World: Diageo reports rise in first-half operating profit, expects annual sales growth to be at lower end of previous forecast
Diageo Plc, the world’s largest spirits company, on January 30 said it expects annual organic net sales growth to be at the lower end of its previous forecast as it faces the fall-out from increasing global trade uncertainty, Reuters reported.
The company now expects full-year organic net sales growth to be at the lower end of the 4% to 6% range it previously forecasted. The company highlighted volatility in India, Latin America and the Caribbean.
The maker of Johnnie Walker Scotch whisky, Smirnoff vodka and Guinness stout said operating profit rose 0.5% to 2.44 billion pounds ($3.21 billion) for the six months ended Dec. 31.
“There is ongoing uncertainty in the global trade environment and we would not be immune from further policy changes,” Chief Executive Officer Ivan Menezes said.
Diageo has faced pressure from U.S. President Donald Trump’s use of tariffs as a weapon in trade conflicts after the United States slapped a 25% tariff on Scotch whisky and other European products.
First-half organic operating profit grew 4.6%.
Diageo said it increased sales in Europe helped by Guinness and Baileys in Britain in the second half of 2019, even as overall beer sales fell back in Ireland
The company posted a 2% rise in net sales in Britain in the six months to the end of December as Guinness, Baileys and Captain Morgan benefitted from digital marketing campaigns.
In Ireland, the company said that net sales fell by 1% in the period, with Guinness posting flat sales and overall beer sales down by 2%, despite growth for its Rockshore lager drinks. Its sales of spirits, boosted by vodka and rum, increased 1% in Ireland, however. Promotions also boosted sales of Baileys in Northern and Central Europes, while North American sales grew 6%, helped by sales of spirits.
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