Profits fall

Diageo takes hit from Latin American weakness

whisky bottles Diageo
Diageo profits fell but conditions are improving (pic: Terry Murden)

Drinks group Diageo said its first half profits fell by more than a tenth following previously flagged weakness in the Latin American and Caribbean (LAC) regions.

However, the new chief executive of the Johnnie Walker to Guinness giant said tackling this was a priority and noted that trading conditions generally in the latter part of the financial year had improved.

Operating profit for the six months to the end of December fell by 11.1% year-on-year to $3.3bn. but would have grown by 0.9% if LAC was excluded. Net sales were 1.4% lower at $11bn because of a $167m unfavourable foreign exchange hit.

Debra Crew, who stepped into the CEO role following the death of Ivan Menezes last summer, said: “Materially weaker performance in LAC, driven by fast-changing consumer sentiment and high inventory levels, significantly impacted total business performance.

“Having conducted a review of inventory levels and monitored performance in the critical holiday season, we have taken action and have further plans to reduce inventory to more appropriate levels for the current consumer environment in the region by the end of fiscal 24. This is a key priority.”

Despite the weaker results, Diageo rasied its interim dividend by 5% to 40.50 cents per share.

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