India highway booze ban to hit Diageo sales

Diageo is expecting the ban on alcohol sales near Indian highways and the late timing of Chinese New Year to impact its organic net sales growth in the first half of the year, CEO Ivan Menezes has said.

Diageo, which produces Johnnie Walker, has weighted its investment in US spirits and Scotch

The Johnnie Walker maker has weighted its investment in US spirits and Scotch, and expects to grow its organic operating margin in the second half of the year as a result, according to a statement released ahead of Diageo’s AGM.

“Improved marketing, innovation, and commercial execution” during the group’s last financial year has “continued to strengthen” the business, which is “well set up” to deliver in line with its ambitions.

Menezes said he has “continued confidence” that the group will deliver “sustainable growth” in its full-year results.

“Our expectations on overall performance for the year remain unchanged,” he said. “Underlying momentum and progress in implementing productivity gives us continued confidence in our ability to deliver sustainable growth.

“We re-affirm our expectation of mid-single digit top line growth and 175bps of organic operating margin improvement over the three years ending 30 June 2019.”

Diageo saw its organic net sales grow by 4% to reach £12.1 billion (US$15.8bn) in its 2016/17 financial year, with growth across all key regions.