Page last updated at 14:26 GMT, Thursday, 27 August 2009 15:26 UK

Profits dip at protest-hit Diageo

Protesters at Diageo headquarters
Protesters delivered a petition to Diageo headquarters on Thursday

Diageo, owner of Guinness, Smirnoff and Johnnie Walker, has reported a 3.7% fall in pre-tax profit for the year to the end of June to £2.015bn ($3.3bn).

Its boss Paul Walsh said it had been "a very challenging year" and cost-cutting would save £120m next year.

There have been protests about part of the plan - the closure of the Johnnie Walker bottling plant in Kilmarnock.

Two affected workers and a group of politicians visited Downing Street and Diageo headquarters on Thursday.

The cross-party group of politicians included former Scottish Secretary Des Browne, who said that public money should be spent on a scheme to save the jobs.

Diageo chief executive Paul Walsh "We're looking forward to another year of growth"

The closure, announced in July, puts 700 jobs at risk, while another 200 are threatened at the Port Dundas distillery in Glasgow.

"This is not just putting people out of work. This is significantly damaging a community and we have estimates to suggest that if Diageo's proposals are implemented - for our community alone, this will cost tens of millions of pounds," he said.

But there was no sign that the company was reconsidering its plans.

"We recognise that in the current environment we have to be very competitive," Mr Walsh told the BBC.

He added that the cost-cutting measures would allow greater spending on marketing the company's brands and said that he was "very comfortable" with the current plans.

Forecast cut

Diageo - the world's biggest spirits group - said that while the global economy appeared to be stabilising, there was "still uncertainty as to the sustainability and pace of any recovery".

KEY DIAGEO BRANDS
Johnnie Walker
Smirnoff
Captain Morgan
Baileys
Guinness
Jose Cuervo
Tanqueray

The company also cut its profit target for the current financial year, saying it expected to report "low single digit organic operating profit growth".

Net sales rose 15% to £9.31bn in the year to the end of June, but Diageo said that when exchange rate movements were stripped out sales had been flat.

Sales had fallen in Europe and in its Asia Pacific markets, while sales were little-changed in North America.

Its international division - which covers Africa, Latin America and the Caribbean - saw net sales rise 7%, and Diageo said this division continued to be a "key contributor" to its performance.



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