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Diageo, revenues over £ 12 billion

Closing the fiscal year with profits to + 25%

Cutting costs and increasing productivity

Diego Plc  publishes the budget and announced a 1.5 billion-pound (€ 1.68 billion) share buyback and lifted its profitability target. The London-based distillates company raised its goal for profit margin expansion to 175 basis points from 100 points over the three years ending in June 2019, and increased its productivity target to 700 million pounds (€ 785 million) from 500 million pounds. Following the announcement, Diageo shares rose as much as 5% in early London exchanges.

The recipe to increase profitability is neither a secret nor a novelty for any large-scale consumer business: cutting costs and increasing productivity. The focus areas will include Diageo’s supply footprint and promotional spending as the company implements a rigorous budgeting program. The company will use new tools to understand the return on investment in marketing with the aim of increasing profitability while keeping costs flat or driving them down.

Diageo's revenues for the 12 months ended June 30 were £ 12.05 billion (€ 13.5 billion, + 15%), while operating income was $ 3.6 billion (+ 25%) in the last year, Diageo said in a note.

In recent years, Diageo sold assets such as the Gleneagles Hotel in Scotland and some wine brands to focus on reigniting growth in its Johnnie Walker Scotch whisky and Smirnoff vodka. Last month, the company bought Casamigos, George Clooney's tequila, with a $ 1 billion deal. It also entered the category of Irish whiskey, which was released after Bushmills sold to Jose Cuervo in 2014.

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