Diageo plc (ADR) (DEO): Results Preview

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Diageo plc (ADR) (NYSE:DEO) , the FTSE 100 drinks giant, is due to announce its interim results on Thursday this coming week (Jan. 31).

How will Diageo's businesses have performed in the first half compared with last year's first half? And is the group on track to meet forecasts for this year's key full-year numbers? Here's your cut-out-and-fill-in table!

Metric H1 2011/12 FY 2011/12 H1 2012/13 Forecast FY 2012/13 Forecast FY growth
Organic net sales (billion pounds)* 5.8 10.8 ? 11.5 6.5%
Earnings per share (pence) pre-exceptional items 55.9 94.2 ? 103 9.3%
Dividend per share (pence) 16.6 Final: 26.9 Total: 43.5 ? 47.7 9.7%

*Excludes excise duties.

In its annual results for the year ended June 30, 2011, Diageo set out its medium-term targets for the business: "Average organic top line growth of 6%, organic operating margin improvement, with the first 200 basis points [1 basis point = 0.01%] achieved in the next three years, and double digit EPS growth. Achievement of these aims would underpin even stronger dividend growth."

These are pretty impressive targets, especially as CEO Paul Walsh had taken into account "a fragile global economy" from which the company is "not immune."

Top line Diageo hit the target of organic top-line growth of 6% in its fiscal year 2011/12. Analyst forecasts for 2012/13 suggest target-beating growth of 6.5%.

Net sales are typically weighted slightly to the company's first half, and the weighting is very consistent: 53.5%, 53.5%, 53.2%, 54.4%, and 53% -- giving a five-year average of 53.5%.

Based on analyst forecasts for the full year and the historical first-half weighting, look out for net sales of around 6.15 billion pounds in the upcoming results -- 6.8% ahead of last year's first half.

Operating margin Diageo's organic operating margin improved 60 basis points in 2011/12 -- a good start, but it leaves the company a bit to do to hit the 200 basis points target by 2014. It would leave Diageo a lot to do if the margin improvement in the upcoming results is anything less than a further 60 basis points.

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