Diageo, the producer of Johnnie Walker whisky, has forecasted a decrease in organic operating profit growth for the first half of its current financial year. The company attributes this decline to significantly weaker performance in the Latin America and Caribbean region.
As a result of this announcement, Diageo’s shares plummeted by 8.5% to 2,970 pence in early London trading, positioning it as the top loser on the blue-chip index.
According to the company, macroeconomic pressures in the Latin America and Caribbean market have led to reduced consumption and downtrading by consumers. This has also slowed the progress of reducing channel inventory to appropriate levels for the current economic environment.
Diageo has also disclosed that sales in the Latin America and Caribbean market are anticipated to decline by more than 20% for the six months ending in December, significantly impacting the company’s overall sales.
On a brighter note, Diageo reported strong growth in Europe, despite geopolitical tensions in the Middle East. However, the pace of growth in Europe is slower compared to the second half of the previous financial year.
In a similar vein, in the year ending on June 30, the maker of Tanqueray gin and Don Julio tequila narrowly surpassed earnings estimates, with sales of its high-end liquor brands offsetting lower volumes.
This news was reported by Eva Mathews in Bengaluru and edited by Rashmi Aich and Emelia Sithole-Matarise.
