Diageo’s share prices surged after the company announced a £1.5bn buyback and “strong” full-year results.
The spirits giant topped the FTSE 100 this morning, with share prices up 7.69% to 2,447p at the time of writing.
It came as Diageo revealed revenues were up 15% to £12.1bn in its full-year results, with operating profit up 25% to £3.6bn.
Organic net sales growth stood at 4.3%, with organic volumes up 1.1%. Underlying operating profit rose 5.6%, which Diageo said was “driven by good progress on productivity partially offset by implementation costs and one-off items”.
The alcohol giant has now raised its operating margin expansion objective to 175bps for the three years ending 30 June 2019.
Diageo was “confident” in its ability to deliver sustainable growth and had raised its productivity goal to £700m, with two thirds to be reinvested in the business, said chief executive Ivan Menezes.
Cashflow stood at £2.7bn, up £566m on the previous year, with net cash from operating activities up £584m to £3.1bn.
The performance demonstrated “the effective delivery of our strategy through disciplined execution of our six priorities put in place four years ago”, said Menezes. “Our productivity work is delivering ahead of expectations, allowing us to reinvest in our brands, drive margin improvement and generate consistent strong cashflow.
“We have embedded an everyday efficiency mindset in the business and with improved data and insight we are making faster, smarter decisions on investment choices.”
Javier Ferrán, who joined Diageo as chairman in 2017, was “clearly making his presence felt”, said analysts at Barclays. “The long-hoped raise to the group’s productivity savings plan should be taken well by investors.”
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