Guinness-owner Diageo suffers steepest share fall since 1997 after profit warning

Diageo

Diageo

Diageo’s shares have plunged after the Johnnie Walker and Guinness proprietor warned of a significant slowdown in gross sales and warned over income.

Shares within the spirits and drinks maker dropped round 14pc as markets opened – the steepest fall since 1997 – after the corporate mentioned it anticipated gross sales in Latin America and the Caribbean to drop by as a lot as 20pc within the first half of its present monetary 12 months. Latin America accounts for roughly 11pc of the corporate’s gross sales.

Chief government Debra Crew blamed the slowing world financial system, which has dented client confidence around the globe and prompted consumers to chop again or purchase cheaper drinks.

She mentioned: “That brought about decrease consumption and actually extra client down buying and selling than what the group was anticipating.”

Diageo has lately shifted its focus to premium spirits, similar to tequila model Casamigos and Johnnie Walker whisky, as demand for costlier drinks grew.

Former chief government Sir Ivan Menezes, who died earlier this 12 months, mentioned in 2022 that Diageo was benefiting from “continued world premiumisation tendencies”.

Nevertheless, the corporate has been caught out as inflation prompts drinkers to go for cheaper spirits and beers as budgets are squeezed.

Diageo is a bellwether for the worldwide financial system. It operates throughout 180 nations around the globe and had revenues of £15.5bn final 12 months. Spirits, which make up the majority of its enterprise, are extremely delicate to altering client confidence.

Ms Crew, who took up the function of chief government in July, warned of successful to enterprise from rising tensions within the Center East, which had brought about it to cease buying and selling in “key geographies”.

She mentioned: “We’ve got seen an influence for the reason that tensions and it’s weighing on client sentiment a bit of extra broadly.”

Diageo’s chief monetary officer, Lavanya Chandrashekar, mentioned: “The place buying and selling has been impacted has been Israel, has been Lebanon after all, however there was broader impacts as properly.

“That is an unlucky final result. I might additionally say that we’re one of many main gamers in that a part of the world.”

She added: “We’ve got a small variety of individuals in Lebanon, we’re targeted on their security and supporting them by means of this very tough time interval. And our first concern in these circumstances is at all times defending our individuals, after which our belongings.”

Diageo’s revenue warning comes amid a broader slowdown within the world spirits market that has seen rivals together with Pernod Ricard and Remy Martin additionally warn of declining demand.

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