Diageo faces €206m currency hit

Diageo faces €206m currency hit

Guinness and Smirnoff owner Diageo said the strong pound will knock its profits by a bigger-than-expected £150m (€205.61m) this year.

The drinks giant, which operates in 180 countries, has previously said that currency weakness in emerging markets would impact its operating profit by £100m (€137.06m).

Chief executive Ivan Menezes said in an update ahead of its annual meeting today: “Our reported results will be impacted by adverse exchange rate movements.”

The FTSE 100 firm has pinned its growth on an expanding middle class in emerging markets in Latin America and Asia who could afford its premium brands such as Johnnie Walker, Capitan Morgan and Tanqueray.

However, in recent years the global slowdown has pegged back the firm’s growth.

Mr Menezes also said that he expected first-half sales in the US to fall by 2% compared to a year ago, due to increased competition in the spirits market.

The drinks maker’s boss added that volumes had grown by “mid-single digit” percentages, but that “price increases have been muted.”

The firm said that while currencies were weaker in emerging markets it believed it would continue to grow volumes in these markets this year, which would lead to modest margin improvements.

Mr Menezes said that overall the year had started in line with expectations.

Shore Capital analyst Phil Carroll said: “Volume growth seems to be particularly strong with it said to have grown mid-single digits, albeit against a weak comparative especially in US spirits.”

More in this Section

China welcomes preliminary deal in trade war it blames on USChina welcomes preliminary deal in trade war it blames on US

Irish shares climb as election drives sterlingIrish shares climb as election drives sterling

Profits fall at hotel groupProfits fall at hotel group

Profits rise 35% as gym group Flyefit expandsProfits rise 35% as gym group Flyefit expands


Want to be cultured this Christmas? From TV to podcasts to books, Ed Power has the definite list of everything you missed this year - so you can curl up on the couch and catch upThe definite list of everything you missed this year

Artist Ciara Rodgers teaches older people how to rediscover their creativity and regain confidence, says Rowena WalshBrush with art: Discovering your creative side in later life

Furniture, paintings, jewellery and silver are on offer at James Adam in Dublin, writes Des O’SullivanAll set for home run: See what's on offer at the James Adam sale in Dublin

It’s not too late to hunt out a unique gift. Des O’Sullivan previews sales in the lead-up to the festive seasonA flurry of auctions in Munster sets the scene for Christmas

More From The Irish Examiner