Diageo plc (DEO) posted better-than-expected sale growth in the second half of last year Thursday driven by improved performance in the U.S. spirits business and its scotch portfolio.
The maker of Johnnie Walker and Crown Royal saw top-line sales rise 4.4% for the six months ended Dec. 31, 2016 on volume growth of 1.8%.
Diageo stock gained 4.2% to 2,228 pence in the first hour of trading in London, up 1.27% on the session, trimming the three-month loss to just under 1.6%
The world's largest producer of spirits saw pre-exceptional earnings per share at 62 pence, up 21% from the same period last year, "as higher operating profit and associate income along with favorable exchange more than offset the impact of disposals and a higher tax rate."
Diageo CEO Ivan Menezes told CNBC that the company "clearly benefited" by the 18% fall in the pound since the U.K. voted to leave the European Union in June 2016. "We are confident of achieving our medium term objective of consistent mid-single digit top line growth and 100bps of organic operating margin improvement in the three years ending 30 June 2019," Menezes added.
North America saw growth of 3% on an organic basis, the majority of growth came from U.S. spirits, which saw new sales up 4%. North America represents a third of the company's earnings.
"North American whiskey net sales grew 15% as Crown Royal and Bulleit continued to gain share in a vibrant category," the company said. Growth was driven by reserve variants, which were up by 11%.
