Diageo shares decline

DIAGEO, makers of Guinness, Baileys and Bushmills in Ireland, reported yesterday first-quarter sales that fell short of expectations.

In its trading update the world’s largest spirit maker blamed destocking in the US as the recession drove consumers to buy cheaper drinks.

Shares in the maker of Johnnie Walker, Smirnoff vodka and other international brands, fell almost 5% in early trading, but by late afternoon the stock had regained some of their earlier losses and were down by under 2% at 957p.

The group’s statement, which was released ahead of the company’s annual general meeting in London, said the first quarter performance was weak compared with the same period last year.

Net sales, excluding acquisitions and currency changes, fell 6% in the three months to end September 2009, double the 3% median estimate of 10 analysts who took part in a recent Bloomberg poll.

The group has maintained its market guidance for the year of “low single digit organic operating profit growth”.