Spirits giant Diageo slumps after ‘challenging year’
It said sales dropped for the first time in around four years, amid weaker demand for scotch and rum.
Guinness maker Diageo saw sales and profits slip during a “challenging year” as a weak performance in Latin America continued to drag on the drinks giant.
The FTSE 100 company, which also makes Gordon’s gin and Baileys, saw shares tumble in early trading on Tuesday as a result.
Diageo revealed sales dropped for the first time in around four years, amid weaker demand for scotch and rum.
Reported net sales slid by 1.4% to 20.3 billion dollars (£15.8 billion) over the year to June 30, as it was impacted by unfavourable currency rates and declining sales volumes.
Organic sales were down 0.6% as an increase in price and sales mix was offset by a 3.5% fall in the volume of products bought, driven by a 21.1% plunge in Latin America and the Caribbean.
Diageo also said volumes were lower in North America amid a challenging consumer backdrop.
In Europe, the company saw organic sales rise 3% driven by jumps in Great Britain and Ireland, and Turkey.
European growth was supported by strong sales of Guinness, particularly in Britain, helping to drive an 18% jump in its beer sales across the continent.
Spirit sales in the region were however down 1%, as strong demand for Baileys and Raki was more than offset by declining demand for scotch, gin and rum.
Across the whole business, it saw a 7% decline in the volume of scotch sold, while rum fell 11%.
Meanwhile, the company said organic operating profits fell by 4.8% to 6 billion dollars (£4.7 billion).
Debra Crew, chief executive, said: “While fiscal 2024 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves.
“With iconic brands that have been enjoyed for decades, Diageo takes a long-term view, and will continue to invest in our brands, people and diversified footprint to deliver sustainable, long-term growth and generate shareholder value.”
