Interim results, six months ended 31 December 2012

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Results which show Diageo is a strong business getting stronger

Results summary

• 5% organic net sales growth with 1% organic volume growth
• 70 basis points of organic gross margin improvement
• 5% organic growth in marketing focused on the faster growing markets
• 110 basis points of organic operating margin expansion
• 9% organic operating profit growth
• Faster growing markets are 42% of Diageo's net sales in the half and delivered organic net sales growth of 14% and operating profit growth of 21%
• Acquisitions made in the past two years added £0.3 billion to net sales in the half
• Free cash flow improved more than £100 million to £0.7 billion
• eps pre-exceptional items up 9% to 60.9 pence per share
• 9% increase in interim dividend

Paul S Walsh, Chief Executive, commenting on the six months ended 31 December 2012

"These results reflect the global strength of our strategic brands, our leadership in the US spirits market and our increasing presence in the fastest growing markets of the world. Our expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth, while net sales growth was driven by our pricing strategy and premiumisation, especially in the US. This drove gross margin expansion, which together with our continued focus on operating efficiencies, delivered operating margin improvement.

This is a strong set of results, confirming our medium term guidance and supporting our decision to increase the interim dividend by 9%."