Why Diageo Is Up 23% This Year

Published in Company Comment on 25 October 2012

Diageo (LSE: DGE) has issued a series of positive statements this year.

Diageo (LSE: DGE) (NYSE: DEO.US) has advanced about 23% to 1,766p so far during 2012, making the share one of this year's best performers in the FTSE 100 (UKX).

The company -- one of the world's leading premium drinks businesses whose brands include Johnnie Walker, Baileys and Guinness -- seems to have impressed investors with a series of positive statements.

During May, the group issued an interim management statement that revealed organic net sales were still growing strongly, having risen 7% in the nine months to 31 March 2012, with sales volumes up 3%.

The best performance came from Diageo's Latin America and Caribbean operations, which saw organic net sales surge 18%. Elsewhere, sales cooled off in North America, and grew just 5%, while a 1% sales dip was reported in Europe.

In September, Diageo issued its financial report for the year to 30 June 2012. Group sales rose 10% to £14,594 million while operating profits soared 22% to £3,158 million. The total dividend for the year was increased by a healthy 7.7% to 43.5p per share.

And just last week, Diageo released a statement for the three months ended 30 September 2012. Organic net sales growth slowed slightly to 5%, but the Latin America and Caribbean regions still saw growth of 16%, while North America improved to 6%. Although Europe as a whole saw another 1% decline, there was double-digit growth in Russia, Eastern Europe and Turkey.

Paul Walsh, Diageo's chief executive, commented last week:

"Diageo has delivered a solid start to the new financial year with net sales growth in line with expectations. The strength of our brands and our routes to market, coupled with the investments we have made in faster growing markets continue to drive the performance of our business."

"As a global business we continue to be aware of the uneven nature of the global economy. However we remain confident that we will deliver our medium term goals, given the strength of our brands and our routes to market."

Diageo's half-year results will be published during February, and may reveal further encouraging news that will impress investors.

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> Jon does not own any share mentioned in this article.

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