Diageo shares skyrocket as sales hit £12.1 billion Posted by: Alana House July 28, 2017 Diageo’s shares have skyrocketed following the announcement the company is launching a £1.5 billion share buy-back program following its outstanding end of year results. The world's largest spirit producer reported 15% increase in net sales to £12.1 billion, which resulted in a 5.5% rise in its share price to a record £23.90. The result was “driven by favourable exchange and organic net sales growth”, with organic growth of 4.3%. Operating profit grew by 25% to £3.6 billion, with organic growth of 5.5% “driven by good progress on productivity partially offset by implementation costs and one-off items.” The company also said it expected organic net sales growth to continue over the next three years, ending June 30, 2019. Organic growth of net sales was achieved in all of its territories, with Latin America and the Caribbean seeing a 9% uplift. Growth in Asia Pacific Sales in Asia Pacific were up 3%, with the company noting that Australia saw growth across both spirits and the RTD portfolio. However, Asia Pacific was the only region to deliver a decrease in volume, down 1%. “Diageo is a strong company today and we are confident in our ability to deliver sustainable growth,” said Ivan Menezes, Diageo chief executive. “We are raising our productivity goal to £700 million with two thirds being reinvested in the business. We continue to expect mid-single digit top line growth, and we are raising our operating margin expansion objective to 175bps over the three years ending 30 June 2019. “Following three years of consistently improving cash flow generation the Board has approved a share buy-back programme of up to £1.5 billion in F18. “Our performance demonstrates the effective delivery of our strategy through disciplined execution of our six priorities put in place four years ago. We have delivered consistent strong performance improvement across all regions and I am pleased with progress in our focus areas of US Spirits, scotch and India. “Our productivity work is delivering ahead of expectations allowing us to reinvest in our brands, drive margin improvement and generate consistent strong cash flow. Through productivity we have embedded an everyday efficiency mind set in the business and with improved data and insight we are making faster, smarter decisions on investment choices.” The booming brands Diageo, which owns 200 brands across 180 countries, said whisky sales rose by 5% over the period thanks to growth in all regions except for Asia Pacific, with Johnnie Walker and Buchanan's climbed by 6% and 16% respectively. Baijiu brand Shui Jing Fang experienced the greatest organic growth – 65% – while Don Julio Tequila and Bulleit Bourbon also saw strong double-digit gains at 25% and 24% respectively. However, vodka, which represents 12% of the group's net sales, dropped by 4%, as Ciroc and Ketel One showed weaker sales in the American market. Smirnoff net sales were also down 1%, challenged in a competitive vodka category in the US. Guinness sales were also flat.