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Diageo's half-year sales rise on India, China demand; announces share buyback

Diageo's half-year  sales rise on India, China demand; announces share buyback
FILE PHOTO - A bartender takes a bottle of Johnnie Walker whisky at Barmaglot bar in Almaty, Kazakhstan June 22, 2017. REUTERS/Shamil Zhumatov   -   Copyright  Shamil Zhumatov(Reuters)
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(Reuters) – Diageo Plc, the world’s largest spirits company, reported higher half-year sales on Thursday, helped by strength in India and China.

The British maker of Johnnie Walker Scotch and Smirnoff vodka also said it would buy back 660 million pounds ($866.91 million) worth of shares, bringing the total buyback programme to up to 3 billion pounds for the year ending June 30.

Diageo, which has operations across 180 countries, said currency exchange rates shaved 91 million pounds off its half-year sales and would drive sales for the full year lower by 80 million pounds.

The company also stuck to its forecast of mid-single digit organic net sales growth for the year and said it expects to expand operating margins to 175 basis points for the three years ending June 30, 2019.

In recent years Diageo has restructured in a bid to improve performance and streamline its portfolio, exiting non-core business and underperforming labels, while trying to bulk up on newer, hipper brands.

Diageo recently sold 19 lower-end brands including Seagrams VO Canadian whisky for $550 million, as it focuses on faster-growing products such as Johnnie Walker Scotch or Casamigos tequila, George Clooney’s brand, which Diageo took over in 2017.

The company said it booked an exceptional pre-tax gain of 154 million pounds on the divestiture.

Diageo reported net sales of 6.91 billion pounds ($9.07 billion), up 7 percent on an organic basis, for the six months ended Dec. 31, above analysts’ average expectations for organic net sales to grow 5.5 percent.

It reported earnings of 77 pence per share, excluding one-time items, also higher than the expected 71.4 pence, according to a company-supplied consensus.

(Reporting by Martinne Geller in London; Arathy S Nair and Shashwat Awasthi in Bengaluru; Editing by Anil D’Silva)

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