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Diageo posts £2bn profits

Published:  27 August, 2009

World drinks giant Diageo has posted a £2.02 billion profit despite recession and slashing jobs across its business.

The firm - which has Smirnoff and Guinness as key brands - is at the centre of a bitter controversy over plans to cut 900 jobs in Scotland and has witnessed a slight slump in profits in the financial year to June 30 when compared to £2.09 billion in 2008.

A campaign led by unions and politicians has been gathering pace in Scotland to persuade Diageo to scrap plans for the jobs losses, 700 of which are based at Kilmarnock's Johnnie Walker packaging plant.

Diageo boss Paul Walsh said that the company had proved resilient in challenging world-wide economic conditions.

The firm's restructuring programme aims to slash costs and make a global saving of £120 million a year.

Walsh said: "This has been a very challenging year. Overall however our results demonstrate the resilience of our business. Our brand range and our geographic reach enabled us to deliver 4% organic operating profit growth and 10% eps growth. While the economic downturn has affected all markets, the response of customers and consumers has not been uniform and therefore the impact on our business has been varied."

He said that Europe had been hit harder by the economic downturn that the North America and Asia Pacific markets.

"By category, we have delivered growth in categories which account for over 50% of our sales, primarily vodka, rum, tequila and beer. The gin and wine categories have been weaker and scotch and liqueurs have been most impacted by de-stocking."

Walsh added that key brands, including Smirnoff, Captain Morgan, Jose Cuervo and Guiness all grew "supported by innovation and effective marketing".