Global drinks maker, Diageo has published its preliminary results and said that it expects 2010-2011 to be a good year for the company after sales trends in developing markets for the six months to June 30 offset poor trading in North America and Europe.
The company said that last year's preliminary results were up 2 pct and hopes next year will bring even more as they continue to focus on developing markets.
The whiskey maker has been in the press recently after plugging its £862m pension hole with 'maturing whiskey' a trend in recent days after core assets became more valuable than the company's cash flow after the recession bit into profits.
The maturing whiskey which has a £500m value is thought to be used as a collateral to produce annual income over the next fifteen years - at the end of that period the pension trustees will be able to sell the spirit back to Diageo.
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented "Concerns over growth prospects have detracted from an otherwise sturdy performance from Diageo, with the shares slipping in early trade.
Weaker sales in the US and Europe were offset by another progressive performance in emerging markets, where targeted marketing produced decent returns. The recent spike in the wheat price will be an additional headwind, whilst exchange rate fluctuations could also be a challenge. Nonetheless, the company's strict focus on operational efficiency, along with its product and geographical diversification, leave the company well placed for any future sustained global economic recovery. The dividend policy remains progressive, whilst the shares continue to provide some relatively defensive appeal.
In all, despite today's dip, the company is well regarded. The shares have outperformed the wider FTSE100 over the last year, having risen 10% versus 4%, and the current market consensus that the shares are a buy is likely to remain unchallenged."