Emerging markets bolster Diageo performance

Nick Raynor, investment adviser at The Share Centre explains why today's half year results from Diageo could make it a good time to invest in the company. 

"Drinks brand Diageo today reported half year pre tax profits of £1.61 billion - up £200 million on the same period last year, with overall sales rising from £6.92 billion to £7.13 billion. Despite these strong results the market saw a slight dip in early trading with some analysts expecting more, but this has improved as investors digest on the figures.

"Crucial to Diageo's strong performance has been emerging markets, with strong sales in Africa, Asia, Latin America and the Caribbean. Scotch has proved to be one of Diageo's best performers in these areas, with the Chinese proving partial to Johnnie Walker in particular.

"However the news is not all good, with much weaker sales in Europe - traditionally an area of strong performance for Diageo. The biggest falls are to be seen in countries such as Portugal, Spain, Greece and Ireland, across the regions a 13% drop was recorded. 

"Given Diageo's strong performance in emerging markets and also a resurgence in its key market of North America we are upgrading the company to a ‘buy' as we believe that even despite the strong share price it presents a good case for future growth."