World: Diageo warns operating profit drops due to currency fluctuations

Drinks giant Diageo has warned that its annual operating profits are expected to fall short by £45 mln due to currency fluctuations in some markets, Sky News reported on September 20.

Annual revenue is also likely to be impacted, taking a hit of up to £175 mln.

Chief executive Ivan Menezes said: "In recent weeks, we have experienced some increased emerging market foreign exchange volatility, which has been partially offset by a strengthening of the dollar.

"Based on current rates we currently expect exchange to have a negative impact on net sales of £175 mln and a negative impact on operating profit of £45 mln for the fiscal year".

Despite this, the group behind Guinness, Captain Morgan rum and Baileys has insisted that trading for the year had "started well" and that performance was still in line with expectations.

This the second currency-related profit warning Diageo has given in two years.

Mr Menezes said: "We continue to execute our strategy with discipline and agility and despite seeing increased volatility in some markets we continue to expect organic net sales growth in 2019 to be broadly in line with last fiscal year and consistent with our medium-term guidance of mid-single digit growth."

He added that the business was focused on "delivering both growth and efficiency" allowing the company to reinvest in its brands.

Shares in the FTSE 100-listed company were down around 0.4% in morning trading. They closed the day 1.6% up.

Diageo is best known for drinks brands including Guinness, Tanqueray gin, Captain Morgan, Baileys, and Crown Royal.