Drinks large Diageo sees share value slide after warning about gross sales in Caribbean and Latin America

LONDON — Spirits and beer large Diageo PLC noticed billions wiped off its market worth on Friday after it warned {that a} sharp slowdown in its enterprise in Latin America and the Caribbean was hitting gross sales and potential earnings.

In early buying and selling in London, the corporate’s share value was down by 14% after it instructed traders that it expects progress within the first half of the present monetary yr to be slower than the earlier half-year.

It blamed a “materially weaker” outlook in Latin America and the Caribbean because of “macroeconomic pressures” and prospects downtrading to cheaper merchandise. The area accounts for round 11% of Diageo’s whole gross sales.

That was a shock for traders as the corporate, which counts Johnnie Walker whisky, Captain Morgan rum and Guinness amongst its secure of manufacturers, had beforehand indicated a “gradual enchancment” in gross sales progress.

The group highlighted that it nonetheless expects an enchancment in progress in North America, whereas its companies in Europe and Asia Pacific witnessed “continued momentum,” although slower than the earlier half-year.

Debra Crew, chief government of Diageo, additionally mentioned it has additionally seen an influence from tensions within the Center East and the battle in Gaza.

“It has impacted outcomes for the area since now we have stopped buying and selling in some components,” he mentioned. “It’s definitely not the biggest a part of Europe and Asia Pacific, however now we have seen an influence because the tensions and it’s weighing on shopper sentiment a little bit bit extra broadly, however this has simply been the previous few weeks.”

Sophie Lund-Yates, lead fairness analyst at stockbrokers Hargreaves Lansdown, mentioned Diageo has impenetrable model energy however that Friday’s warning might stoke issues {that a} “change in appetites may translate to different, bigger markets.”