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Diageo raises a glass to emerging market growth

Diageo raises a glass to emerging market growth

London: Sales at Diageo, the world’s biggest distilled drinks group, were up 6% in the first three months of 2012 with fast-growing emerging markets and a recovery in North America offsetting falling sales in Europe.

The London-based maker of Smirnoff vodka and Captain Morgan rum said on Thursday that despite weakness in Europe its fiscal third-quarter performance was in line with its expectations, and this put it on track to hit its medium-term target which is also for 6%growth.

The British group gained as markets in Latin America, Africa and Asia showed strong demand for its range of drinks, a US recovery gathered steam while in Europe, Spain and Greece were in decline and the UK market disappointed.

“Trading in the third quarter remained strong with the year-to-date performance in line with the first half and our expectations," said chief executive Paul Walsh in a trading update.

This saw the group’s nine-month sales to end-March rise 7%, similar to the increase in its July-December first half, with some 3% coming from price rises.

The nine-month sales picture was led by Latin America and Caribbean with a 18% rise, Africa was up 12%, Asia Pacific 10% ahead and North America 5 percent higher while Europe saw a fall of 1%

Last week Pernod Ricard, Diageo’s biggest rival, reported a 3% rise in its third-quarter sales, with growth in the period limited by the early Chinese New Year and by French consumers stocking up ahead of a tax rise which boosted sales in the closing months of 2011 at the expense of early 2012. Its nine-month sales rose 9 percent

Diageo’s shares have risen around 30% over the last 12 months, outperforming Pernod by some 20% with Diageo’s shares closing on Wednesday at 1,590 pence.

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