Diageo Profits Stumble over European Obstacles

21 February 2005

Difficult European trading conditions contributed to a fall in first half pretax profits for alcoholic drinks giant Diageo.

The London headquartered company, which makes such brands as Smirnoff vodka, Baileys liqueur and Guinness stout, reports a profits decline of 4.8% to £1.24 billion ($2.34bn, £1.79bn), broadly in line with analysts' forecasts.

European markets grew by just one per cent, while volumes in the US were stronger with five per cent growth.

The Johnny Walker whisky brand performed strongly with net sales up 14 per cent and growth in all regions. Guinness made a strong comeback in the UK while decline in Ireland slowed on the back of intensive marketing.

Diageo ceo Paul Walsh says the company has made a good start and is confident its strong global brands are the "group's main engines" for organic growth.

Data sourced from Financial Times Online; additional content by WARC staff