Emerging markets and US prop up Diageo sales

Diageo’s performance in North America and the emerging markets is carrying the drinks group through deteriorating sales in Western Europe.

Diageo has reported a 6.2% sales increase in line with its medium term plans

The UK-based company reported an overall net sales growth of 6.2% (5% organic) in its 2012/13 full-year financial results this morning to £11.4bn, driven largely by positive results from the US where net sales increased 5%.

Overall profit meanwhile increased to £2.59bn, up 25%.

Sales for Diageo in emerging markets such as Latin America and Caribbean, and Africa, Eastern Europe and Turkey – a newly formed region for the group – also proved strong with double-digit sales increases in both.

However the continued “challenging trading environment” of Western Europe, particularly in Southern Europe and Ireland, dragged down Diageo’s overall net sales growth by producing a decline of 11%.

Diageo CEO Ivan Menezes said: “These results reflect Diageo’s strengths. We have delivered 5% net sales growth reflecting the strength of our US spirits business and continued double digit growth in the emerging markets, despite weakness in some markets. The breadth of our good performance is reflected in the strength of the cash flow, in our double digit eps growth and a recommended 9% increase in the final dividend. This year we have again made a strong business stronger and we remain on track to deliver our medium term guidance.”

Diageo is now in its second year of a three-year plan to maintain an average 6% net sales growth for the term.