Diageo, the world’s largest premium drinks company, has reported net sales of £6.9 billion for the second half of 2018, up 5.8%, and an operating profit of £2.4bn, up 11.0%, driven by organic growth.
Organic operating income grew by 12.3%, ahead of revenue growth, as “cost inflation and higher marketing investments were more than offset by improved price/mix component and the effectiveness of our productivity program,” Diageo said in a press release.
Net cash flow from operating activities was £1.6 billion, up £356 million, and free cash flow was £1.3 billion, up £317 million.
Basic operating income per share was 80.9 pence, down 1.6%, while current operating income was 77.0 pence per share, up 13.6%, driven by higher operating income and lower financial expenses, which more than offset an increase in taxes, mainly due to the positive impact of the US tax reform in the first half of 2018.
The interim dividend was increased by 5%, to 26.1 pence per share, with the FTSE 100 index rising by more than 2.6% this morning, proving that Diageo is the best-performing company.
Diageo chief executive, Ivan Menezes, said: “Diageo delivered broad-based volume and organic net sales growth across regions and categories. We continue to expand organic operating margins while increasing investment in our brands ahead of organic net sales growth.
“These results are further evidence of the changes we have made in Diageo to put the consumer at the heart of our business, to embed productivity and to act with agility to enable us to win sustainably.
“At £1.3bn, we delivered another period of strong free cash flow. As a result the board approved an incremental share buyback of £660m, bringing the total programme up to £3bn for the year ending 30 June 2019.”