and bottom-line growth in fiscal year 2006.

At its AGM on October 18 Diageo reported that trading in the first quarter of the new financial year (fiscal 2006) supports guidance given at the results presentation in September that it expects to continue top and bottom-line growth in fiscal year 2006.

In a statement, Paul Walsh, chief executive of Diageo said, “The current oil price has led to higher costs for all consumer goods companies. Diageo is not immune to this but our cost structure does reduce our exposure and therefore we currently expect to contain these cost pressures within our overall guidance.

“In addition, if the recent strengthening of the US dollar were to be maintained the negative impact in fiscal 2006 of the year-on-year movement in exchange rates is estimated to be £45m. This is a slight improvement from the £50m adverse movement we estimated in September but if current rates were maintained we would expect a more substantial improvement in fiscal 07.”

The report said that the European trading environment continues to be difficult, with sales volume dropping on the previous period as the decline in the ready-to-drink segment continues to adversely impact net sales growth. The North American sector however has continued to gain share in the growing spirits category.