Diageo profits boosted by Brexit and Scotch sales
Guinness owner Diageo has cheered rising profits thanks to a triple tonic from the Brexit-hit pound, robust Scotch sales and a strong US performance.
The maker of Captain Morgan rum and Johnnie Walker Scotch saw operating profits jump 28% to £2.1 billion in the six months to the end of December.
Net sales beat expectations, rising 4.4%, with the market pencilling in a rise of 3.1%.
The company said sterling's Brexit-induced slump against the US dollar and the euro helped push net sales higher, with the pound's weakness set to bolster full-year sales and profits by £1.4 billion and £460 million respectively.
Chief executive Ivan Menezes said the FTSE 100 firm was on track to hit its financial targets.
"We have delivered a strong set of results with broad-based improvement in both organic volume and top-line growth and this positive momentum demonstrates continued effective execution of our strategy.
"Highlights this half include improved performance in our US spirits business and across our Scotch portfolio, driven by our focus on marketing with impact, innovating at scale, expanding our route to consumer, and winning in reserve."
Steve Clayton, fund manager at Hargreaves Lansdown, said the results showed underlying progress, but were "hugely flattered" by the weakness of sterling
"Consumers around the world have been faced with a series of extraordinary events, from Brexit, to the election of President Trump and even the demonetisation of the Indian economy.
"Whatever the events, it appears their reaction was to pour a larger than usual measure whilst they sat back and tried to figure out what on earth was going on."
The firm said its American operation had recorded net sales growth of 3% for the period, helped by a 4% rise in US spirit sales.
Sales of Johnnie Walker and Baileys lifted the company's European arm, where sales rose 5% over the half year.
Shares in Diageo soared more than 4% in early afternoon trading on the London stock market.