The Courier & Advertiser (Fife Edition)
Diageo cuts sales outlook amid uncertain global backdrop
FIFE: Mixed trading update from major kingdom employer
Spirits giant Diageo has tempered its sales expectations for the current year as it faces a backdrop of global “uncertainty”.
The drinks firm has a number of sites in Kirkcaldy and Leven, most notably its bottling plant at Banbeath and the distillery at Cameronbridge.
The Gordon’s gin and Captain Morgan rum maker warned that fullyear sales are expected to be on the lower end of forecasts as it was affected by volatility in global markets.
The FTSE 100 firm’s bosses also slammed the US Government’s decision to introduce a 25% tariff on Scotch single malt whisky in October but said it was well-shielded from the impact of the tax during the half-year.
“We don’t like the tariffs and are working very hard with the support of the UK Government, the US and EU to ensure our category does not get impacted in a negative way with tariffs and to reverse the existing tariffs,” said chief executive Ivan Menezes.
He added that the company’s US whiskey business and strong tequila business in the country means it “can handle it”, but warned that “hundreds if not thousands of jobs” could be at risk at smaller Scottish distilleries.
However, the London listed firm hailed a “good” half-year’s trading performance as it said net sales increased by 4.2% to £7.2 billion for the six months to December 31.
It added that operating profit increased by 0.5% to £2.4bn as organic growth was offset by unfavourable exchange rates.
Diageo said it made progress, but warned that the company “would not be immune from further policy changes” in an uncertain political environment.
Diageo said it expects net sales growth for the full year to be towards the lower end of its forecast range, of between 4% and 6% growth.
In the UK, the company was strengthened by sales growth for Tanqueray, offsetting a slight decline in Gordon’s sales.
Diageo shares closed down 81.00p at 3,029.00p.