The Scottish business of Diageo, the world’s largest spirits maker, is experiencing the best of times particularly for whisky which is enjoying a high demand with strong signals that demand for scotch is likely to hit double digit percentages in overseas markets. The company announced a 5% rise in profits to £2.9bn in the year to June. It now says it has long term plans for Scotland and has already invested £600m in the last six years, a move that will see it strengthen its grip in Scotland and definitely contribute to the solidity of Scottish business. Whisky sales in emerging markets rose by 16%.
The company is happy with the results, saying they will definitely make a positive impact on Scottish business both directly and indirectly as well as add to the value of Scotland as a healthy business spot for globally-focused investors. In a move to consolidate its position both for its Scottish business and elsewhere in the global market, Diageo is planning to make heavy investments in popular brands such as Johnnie Walker. It currently employs about 4000 people in Scotland, adding to the vibrancy of Scottish business.
In addition to the excellent performance exhibited by the company’s Scottish business, other markets performed equally well across the year, with sales volumes increasing tremendously in countries such as China where sales of super deluxe scotch and super deluxe swelled by 17% and 41% respectively. Commenting on the results, Diageos’ chief executive, Paul Walsh, said their mid-term outlook is for an average organic top-line growth of 6%, improved organic operating margin and double digit earnings per share (eps).
Diageo is one of the strongest performers in Scottish business, helped by heavy marketing budgets that see the company running vigorous marketing campaigns throughout the year. The scotch and rum brands have particularly performed exceptionally well and they are believed to have contributed a greater portion of the double-digit organic growth in net sales especially in Russia where marketing majored on premium and super premium scotch.
The directors recommended a 6% rise on final dividend, taking it up to 24.9p per share. Shares on the other hand closed 5% up, 52p, at 1170p.