LONDON -- The shares of Diageo (LSE: DGE.L ) (NYSE: DEO ) slid 2% to 1,754 pence this morning despite the drinks group reporting total first-quarter sales up 6%.
The FTSE 100 member said organic net sales had improved by 6% in North America, by 11% in Africa, and by 16% in Latin America. In contrast, underlying sales dropped 1% in Europe.
Highlights included a "continued good performance in U.S. spirits," double-digit growth in Turkey and Russia, plus strong sales of beer in East Africa. Lowlights involved weak trading in Ireland, France, South Korea, and India.
Diageo said the group's net assets advanced from 6.8 billion pounds to 7.2 billion pounds during the quarter, suggesting earnings for the period were about 400 million pounds.
Paul Walsh, Diageo's chief exec, commented:
Diageo has delivered a solid start to the new financial year with net sales growth in line with expectations. ... As a global business we continue to be aware of the uneven nature of the global economy. However, we remain confident that we will deliver our medium-term goals, given the strength of our brands and our routes to market.
Prior to today, City experts had predicted Diageo would produce earnings of about 102 pence per share for 2012, which would place the firm's 44 billion pound market cap on a P/E of 17. A predicted dividend of 47 pence per share would offer a 2.7% yield. Those ratios seem less attractive than the wider FTSE 100, which, at 5,871, trades at 11.4 times profits and offers a potential 3.7% income.
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