Diageo, the world's biggest spirits group, beat forecasts with a 9 per cent rise in underlying first-quarter sales led by Latin America and said it expected further growth in its first half, sending its shares to a record high.
The maker of Guinness said today that although it was alert to any impact from the fragile global economy, trading in its July-September first quarter was marginally ahead of its own expectations.
The quarterly sales rise compared with forecast growth of 5.9 per cent in a Reuters poll, and was reported in a trading update ahead of the group's annual general meeting.
Diageo's chief executive Paul Walsh said the group saw very strong growth of 20 percent in emerging markets, improving growth in Europe and better pricing in North America.
"Diageo has delivered a good start to the new financial year. Net sales growth was marginally ahead of expectations and the quarter did benefit from some one-off factors which are not expected to reoccur in the second quarter," Mr Walsh added.
The two major one-off impacts came in Spain and Venezuela, which improved strongly from the same period last year when the former suffered from heavy destocking and the latter from a currency crisis.
Analysts estimate that stripping out these one-offs meant underlying growth was around 7 percent, still above consensus forecasts, while there were some key positives like a return to growth in Western Europe and strong growth in Latin America.
"These results represent a very encouraging start to the year and a good underwriting of existing estimates," said analyst Michael Bleakley at house brokers Credit Suisse.
Diageo said its Latin America and Caribbean region saw underlying quarterly sales rise 30 per cent, followed by Asia Pacific up 14 per cent, Africa 9 per cent, Europe 6 per cent, and North America 5 per cent.
Analysts said growth in Europe was the best since Diageo started disclosing regional sales numbers in 2005 and was led by 10 per cent plus growth in Russia, Eastern Europe, Germany, the Nordic markets and Spain.
The London-based group is expanding into fast-growing emerging markets with recent deals in China and Turkey and expects half its turnover to come from these markets by 2015 from a current proportion of around 35 percent.
In August, the company set new targets to grow underlying annual sales 6 per cent, improve margins and see double-digit percentage earnings growth in the medium term.
Underlying sales and operating profit grew 5 per cent in its 2010/11 year to end-June.
"We believe Diageo should meet its mid-term sales growth guidance of 6 per cent in 2011/12, now needing 5.3 per cent growth for the rest of the year," said UBS's Melissa Earlam.
The group said the strong dollar against the pound would cut operating profits by £35 million for the year to June 2012 compared to a previous estimate for a £25 million hit.
Diageo's arch rival, Pernod Ricard , will outline its annual targets tomorrow when the Absolut vodka and Martell cognac maker reports first-quarter sales.
Its underlying sales rose 7 per cent and profit 8 per cent in its year to end-June.
