Despite price hikes, Guinness-owner Diageo still misses profit forecast

Tue, 30 Jul, 2024 - 08:13

Emma Rumney

Despite a number of price increases over the last few years, Guinness-owner Diageo has reported a 4.8% decline in annual profit due to a steep decline in sales in Latin America and the Caribbean.

The world's top spirits maker has been battling to restore investor confidence after a build up of unsold inventory in Mexico and Brazil led to a profit warning and a loss of market share in its biggest territory, the US.

On Tuesday morning the company released its results for its latest financial year ending on June 30.

Alongside Guinness, the company also makes Johnnie Walker whisky and Tanqueray gin. It said the decline in its annual organic operating profit was largely due to a 21.1% fall in sales in Latin America and the Caribbean, a profitable region for the company.

Diageo chief executive Debra Crew said the company had taken steps to resolve its problems in the region and improve its performance elsewhere too.

"We are confident that when the consumer environment improves, the actions we are taking will return us to growth," she said in a statement.

Ms Crew said that it is"hard to call" when Diageo will be able to meet its medium term sales target, adding that this was impacted by factors such as high inflation and consumer confidence.

Analysts had expected a 4.5% fall in annual operating profit. Diageo had previously said sales in Latin America and the Caribbean would fall by between 10% and 20%.

Overall, group net sales were also slightly worse than forecast, declining 0.6% organically.

In April, Diageo announced that the price of a pint would increase by 6c, its third price hike in less than two years. The increase applied to the company's draught products including Guinness, Rockshore and Hop House 13.

Diageo blamed rising input costs across all its operations in Ireland despite energy costs and inflation decreasing in recent months.

Reuters