The Courier & Advertiser (Angus and Dundee)
Spirits giant Diageo expected to post sales fall amid pub and bar closures
Smirnoff and Guinness maker Diageo is expected to reveal lower organic sales for the past six months after global trading was hit by the mass closure of pubs, bars and restaurants.
Investors will be keen to hear how supermarket sales have offset the impact of hospitality closures when it posts its update for the half-year to December on Thursday.
The major Fife employer, which also makes Baileys and gin brand Gordon’s, is expected to reveal a 4.6% sales slump, according to a consensus of analysts.
The experts have also predicted that organic operating profits will slide 10.6% over the period as a result of surging coronavirus costs.
However, shareholders appear confident that the company could be well-placed when economies reopen and lockdown restrictions lift, with its shares only down 5% in the past 12 months.
In the last financial year, to June 2020, organic sales dived 8.4% after sales volumes were hit heavily by the pandemic but its performance is expected to improve on the back of resilient retail sales and the reopening of some regions.
However, the group is also expected to see overall revenues boosted by its recent acquisitions, including the takeover of Ryan Reynolds-backed Aviation Gin and Herefordshire gin and vodka distillery Chase.
Edward Mundy, analyst at Jefferies, said the broker sees Diageo “at an early stage of recovery” as many restrictions are expected to remain in place throughout the current quarter.