Ivan Menezes – Chief Executive Officer
Good morning, everyone. Diageo has delivered another strong set of results, demonstrating consistent progress and momentum towards our performance ambition: to be among the best-performing, most trusted and respected consumer goods companies. I would like to thank all Diageo employees for their contribution to these results.
In this first half of fiscal 2019, we have delivered particularly strong top line growth with organic net sales up 7.5%. This was driven by good volume performance and strong price/mix with growth broad based across categories and regions, including our three focus areas of scotch, U.S. Spirits and India. We still expect to deliver mid-single-digit top line growth for the full year as these results benefited from a number of gains that will unwind in the second half. Kathy will share more on this in a moment.
I am pleased to see the step-up in price/mix coming through. This reflects our ongoing work on net revenue management and the mitigation of more of the cost inflation we face. We’ve also delivered organic operating margin expansion ahead of expectations while continuing to up-weight marketing investment. Kathy will walk you through some of the factors that favored the first half margins. We continue to feel good about delivery of our margin guidance, which remains unchanged.
Our focus on consistently delivering strong cash flow performance continues with the £1.3 billion free cash flow in the first half. Preexceptional EPS was up 14%, driven predominantly by organic growth. We returned £1.3 billion to shareholders in the half through a share buyback. Today, we are announcing an increase to our fiscal 2019 share buyback program, which will now return up to £3 billion to shareholders an additional £660 million.
And we have again increased the interim dividend by 5%. Our strategy is to be a reliable compounder of growth, creating a virtuous circle of consistent top line performance, margin expansion and increased investment in our brands. Consistent execution of our strategy is delivering the results we intended: sustainable organic net sales growth, investment behind our brands to fuel long-term growth, expanding our operating margins and strong free cash flow.
We also maintained a disciplined approach to capital allocation to maximize value for shareholders. We have increased investment in the business as our top priority. We actively managed our portfolio. In this half, we increased our investment in Shui Jing Fang and completed the sale of a portfolio of 19 brands to Sazerac. Since fiscal 2017, we have returned just under £7 billion to shareholders in dividends and share repurchases. Today, we announced the additional £660 million to be returned to shareholders in fiscal 2019 through our share buyback program. Finally, our TSR at 4% remains towards the top of our peer group.
Diageo's (DEO) CEO Ivan Menezes on 2019 Interim Results, Half Year Ended 31 December 2018 - Earnings Call Transcript | Seeking Alpha
