Shares in Guinness beer maker Diageo plunged 15.44% in afternoon trade on Friday as investors reacted to the company’s latest earnings report.
It put the company at the bottom of London’s FTSE 100 index as traders reacted to Diageo’s uncertain outlook.
The British multinational alcoholic beverage company said it is expecting a decline of its organic operating profit growth in the first half of its current financial year due to a “materially weaker” performance in Latin America and the Caribbean (LAC).
The LAC market generates nearly 11% of total sales, which are now expected to decline by more than 20% in the six months ended December, Diageo said.
The Johnnie Walker whisky maker had declared an organic net sales growth of 6.7% in its preliminary 2023 results back in August. In its update published on 10 November, the company said it expected “to deliver organic net sales growth between 5 and 7% over the medium term”.
“Macroeconomic pressures in the region are resulting in lower consumption and consumer downtrading,” the world’s biggest spirits company said in a statement. “These impacts are slowing down progress in reducing channel inventory to appropriate levels for the current environment.”
Alcohol demand remains strong in Europe
Meanwhile in Europe, the company said growth continues to be strong despite geopolitical tensions in the Middle East. However, it said the pace is slower than the second half of the previous financial year.
Earlier this year, the alcoholic beverages maker said Asia Pacific and Europe had double-digit growth. It did not provide a detailed update, but said it saw “continued momentum” in both regions.
“As inflation moderates and productivity from our supply agility program flows through, we expect operating profit to grow ahead of organic net sales growth”, Diageo added.
Source: Euro News