Diageo says European lockdown is having ‘significant impact’ on business
DIAGEO has said the European coronavirus lockdown is having a “significant impact” on the performance of the business as it pulled its financial guidance.
The drinks giant put a share buyback on hold but kept an interim dividend in an update to the London Stock Exchange.
It said: “Widespread containment actions put in place by governments across the globe in March, including the closure of bars and restaurants, are having a significant impact on the performance of our business.
“Social distancing measures, including the closure of the on-trade channels, have been introduced in most of our markets. We are tracking changes in consumer behaviour during this time and adjusting our plans and resources in response.”
Diageo said in Europe around half of all sales are from pubs, bars and restaurants.
The business is halting advertising and promotional spend “that will not be effective in the current environment”.
Diageo said it is providing “an appropriate level of support” to key suppliers and customers.
Ivan Menezes, Diageo chief executive, said that he is confident in the long-term strategy and “ability to move quickly”. Diageo said it was donating alcohol to make more than eight million bottles of sanitiser for healthcare workers around the world, along with support packages for bar staff hit by closures.
It comes as Chivas Brothers, the Scotch whisky business of Pernod Ricard, said it has ramped up production of hand sanitiser for NHS staff.
It has set in motion the transportation of two tankers of Strathclyde grain spirit as part of an initial donation of 100,000 litres of pure alcohol to manufacturing partners who will use it to produce 120,000 litres of muchneeded hand sanitiser gel for frontline NHS staff across the Scotland, England and Wales.
The company also received a consignment of 4,000 litres of hand sanitiser gel ready to be packaged at its bottling plant in
Kilmalid, Dumbarton.
Jean-christophe Coutures, Chivas Brothers chief executive, said: “Combatting Covid-19 requires a collective effort from everyone.
“We’re fortunate to have ready access to ethanol and state-of-the-art facilities, so we are determined to do all we can.”