New Diageo boss reaffirms medium-term outlook

LONDON Wed Jul 31, 2013 2:58am EDT

LONDON (Reuters) - The new head of Diageo (DGE.L) on Wednesday confirmed a key medium-term sales target for the world's biggest spirits group after it reported a slightly better than expected full-year performance due to strong demand in the United States.

Delivering the first set of results under new boss Ivan Menezes, the maker of Johnnie Walker whisky and Guinness stout said organic net sales were up 5 percent in the year to end June, slightly above forecasts of 4.8 percent growth.

"Results are much as expected ... and the message is that nothing has really changed from the last update," Credit Suisse said in a note. "Overall a reassuring set of numbers and forecasts look well underpinned."

Diageo, which reiterated its medium-term sales target of 6 percent compound growth, said the results had been boosted by strength in the spirits market in the United States and double digit growth in emerging markets.

Net sales in the U.S. spirits division was up 8 percent due to strong demand for Johnnie Walker, Crown Royal and Buchanan's whisky. It enjoyed sales growth of 11 percent in emerging markets, although it noted that its operations in Brazil, Nigeria and China had suffered some weakness.

"The breadth of our good performance is reflected in the strength of the cash flow, in our double digit earnings per share growth and a recommended 9 percent increase in the final dividend," Menezes said.

"This year we have again made a strong business stronger and we remain on track to deliver our medium term guidance. "

(Reporting by Kate Holton; editing by Paul Sandle)

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