Diageo in high spirits as profits jump on gin boom

The Johnnie Walker owner saw operating profits increase by 9 per cent. Picture: Diageo

The spirits giant - Scotland's largest distiller - saw operating profits jump by 9 per cent to £4 billion for the year to 30 June.

The company, whose portfolio includes Tanqueray and Gordon's gin, said rising profits were driven by organic growth of its key brands and pointed to the continued popularity of gin, especially in western Europe.

Organic net sales grew by 6.1 per cent to almost £12.8bn, with Diageo hailing a contribution from all regions.

It cited healthy European sales, pushed higher by a particularly strong performance in the UK and Ireland, where it has continued to pump investment over recent years.

The results come in the same week as talks between Diageo and its Scottish union workers fell apart, increasing the likelihood of strikes at its whisky sites.

Following last month's completion of a share buyback programme worth £2bn, the group has now pledged a further of capital of up to £4.5bn to shareholders by 2022.

Chief executive Ivan Menezes said: "Diageo has delivered another year of strong performance.

"Organic volume and net sales growth was broad-based across regions and categories, with new product innovation being a strong contributor.

"These results reflect the steady progress we are making and, as we look ahead, we see attractive opportunities to deliver consistent growth and create shareholder value."

Arlene Ewing, investment manager at Brewin Dolphin, said: “This is another strong set of results from Diageo, with growth more or less across the board.

"The share price is up nearly a quarter in the year to date for this defensive stock, which has been seen as a relative safe haven against an uncertain backdrop.

"They could be buoyed further by the extension to the share buyback programme announced today, the continued weakening of the pound, and the uplift to the dividend.”