First quarter sales up 7% for Diageo

Diageo saw organic net sales growth of 7% in the first quarter of 2011. Sales in the nine months to March 31 – the spirits producer’s current financial year – increased 5% on an organic basis and volumes were up 3%.

Sales in Asia Pacific were up 9% and North America 3%, but Europe saw a 3% decline.

The company said foreign exchange movements were expected to bring an increase in operating profit for the year to June 30, 2011, by £25 million against the prior year.

This represents a reduction of around £30 million on the guidance given at the time of the interim results and is mainly as a result of the weakness of the US dollar against sterling.

Chief executive Paul Walsh said: “Trading in the third quarter was in line with our expectations that the second half would be stronger than the first.

“Overall trading in Europe continues to be challenging, although in the quarter stronger price/mix in Great Britain and Russia offset weaker price/mix in Ireland and Greece and a deterioration of the on-trade in Spain.

“We remain confident that our upweighted marketing investment, together with the increased investment we have made in emerging markets in the year, will continue to deliver improving performance.”