Here are the key numbers:

• Reported net sales (£6.9bn) was up 5.8% with organic growth partially offset by unfavourable exchange.
• Reported operating profit (£2.4bn) was up 11.0%, driven by organic growth.
• All regions contributed to broad based organic net sales growth, up 7.5%, with organic volume up 3.5%.
• Organic operating profit grew 12.3%, ahead of top line growth, as cost inflation and higher marketing investment were more than offset by improved price/mix and efficiencies from our productivity programme.
• Cash flow continued to be strong, with net cash from operating activities at £1.6bn, up £356m and free cash flow at £1.3bn, up £317m.
• Basic eps (earnings per share) of 80.9 pence was down by (1.6)%. Pre-exceptional eps was 77p, up 13.6%, driven by higher operating profit and lower finance charges, which more than offset an increased tax charge largely as a result of lapping the positive impact of US tax reform in the prior period.
• The interim dividend increased 5% to 26.1p per share

Diageo chief executive, Ivan Menezes (pictured) said: “Diageo delivered broad-based volume and organic net sales growth across regions and categories. We continue to expand organic operating margins while increasing investment in our brands ahead of organic net sales growth.

“These results are further evidence of the changes we have made in Diageo to put the consumer at the heart of our business, to embed productivity and to act with agility to enable us to win sustainably.

“At £1.3bn, we delivered another period of strong free cash flow. As a result the board approved an incremental share buyback of £660m, bringing the total programme up to £3bn for the year ending 30 June 2019."

This half has benefitted from some one-time and phasing gains in both organic net sales and operating profit, and therefore we continue to expect to deliver mid-single digit organic net sales growth for the year and to expand operating margins in line with our previous guidance of 175 bps for the three years ending 30 June 2019.

"As we deploy our strategy, we remain focused on building the long-term health of our brands and ensuring we grow our business in a consistent and sustainable way,” says Menezes.

Thomas Buckley of Bloomberg News comments: “The first-half sales that topped analysts’ estimates, citing strong growth in China and other markets” and the organic net sales beat the analyst estimate of 5.5%.” The company added £660m ($867m) to the existing £2.34bn share buyback programme it announced last year.

Buckley’s key insights are: 

• Diageo added more evidence that luxury goods are holding up well amid China’s broader slowdown. Sales rose 20% in greater China, driven by scotch and Chinese white spirits.
• Currencies have been a challenge for Diageo, which said it expects exchange rate movements in the year ending June 30 to hurt net sales by about £80m.
• Despite the emerging-markets currency hit, Diageo is being boosted by rising global demand for spirits as drinkers increasingly choose liquor-based cocktails over beer and wine, helping it perform in line with expectations.
• The expansion of Diageo’s share-buyback plan comes as activist investors take a growing interest in the sector. In December, Paul Singer’s Elliott Management Corp. took a stake in French rival Pernod Ricard. 

Market Action:

• Diageo shares have fallen 0.8% so far this year after gaining 2.6% last year.