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Thursday, 6 September, 2001, 12:04 GMT 13:04 UK
Top brands drive Diageo
Cans of Guinness
Guinness: one of Diageo's most famous brands
The drinks giant Diageo - which owns well known brands like Guinness stout and Smirnoff vodka - has reported a 9% rise in profits, helped by strong sales of its main drinks brands.

The company reported interim pre-tax profits excluding one-off items of 1.98bn, with sales of its premium brands up 6%.

But its Burger King fast food business saw profits fall as sales dropped in the US and Europe.

The results covered the six months to the end of June, but the company said sales had continued to grow during July and August despite the tough global economic conditions.

"Since the start of the new financial year the key drivers of performance have remained unchanged," said the company's chief executive Paul Walsh in a statement.

"In premium drinks top line growth, in terms of both volume and net sales, has been maintained despite some weakening of economic conditions."

Brand boost

Diageo owns many of the worlds best known drinks brands, and it was a good performance by its eight 'global priority' brands which was behind the rise in profits.

These brands include Johnnie Walker, Guinness, Smirnoff, J&B, Baileys, Cuervo, Tanqueray and Malibu, and together account for more than half of the company's drinks sales.

Sales of these brands rose by 6%, helping total drinks sales up by 4%.

Burger King

But there was little cheer from the fast-food chain Burger King, which Diageo is currently looking to split off either through a trade sale or partial flotation.

Burger King restaurant in Piccadilly Circus, London
Burger King: profits down
Profits were down 12% with sales falling in both North America and Europe.

"We should keep it in context, Burger King represents only 6% of Diageo's total profitability," Diageo's Chief Executive, Paul Walsh, told the BBC's World Business Report.

The results for this year are also set to be hit by a reduction in the number of new restaurants being opened.

Pillsbury

Diageo said its US food business Pillsbury - which owns the El Paso brand - was affected by a slowdown in its food service business.

But profits grew by 5% and the company said trading at the business has improved over the past couple of months.

Diageo is in the process of selling Pillsbury to General Mills, and said it expects US regulators to finish their review of the sale next month.

In the City, Diageo shares stood 7.5p down at 697p in lunchtime trade.

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 ON THIS STORY
Paul Walsh, Diageo Chief Executive
"I don't believe it (Burger King) fits with our core strategy"
See also:

22 Feb 01 | Business
Irish drinkers desert Guinness
19 Dec 00 | Business
Seagram splits drinks empire
17 Jul 00 | Business
Diageo confirms Pillsbury sale
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