Diageo reports 13 per cent rise in earnings

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The Independent Online

Diageo Plc the world's biggest spirits group, expects higher profits growth this year driven by developing markets after broadly meeting forecasts on Thursday with a 13 per cent rise in annual earnings.

The London-based maker of Smirnoff vodka, Johnnie Walker whisky and Guinness beer saw strong growth in Latin America, Africa and Asia which account for a third of group earnings, while demand in Europe and North America was weak.

Chief Executive Paul Walsh said the group had seen a strong performance in the first six months of 2010 and now expects higher growth this year than the 2 per cent rise in underlying operating profit seen in the reported year to June 2010.

He added that the performance, "gives us confidence that in fiscal 2011 we well be able to improve on the organic operating profit growth we have delivered this year.

The group posted pre-exceptional earnings of 72.0 pence a share for the year to end-June, compared with a consensus of 72.5p according to Thomson Reuters Starmine SmartEstimates, which predict future earnings by putting more weight on recent forecasts of top-rated analysts.

The final dividend rose 6 percent to 23.5 pence a share.

Operating profits rose 2 percent to 2.75 billion pounds in line with its target of a low single digit percentage rise due to a strong second half rebound after first half July-December 2009 profits had fallen 3 percent.

The London-based group which makes Baileys liqueur, Captain Morgan rum and Tanqueray gin has see a recovery in sales and after first quarter sales fell 6 percent, second and third quarters showed growth of 2 and 12 percent, giving overall annual underlying sales growth of 2 percent.

Diageo's arch-rival Pernod Ricard lifted its annual profit growth target last month for the second time in less than two months and now looks for a 3-4 percent rise due to improving trends in the U.S., Eastern Europe and duty free. Pernod report its full year results on Sept 2.