Di­a­geo slump leaves glass half-empty

The Daily Telegraph - Business - - Business - Louis ash­worth

A PLUNGE in an­nual prof­its at Di­a­geo kept the lid on gains in the blue-chip in­dex yes­ter­day af­ter the spirit maker took a £1.3bn sales hit from lock­downs across the globe.

Shares tum­bled 160p to £27.21 af­ter the owner of Guin­ness and John­nie Walker said pre-tax prof­its fell 52pc to £2bn in the year to June 30, with net sales fall­ing 8pc to £11.8bn – slightly worse than an­a­lysts’ fore­casts.

The com­pany has strug­gled af­ter bars, clubs and restau­rants were forced to shut in a swathe of coun­tries fight­ing coro­n­avirus and sales fell in all mar­kets apart from North Amer­ica, where strong de­mand for drinks at home – es­pe­cially te­quila brands such as Casami­gos – off­set losses from li­censed premises.

Such so-called on-trade de­mand usu­ally ac­counts for a fifth of al­co­hol sales in North Amer­ica, with most drinks in­stead bought at su­per­mar­kets and liquor stores.

De­spite this de­clin­ing per­for­mance, Di­a­geo pledged to hold its fi­nal div­i­dend at 42.47p a share, and the stock is still higher than at its £22 trough in late March.

On a busy day for cor­po­rate re­port­ing, gains in oil heavy­weights

BP and Shell helped the FTSE 100 edge up 3.2 points to end at 6,036.

BP jumped 18.2p to 299.3p af­ter beat­ing an­a­lysts’ ex­pec­ta­tions with its first-half re­sults – de­spite slash­ing its div­i­dend and slip­ping to a £21.6bn loss. Its rise re­flected well on peer Shell, which rose 40.6p to £11.41.

But phar­ma­ceu­ti­cals gi­ant As­traZeneca – cur­rently the FTSE 100’s sec­ond-largest con­stituent af­ter Unilever – also weighed on the blue-chip gauge, drop­ping 217p to £85.50 af­ter pric­ing a three-tranche bond of­fer­ing worth $3bn (£2.3bn).

En­gi­neer Mel­rose was the big­gest riser on the FTSE 100, jump­ing 8.3p to 96.5p af­ter se­cur­ing a deal with len­ders over a debt waiver.

Hot on its heels was BT, which jumped 8.1p to 106.1p af­ter Beren­berg raised its out­look for the group’s shares. An­a­lyst Carl Mur­dock-Smith told clients that sen­ti­ment about the tele­coms group was “on its knees”, but added “its sig­nif­i­cant un­der­per­for­mance and scope for im­proved sen­ti­ment over the next year” made it a “buy”.

The FTSE 250 out­per­formed its blue-chip peers with a 0.9pc gain to 17,307.7, led by the air­line easy­Jet

– which rose 44.4p to 551.6p af­ter out­lin­ing plans to in­crease its flight sched­ule in re­sponse to high lev­els of de­mand.

Di­rect Line climbed 16.4p to 324p af­ter bump­ing its div­i­dend slightly higher de­spite a fall in prof­its dur­ing the first half of the year. The mid-cap in­surer will pay 7.4p per share to in­vestors, ver­sus last year’s 7.2p.

Bab­cock was the big­gest mid-cap faller, drop­ping 27.2p to 261.8p. The de­fence en­gi­neer scrapped its fi­nal div­i­dend af­ter prof­its sank.

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