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The Markets
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The Markets
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Food & drink

Diageo cools full-year guidance after soft first half

For the six months to 31 December, sales rose 4% to £7.2bn while profit before tax dropped 6% to £2.6bn

Smirnoff and Baileys producer Diageo PLC (LON:DGE) cautioned sales this year will grow at the lower end of the 4% to 6% guidance after a soft first half.

The FTSE 100-listed distiller added net sales will be hit by £110mln headwinds of exchange rates, but maintained guidance for operating profit.

READ: Diageo mixing its drink sales well, says RBC Capital

Management flagged volatility in India, Latin America and the Caribbean and travel retail as well as uncertainty in the global trade environment.

For the six months to 31 December, sales rose 4% to £7.2bn driven by tequila, gin and Canadian whisky, against a strong first half last year due to the success of Game of Thrones-themed Scotch White Walker.

Profit before tax dropped 6% to £2.6bn due to increased capital expenditure and higher interest charges.

Analysts at Liberum said Diageo is “a juggernaut in the beverages world” with a broad portfolio of brands providing a “wide economic moat”, but the slow start of the financial year tempered the enthusiasm.

UBS, instead, was "encouraged" by growth in the US, were spirits sales rose 6%.

Shares dropped 3% to 3,032.22p on Thursday afternoon.

--Adds analyst's comment, shares--

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