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Concern over spread

Diageo warns of £200m hit to profit from coronavirus

whisky bottles Diageo

Diageo produces a range of Scotch whisky brands (pic: Terry Murden)

Drinks group Diageo has warned that the spread of coronavirus in Asia could knock up to £200 million off its 2020 profit as bars and restaurants stay shut.

The company, whose brands include Johnnie Walker Scotch whisky, Smirnoff vodka and Guinness beer, estimated the negative impact of the virus on the group’s organic net sales could be between £225-325m and organic operating profit between £140-200T.

It said these figures exclude any impact of coronavirus on other markets beyond China and Asia Pacific.

French food group Danone, German airline Lufthansa and tech giants Apple and Microsoft have also issued warnings about the impact of the virus on revenue and continuity of supplies.

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

The company said it has seen significant disruption to trading since the end of January which it expects to last at least into March.

It is also preparing to take a hit in other Asian countries, especially South Korea, Japan and Thailand.

Chinese President Xi Jinping said on Sunday that factories in areas of low risk of infection should reopen.

UK shares tumbled for a fifth straight session on Wednesday, as a US warning to brace for a coronavirus pandemic raised fears of widespread disruptions to supply chains, while Rio Tinto became the latest company to flag a hit from the outbreak.

London’s FTSE 100 slid 0.5%, below 7,000 for the first time in a year and has now lost more than 5% of its value this week.

Travel companies are leading the fallers, again, with holiday firm TUI and budget airline easyJet both losing 3%.

Update on cases

The coronavirus outbreak at a Tenerife hotel worsened last night as the number of patients doubled from two to four.  

Two more tourists were quarantined in a Spanish hospital after testing positive for the killer virus which was brought to the resort by an Italian doctor. 

Hundreds of guests including Britons remain in limbo today with the hotel in quarantine and holidaymakers confined to their bedrooms.

Towns and cities in Italy have been sealed off in an attempt to stop the contagion, while hotels in the Canary Islands and Austria were locked down because of suspected cases.

Italy – which has reported 10 deaths and more than 300 cases – has locked down 11 towns and ordered Serie A football games to be played to empty stadiums.

A man who returned to Croatia from Italy became the first case in the Balkans region.

The virus has killed 2,715 people and infected more than 78,000 in China. There were 52 more deaths inside the country reported on Wednesday.

South Korea, which reported 169 new infections on Wednesday, raising its total to 1,146 – by far the most outside China – while an 11th person died.

In Japan the football league was cancelled and questions were raised over the viability of the Tokyo Olympics.

The developments in Asia came after three more people died from Covid-19 disease in Iran, which has reported 16 fatalities out of nearly 100 infections. 

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