Britain's Diageo, the world's largest spirits company, announced a 2 billion pounds share buyback programme on Thursday and better-than-expected sales growth for the full year, helped by a gin boom in Western Europe.

The British maker of Johnnie Walker Scotch and Smirnoff vodka reported net sales of 12.2 billion pounds, up 5% on an organic basis, higher than the 4.3% growth forecast in a consensus supplied by the company.

The company said Tanqueray gin performed well in Europe and the launch of Gordon's pink gin also offered a boost.

Earnings per share, at 118.6 pence, also beat forecasts.

Diageo stood by its mid-term expectations, saying it still anticipated mid-single digit organic net sales growth and 175 basis points of organic operating margin expansion for the three years ending 30 June 2019.

Yet it forecast some near-term headwinds for the new financial year that started in July, regarding currency exchange rates, tax and interest rates that helped push its shares down 1.5% at 0823 GMT.

It said foreign exchange rates would reduce full-year sales by 70 million pounds, and operating profit by 10 million pounds. It expects a tax rate of 21 to 22%, up from 20.7% in the just-ended year, and also expects higher interest rates to increase its borrowing costs.

Diageo said it approved a share buyback programme of up to 2.0 billion pounds for the year ending 30 June 2019. (Reuters)

Source: www.businessworld.ie