Diageo confident of 'stronger' 2017 financial year

Smirnoff, Guinness and Baileys producer Diageo is set to deliver a “stronger” performance for the 2017 after a good start to the financial year as it beefs up marketing, innovation and commercialisation of products.

Sales from scotch, US spirits and expansion in India were identified as key areas for growth in the current financial year, chief executive Ivan Menezes said ahead of the group's shareholder meeting on Wednesday.

Menezes said the FTSE 100 company made a strong start to productivity and it will no longer use productivity related costs as an exceptional item. In the first half of the year the costs will impact the company's organic operating profit margin.

Productivity related costs will decline in the second half of the year and be offset by higher savings and benefits from targeted reinvestments, which will contribute to organic margin expansion for the full year.

"Our top line momentum and progress in implementing productivity changes, gives us continued confidence in achieving our objective of mid-single digit top line growth, and over three years ending fiscal year 2019 delivering 100 basis points of organic operating margin improvement”, Menezes added.

In July, Diageo posted its preliminary results for the year to 30 June and reported an improvement in organic results with volume growth of 1.3%, net sales growth of 2.8% to £10.485bn, and operating profit growth of 3.5% to £3.008bn.