Diageo takes hit on strong pound
The estimate is £50m more than a previous announcement and comes amid generally stronger sales volumes, although there has been a slowdown in emerging markets and tougher competition in the US.
Chief executive Ivan Menezes revealed the hit to operating profits in a trading update ahead of its AGM.
“Our brands, our global footprint and our people give me confidence that Diageo can deliver strong and sustained performance,” he said.
James Jones, an analyst at RBC Capital Markets, said the added currency cost “is unhelpful, though not surprising.”
He retained his “outperform” recommendation and £20 price target on the shares.
Stock markets staged a recovery after yesterday’s rout, pushing the FTSE100 back above 6,000 as firmer oil prices gave a lift to energy stocks.
After falling 2.8% in the previous session, it more than 110 points to hover around 6,045 points near the close.
International Consolidated Airlines Group was the biggest riser, up 4.85% after a broker raised the target price to 1000p from 915p.
Easyjet was also flying high, up 3.47% after Morgan Stanley retained its ‘overweight’ rating, and raised its target price up to 1,980p from 1,910p.
Glencore also moved up 4.47% to 111.10p after Tuesday’s selloff, after Investec traders recommended holding the stock instead of selling.