Diageo warns of £200 million profits hit from coronavirus

SALES: Kingdom is home to around a third of drinks giant’s Scottish workforce

Major Fife employer Diageo has warned of a £140 million to £200m hit to profits as it counts the cost of the coronavirus outbreak in one of its key markets.

The drinks giant, whose Scotch portfolio includes global market leader Johnnie Walker and also Bell’s, J&B, Haig Club, Old Parr and Vat 69, said the drop in net sales this year was likely to be in the range of £225m to £325m after a slump in business in China.

Bars, restaurants and shops in large parts of the country have remained shut, and restrictions have been placed on public gatherings and events as the government tries to get the outbreak under control.

Laying bare the coronavirus impact on one of the UK’s leading blue-chip companies in a trading update, Diageo said: “It is difficult to predict the duration and extent of any further spread of the Covid-19 outbreak both in and outside of Asia.

“Based on current information, we have made assumptions to estimate the fiscal 2020 impact.

“Bars and restaurants (in China) have largely been closed and there has been a substantial reduction in banqueting.

“As the majority of consumption is in the on-trade, we have seen significant disruption since the end of January which we expect to last at least into March.

“The outbreak in several other Asian countries, especially South Korea, Japan and Thailand, has led to events being postponed, a reduction in conferences and banquets, and a drop in tourism which have all impacted on-trade consumption.”

Diageo employs around 1,000 staff in Fife and has a number of sites in Kirkcaldy and Leven, most notably its bottling plant at Banbeath and a distillery at Cameronbridge.

Outlining a further impact on its travel retailing, Diageo said: “The outbreak has caused a significant reduction in international passenger traffic, especially in Asia.”

Diageo said its estimates for the financial hit were based only on current circumstances in a “dynamic” situation which continued to evolve.

Picture: Kim Cessford. Production at Diageo’s bottling facility in Leven.