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Whisky maker hails new year

Diageo sales and profits hit by currency volatility

Diageo CEO Ivan Menezes

Ivan Menezes: year started well (pic: Terry Murden)

Diageo, the maker of Guinness, Johnnie Walker whisky and Smirnoff vodka, said currency market volatiity is hurting sales and profits.

It expects sales to be reduced by £175m this year and operating profits to fall by £45m.

However, Ivan Menezes, chief executive, said the year has started well and performance is in line with expectations.

“We continue to execute our strategy with discipline and agility and despite seeing increased volatility in some markets we continue to expect organic net sales growth in F19 to be broadly in line with last fiscal year and consistent with our medium-term guidance of mid-single digit growth,” he said in a trading update ahead of the AGM.

“We are focused on delivering both growth and efficiency, allowing us to continue to reinvest in the business to support the long-term growth of our brands.

“We continue to expect to grow organic operating margins in line with our guidance of 175bps of margin expansion in the three years ending 30 June 2019.

“In recent weeks, we have experienced some increased emerging market foreign exchange volatility, which has been partially offset by a strengthening of the dollar.

“Based on current rates we currently expect exchange to have a negative impact on net sales of £175m and a negative impact on operating profit of £45m for the fiscal year.”

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