Guinness sales surge in half year

SALES OF Guinness in Ireland grew by 2 per cent in the six months to the end of December, reversing a decline of recent years in the fortunes of the famous stout in its home market.

This emerged yesterday from figures produced by parent group Diageo.

Guinness also gained share in the pubs market on both sides of the Irish Border and reported an upturn in sales in Britain, which is served by the St James’s Gate brewery in Dublin.

Internationally, reported net sales of Guinness grew by 21 per cent, with Africa the star turn reporting a 25 per cent increase.

Diageo said its overall performance in Ireland was impacted by the further decline in the total alcoholic drinks market where volume was down 3 per cent.

“Harp gained share in the key Northern Ireland on-trade following the successful launch of Harp Ice Cold,” it added.

Diageo, which also owns Smirnoff vodka and Baileys liqueur, cut its profit target for the year due to the economic slowdown.

The world’s biggest alcoholic drinks group also announced a restructuring programme aimed at cutting £100 million from its cost base, largely in its 2009-2010 financial year.

Diageo cut its growth forecast for full-year operating profit to a range of 4-6 per cent, down from a prior range of 7-9 per cent.

Paul Walsh, the company’s chief executive, said that the global slowdown hit the company particularly hard in November and December.

“Current economic trends indicate that consumer confidence will reduce further and the outlook for the second half is more difficult to predict,” he added.

In relation to its restructuring programme, Mr Walsh said: “In the second half , we will implement a restructuring programme designed to ensure that Diageo emerges from this challenging time with improved routes to market, even stronger brand positions and enhanced financial strength.

“Anticipated full-year savings, in both cost of goods sold and overheads, of £100 million will accrue largely in fiscal 2010. Restructuring costs, amounting to approximately £200 million, will be taking an exceptional charge in the second half .”

Diageo’s net sales were £1.7 billion in the six months ended December 31st, up £434 million on the same period of the previous year.

Its operating profit increased by £191 million year-on-year to £682 million.

Diageo’s figures were boosted by currency movements. The company reports in sterling, which weakened against most other currencies late last year.