Poor results for Burger King and Pillsbury
its premium drinks business but warned of a poor second half for
both Pillsbury and Burger King.
On July 12, Diageo, the UK drink company, reported strong sales and volumes at its premium drinks business but warned of a poor second half for both Pillsbury and Burger King, reports the Financial Times. The group's shares fell 16p to 749p on news that a reorganisation of the struggling Burger King chain would result in an unexpected one-off charge of $71m. Burger King accounts for 8 per cent of group profits. Diageo had wanted to complete a partial flotation of the fast food chain this year. This is becoming increasingly unlikely with the announcement of "challenging" trading, particularly in Europe where sales suffered because of consumer concerns over BSE and foot-and-mouth. Burger King's chairman and chief executive John Dasburg has implemented a management shake-up, and is believed to favour a trade sale. A management buy-out is also an option. In a year-end trading update, Diageo said Guinness UDV had performed strongly, continuing the momentum seen in the first six months when the division reported a 14 per cent rise in operating profits and volume growth of 5 per cent from the eight top brands. In its portfolio, Diageo has Johnnie Walker whisky, Smirnoff vodka, Gordons gin and Guinness. The second-half outlook at Pillsbury, the food company, was rather gloomy. Pillsbury is being sold to General Mills, the American food group. Trading slowed in recent months, resulting from weakness in the bakeries and foodservice divisions and concern that US Federal Trade Commission approval of the sale was taking longer than expected. The deal was originally expected to close in December 2000.