Emerging markets boost Diageo

Emerging markets and US growth have given Diageo a boost in the face of continuing woes in the eurozone.

The drinks giant today released its half year results, which show underlying profits of 9%, while the group saw 18% growth across its emerging markets which now account for 40% of its business.

Pre-tax profits were £1.86 billion, an increase of 15% on the same six-month period in 2010.

Chief executive Paul Walsh said that the results meant that the group was “well placed to meet its medium term financial targets for 6% annual profits growth, margin expansion and 10%-plus earnings growth.”

Walsh continued: “We are cautious as to the consumer and economic trends we will face in 2012 but these first half results have positioned us well.”

Finance director, Deirdre Mahlan, said she expected to see no slowdown in emerging markets and was encouraged by the US’s recovery, albeit slow.

Although depressed trading in Europe was exacerbated by on-going problems in Spain, Greece and Ireland, she did add that the region had stabalised.

In the UK, sales of Smirnoff and Baileys remained strong but sales still fell overall. It was France and Germany that effectively kept Europe afloat.

Diageo Europe president, Andrew Morgan, said: “The economic environment, particularly in southern Europe, has impacted our performance in Western Europe, while in the emerging markets of Europe we have delivered strong growth.”