Strong performances in emerging markets have helped Diageo to achieve organic growth of 6% in net sales to £10.76 billion and 9% in operating profit before exceptional items to £3.20 billion for the year ended 30 June 2012, with the margin improving by 60 basis points. Free cash flow was £1.6 billion.
During the year, Diageo increased marketing investment by 8%, up 30 basis points to 15.8% of net sales, focusing on strategic brands and the fastest growing markets.
Emerging markets, which now account for almost 40% of Diageo’s business, grew net sales by15% and operating profit by 23%. Acquisitions in faster growing markets, primarily Mey İçki inTurkey, added £320 million of net sales and £82 million of operating profit after transaction and integration costs.
During the year Diageo increased its ownership stake in Shuijingfang and Halico and announced an agreement to acquire the Ypioca brand inBrazil. The drinks group is also planning to invest a further £1 billion to expand its Scotch whisky production capacity
“Diageo is a strong business, getting stronger,” says Paul Walsh, chief executive of Diageo. “We have increased our presence in the faster growing markets of the world, through both acquisitions and strong organic growth. We have enhanced our leading brand positions globally, through effective marketing and industry leading innovation and we have strengthened our routes to market. 6% organic top line growth, 9% operating profit growth and 60 basis points of margin expansion is a strong performance and demonstrates our commitment to delivering efficient growth.”
He adds “In F12, we have continued to invest to ensure this business is well positioned for the future. Our confidence in the achievement of our medium term guidance is underscored by the 8% recommended increase in our final dividend.”