Johnnie Walker and Smirnoff owner Diageo (DGE) has enjoyed sales growth across all its markets, helping operating profit rise 11% to £2.4bn in the half year to 31 December.

By boosting investment behind its wide and highly prized range of alcohol brands, overall sales at Diageo jumped 7% to £6.9bn over the same period.

BUYBACKS CHEER

In addition to the strong trading, the cash generative beverages behemoth has also approved incremental share buybacks of £660m, pushing the overall programme to £3bn for the year to 30 June.

Diageo’s move also signals confidence in the company's outlook and may imply the shares are too cheap. This isn’t the first time Diageo has strategically used share buybacks.

In November, the company announced the sale of a portfolio of brands, including Booth’s gin, for $550m to help boost its share buyback programme.

ORGANIC GROWTH BEATS ANALYSTS’ FORECASTS

Liberum analyst Nico von Stackelberg says organic sales growth of 7.5% beat analysts’ expectations by 1.95%, but also notes the outlook was not raised as investment will stunt Diageo's second half performance.

Despite this, shares in Diageo are up 4% at £28.82 as the market toasts the additional buybacks. Investors may also be relieved by the company’s reassurance that the direct financial impact from Brexit will not be material.

It appears the spirits seller has mitigation plans to deal with any short-term disruption from a ‘no-deal’ scenario, which includes the UK reverting to World Trade Organisation rules.

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