Diageo buyback proves a perfect pick-me-up

The City downed shares in drinks giant Diageo on Thursday after the maker of Guinness and Smirnoff vodka unveiled a £1.5 billion share buyback and strong financial figures.

The world’s largest distiller reported sales of £12.1 billion for the year to June 30, up 4% excluding the impact of the weaker pound, which boosts the value of overseas revenue.

Diageo hailed a strong performance in the UK, with sales up 3% partly thanks to the British love of Captain Morgan rum.

The company also benefited from making Baileys the new official sponsor of reality TV show Made in Chelsea in March, giving the brand exposure to a number of new younger female customers.

Finance chief Kathy Mikells said: “[Despite inflation] people are still very much willing to reach in their pockets for a really terrific product.”

Pre-tax profits rose to nearly £3.6 billion from £2.9 billion, and the business also lifted its profitability target.

Diageo was one of the biggest risers on the FTSE 100 after the update, with shares up 144.2p, or more than 6%, to 2416.5p.