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Diageo Returns to Growth on Improved Sales of U.S. Spirits

  • Whiskey, tequila and vodka drive 3% North America sales gain
  • Management is starting to deliver, Morgan Stanley analyst says

Diageo Plc returned to growth, reporting a profit gain above analysts’ estimates as improved demand for whiskey, tequila and vodka in the U.S. offset declines in Brazil and China.

Operating profit excluding some items rose 3.5 percent on a so-called organic basis in the twelve months ended June 30, Diageo said Thursday. Analysts expected growth of 3.1 percent. Organic revenue grew 3 percent, an improvement on last year’s flat sales. The shares rose as much as 1.8 percent in London.

“After a tough fiscal 2014 and 2015, management is starting to deliver on its promises,” wrote Olivier Nicolai, an analyst at Morgan Stanley.

Chief Executive Officer Ivan Menezes has returned Diageo to growth after two years of lackluster results by reshuffling senior managers, cutting costs and boosting productivity. Investors expect that the...