Diageo to Buyback $5.6 Billion of Shares

Diageo (DEO, DGE.L), the world’s largest spirits firm, unveiled an additional 4.50 billion-pound ($5.61 billion) share repurchase program early on Thursday as higher sales and an improved price/product mix boosted earnings in fiscal 2019.

Net sales rose to 12.87 million pounds ($16.05 billion) during the 12 months that ended June 30, from 12.16 billion a year ago, 6% growth on both reported and organic bases, the London, England-based group said. This was ahead of the consensus estimate of analysts polled by Capital IQ for 12.80 billion pounds.

The company, which owns brands such as Johnnie Walker whiskey, Smirnoff vodka, and Guinness stout, said in its statement that strong growth in gin had continued with Tanqueray and Gordon’s posting double-digit growth.

Earnings before exceptional items surged by 10% to 130.8 pence per share from 118.6 pence per share. This was also ahead of analysts’ average estimate for 1.29 pounds per share on an adjusted basis.

The group, which disposed of a portfolio of 19 brands to Sazerac in December as part of a strategy to streamline its portfolio by selling non-core businesses and underperforming labels, said growth in pre-exceptional earnings was driven by higher operating profit and lower finance charges, which more than offset an increased tax charge.

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