Diageo claims it's on the way back


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The Independent Online

The drinks company behind Johnnie Walker, Smirnoff and Guinness has insisted that the problems of the past three years are now behind it.

Diageo made the claim at its full-year results, with bosses saying next year will bring a return to organic growth, with big pushes in South Africa, India and the US.

Particular attention is being paid to the North American division, with the chief financial officer, Deirdre Mahlan, being drafted in to help the struggling business, which has suffered due to the rise of craft beer and spirits.

Operating profits in the region, where Diageo makes 40 per cent of its profits, fell 2 per cent in the year to the end of June. Ms Mahlan said: “We don’t think people change their habits so much. People are trading up or people are trading down. For the consumer... it means the discretionary spend has been relatively weak.”

She will also be expected to deal with the inquiry by the US Securities and Exchange Commission over allegations that the company pumped suppliers with excess stock to boost sales, only to withdraw the stock later. “We don’t comment on speculation,” she said.

The results showed Diageo failed to create organic growth for a third year, with revenues flat at £10.8bn.

However, the company’s pre-tax profits jumped by 8 per cent to £2.93bn.