GO-AHEAD: Diageo chief executive Paul Walsh's pay package was backed by shareholders at the AGM.
Directors did not comment on how the negotiations with Vijay Mallya's company are progressing amid reports suggesting a deal was close to being announced .
At the meeting, almost 93% of shareholders backed Diageo chief executive Paul Walsh's £11.2 million pay package
The majority of the bumper reward, a 152% increase on the £4.5m he received the previous year, was linked to long-term share incentive plans for performance between 2009 and 2012.
In that period, Diageo's shares have increased around 88% and its market capitalisation more than doubled from £19 billion to £42bn. The Johnnie Walker maker also released a first quarter trading update showing organic net sales in the three months to September 30 increasing 5% despite weaker performance in South Korea and parts of Europe.
A postponed duty-free shipment, which will be factored in to the next quarter's results, hit sales in the key Asia Pacific region which were only up 2% thanks to good growth for Scotch whisky in south-east Asia and China.
Shore Capital analyst Phil Carroll said the delay was likely to have knocked two to three percentage points off growth in the region.
He added: "Asia Pacific was disappointing and South Korea and Japan are markets we will be keeping a close eye on in future but if you are looking at the picture as a whole we are still very happy. It remains our key pick in the sector."
A deal for Mr Mallya's United Spirits – which also produces Dalmore and Jura whisky plus gin, vodka, rum, brand and wine – would be one way for Diageo to quickly boost sales in Asia Pacific.
Emerging markets still drove overall growth with Africa and Latin America reporting increases of 11% and 16% respectively.
Strong performances in Turkey, Russia and eastern Europe failed to offset weakness in the rest of the continent with overall sales declining 1%. North America reported a 6% jump in sales growth.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "Diageo's breadth of products and geographical diversification continued to save the day, with strong performances in areas such as North America, eastern Europe and South Africa."
Diageo also confirmed it is expanding Glen Ord distillery with new fermentation vessels and copper stills.
Mr Walsh said: "Diageo has delivered a solid start to the new financial year with net sales growth in line with expectations.
"The strength of our brands and our routes to market, coupled with the investments we have made in faster growing markets continue to drive the performance of our business. We remain confident that we will deliver our medium term goals given the strength of our brands."
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