Diageo profits hold firm but challenges expected

Guinness brewer Diageo today revealed its profits took a minor fall as it admitted entering a challenging period.

Profits before tax for the last 12 months stood at £2.093 billion, down £2 million on the previous year.

However, operating profits were up nine per cent and net sales rose seven per cent.

Sales for the maker of myfinances.co.uk favourites tipples Baileys, Johnnie Walker and Smirnoff stood at £10.643 billion.

Paul Walsh, chief executive of Diageo, explained growth was driven by sales of Scotch in Latin America and beer in Africa.

However, he admitted the current economic woe was setting a challenge.

“We enter the new financial year facing slowing global GDP growth and more challenging global economic trends, but given the strength and diversity of Diageo’s business we believe we can deliver organic operating profit growth for the coming year within our range of seven per cent to nine per cent,” Mr Walsh said.

In the UK, the drinks maker reported a growth in the off-trade – people buying alcohol to have at home rather than from a pub.

The firm also saw growth for its premium products, suggesting consumers were drinking less and of better quality.

However, international net sales of ‘ready to drink’ products – so-called alcopops – fell five per cent.