Markets: Wide market exposure set to lift Diageo

Published on Sunday 5 February 2012 00:00

DRINKS giant Diageo is expected to cheer strong profits growth on Thursday despite continuing pressure on sales of its whisky in troubled southern Europe and damage to margins from pub closures in Britain.

The group’s UK performance has been hit by widespread pub closures, which has seen more people buying alcohol from supermarkets where special offers drive down prices.

This, along with the economic woes in Ireland, has contributed to steep falls in Guinness sales – down 5 per cent in the year to June – while drinkers in the depressed Eurozone economies of Greece and Spain are struggling to afford their favourite whisky.

But Diageo sells its drinks in 180 countries, giving it huge exposure to emerging markets which are expected to buoy its results for the six months to 31 December.

The City expects it to report sales up 7.6 per cent to £5.7 billion, with a 9.6 per cent rise in profits to £1.9bn.

Engine giant Rolls-Royce is in line to report profits over £1bn for the first time when it announces its annual results on Thursday. The Derby and Bristol-based group is expected to have made £1.1bn before tax in 2011, compared with £955 million the previous year.

Rolls has won significant orders and is also likely to hail the positive impact of its acquisition of German engine maker Tognum.

Struggling holidays firm Thomas Cook is tipped to reveal more sales pain on Wednesday amid signs that rival Tui Travel has picked up some of its business.

Thomas Cook reportedly suffered a 33 per cent decline in summer holiday sales in the first two weeks of 2012 as customers delayed their holiday plans amid uncertainty over the firm’s future prior to a £100m lifeline from its banks.

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