Net profit down for Diageo

11 February, 2010

Diageo has reported a fall in half-year profits, but the drinks giant has said it is “in the early stages of recovery”.

The world's biggest spirits group said today (February 11) that its first-half net profit dipped to £1 billion, from £1.1 billion last year.

A Christmas push on spirits and Blossom Hill wine contributed to a 6% volume rise and a 5% sales jump in Britain with “share gains delivered across spirits, beer and wine”.

Diageo's marketing drive to celebrate the 250th birthday of Guinness saw it gain market share in Britain and Ireland in the six months to December 31.

A statement said: “Volume and net sales grew in Great Britain as a result of strong sales execution, particularly during the Christmas campaign in the off-trade.

"Guinness remained resilient and delivered share gains in both Great Britain and Ireland.

"Overall price/mix was negative due to increased promotional activity on spirits in the off-trade channel and as consumers traded down from super premium and premium into lower priced segments.

"The continued consumer shift from on-trade to off-trade accelerated in many markets during the period.”

Chief executive Paul Walsh said: “We are in the early stages of recovery with more encouraging signs in the emerging and developing markets.

"However, in a difficult environment this half we have continued to improve the efficiency of our functions, reduced our cost base, strengthened our relationships with our customers and generated significant free cash flow which has again enhanced our financial strength.”

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