Johnnie Walker owner toasts £2bn profit in 'difficult' year

Published on Thursday 27 August 2009 09:43

DRINKS giant Diageo today reported a £2.02 billion profit despite a "challenging" year in which it shed jobs to cope with the economic downturn.

Diageo saw its pre-tax profits fall slightly in the full year to 30 June, down from 2.09 billion in 2008.

It said the global downturn had affected all its markets, although Europe was hit harder than Asia and North America.

Diageo reported 4 per cent growth in organic operating profits for the year and a 15 per cent hike in reported net sales to 9.3 billion.

The firm said Europe was severely hit by the economic downturn, with deterioration in Spain and Ireland particularly pronounced.

But it said British sales grew 2 per cent in the period and had out-performed a declining overall alcohol market.

Diageo chief executive Paul said: "While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery."

He said the year to 2010 would be "challenging".

The firm has launched a restructuring programme to cut costs, including plans to axe 900 jobs in Scotland. These are aimed at saving the company 40 million a year, while another initiative in its global operations aims to save 120 million a year.

A cross-party campaign to save the Scottish jobs was set to go to London today.

Mr Walsh said: "We took action quickly to manage these difficult times, reducing our cost base and refocusing marketing spend as consumer trends changed."

Mr Walsh said the firm had seen growth in vodka, rum, tequila and beer sales, but gin and wine had been weaker in the period and scotch and liqueurs had been the biggest target for de-stocking among its customers.

The company revealed in July that it planned to close its Johnnie Walker bottling plant in Kilmarnock, putting 700 jobs there at risk. A further 200 jobs are under threat at the Port Dundas distillery in Glasgow.

The company is intending to partially offset the cuts by creating 400 positions at its plant in Fife.

Today two workers from the Kilmarnock plant were set to join politicians – including former Scottish Secretary Des Browne – at protests in London.

The campaigners – to include SNP, Tory and Labour councillors – were first visiting Diageo's headquarters in London.

Mr Browne, the MP for Kilmarnock and Loudoun, said: "Real progress is being made to help save the home of Johnnie Walker whisky.

"After Diageo HQ the group will be visiting No 10 Downing Street and the embassies of countries where Johnnie Walker whisky is most popular. "

Alternative proposals aimed at saving the 900 jobs have now been agreed by a multi-agency task force – which brings together trade unions, local authorities, Scottish Enterprise and politicians.

These could see production continue at the Port Dundas distillery in Glasgow, as well as the development of a new plant at Kilmarnock. And Scottish Finance Secretary John Swinney has vowed to put the plans to the drinks firm "swiftly".

Scotland is one of Diageo's largest spirit supply centres, currently employing around 4,500 people and producing nearly 50 million cases of Scotch whisky and white spirits.

Shares in the company fell around 4 per cent today.