Market report

Diageo warns of slower growth in first half

Johnnie-Walker-Princes Street
The Johnnie Walker owner says growth has slowed in one of its regions (pic: Terry Murden)

Diageo’s shares took a bit hit after it issued an updated trading statement warning that it now expects slower growth in the first half of next year than indicated in September.

This is a result of a weaker performance outlook in Latin America and the Caribbean.

Its hares were the biggest fallers on the FTSE 100, dropping 395p, or 12.2%, to 2850p.

On 28 September the Johnnie Walker whisky and Guinness producer said its outlook for next year had not changed since 1 August.

“At that time, our expectation for the group was for the first half of fiscal 24 to see a gradual improvement in organic net sales growth from the second half of fiscal 23. 

“We have momentum continuing in four of our five regions, however at the group level, in the first half of fiscal 24, we now expect to see slower growth than the second half of fiscal 23.

“This is due to a materially weaker performance outlook in Latin America and Caribbean (LAC), which is nearly 11% of Diageo’s net sales value (fiscal 23), and is now expected to decline organic net sales by more than 20%, year-on-year, in the first half of fiscal 24.”

Markets hit by Powell

Jerome Powell, the chairman of the US Federal Reserve, spooked markets chairman, by warning that policymakers “are not confident” that interest rates are high enough to bring down US inflation.

This raised concerns that rates have not yet peaked.

In London, the FTSE 100 shed 95.12 points, or 1.3%, to 7,360.55, resulting in a weekly loss of 57.18 points, or 0.8%.

Miners were among the biggest fallers along with housebuilders. Barratt Developments retreated 13.25p, or 2.9%, to 444p and Crest Nicholson fell 4.5p, or 2.5%, to 172.5p.

An uplift in oil prices sent some energy and defence stocks higher. Ithaca Energy, was up 3p to 160.25p, while a £750 million contract for Babcock pushed its shares 17p, or 4.2% higher to 419p. BAE Systems topped the few risers with a 13.5p, or 1.2%, uplift to 1103p.

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