Diageo’s sales get a lift from United Spirits

United Spirits has contributed 9 per cent of net sales (£921 million) to its parent Diageo’s sales during FY15.

Global liquor giant Diageo’s net sales were £10.8 billion.

Sales up London-based Diageo, which announced its annual results on Thursday, said net sales were boosted by £949 million as a result of acquisitions including United Spirits and the remaining 50 per cent of tequila brand Don Julio.

Diageo Chief Executive Ivan Menezes in an investor presentation while announcing the company’s results, said: “In (the next full-year), we believe stronger volume growth will deliver an improved top line performance.

“As we achieve our productivity gains from 2017 we expect to deliver mid-single digit organic top line growth on a sustained basis and operating margin expansion of 100 basis points over three years.”

While operating profits for United Spirits was £53 million, finance charges amounted to £60 million.

“We are focused on reducing USL’s net debt position and the sale of non-core assets is one way in which we will do this. As part of this, earlier this month, USL announced the sale of its shares in United Breweries for around £85 million,” Menezes said.

He said consolidation of USL reduced margin by 200 basis points. USL brands had added over 90 million cases to reported volume and represent almost 40 per cent of parent’s volume.

The presentation also said that the average net debt increased by £1.3 billion, largely driven by the acquisition of the controlling stake in USL in July 2014 and the consolidation of its debt.

“We expect our effective tax rate to increase to 19 per cent next year, reflecting the wider tax environment and higher profits from USL,” he said.