Connect with us

Hi, what are you looking for?


Diageo faces £150m annual profit cut due to weak currencies

ca21e224-d7c3-4cc7-a26b-73ba7db697d1-2060x1236The weakness of emerging-market currencies against the pound is likely to chop about £150m off Diageo’s annual profit, according to the maker of drinks brands including Guinness and Johnnie Walker.

In a trading update for its annual meeting, Diageo said it sold more drinks in the first three months of its financial year than a year earlier. But the company said continued weakness of currencies outside the UK would increase the expected impact on profit for the year to June 2016. It had previously said the problem would cut profits by £100m.

Diageo, whose other brands include Smirnoff and Baileys, did not say which currencies were to blame but it previously listed the euro, the Venezuelan bolivar and the Russian rouble as the main currencies that had fallen against sterling.

Ivan Menezes, Diageo’s chief executive, said: “Our outlook for this financial year included the possibility that further currency weakness could impact demand for premium spirits in the emerging markets. Therefore, while currencies are weaker in these markets, we continue to believe that stronger volume growth in full-year 2016 will lead to improved top-line performance and that we can deliver modest organic margin improvement.

“Our reported results will be impacted by adverse exchange rate movements, which at current rates will reduce operating profit for full-year 2016 by approximately £150m against last year.”

The strength of sterling against currencies in emerging markets, where Diageo has expanded rapidly, has caused the company problems for more than a year. The pound has also increased by about 8% against the euro this year after the European Central Bank loosened monetary policy to support eurozone growth.

At the annual meeting in London, Menezes could face questions from shareholders about Diageo’s lacklustre performance, as well as takeover activity in the drinks industry after Anheuser-Busch InBev’s approached SABMiller about forming a £160bn brewing giant.

Diageo’s shares, down 8% this year, were little changed at £17.21 in early trading.


Advertisement. Scroll to continue reading.

You May Also Like


Professing to be the lead in Thai relationship with over 1.5 million enrolled single people, Cupid Media’s ThaiCupid brings the one in every of...


Read more about switzerland women here. Swiss ladies and men are not reknown for being the most chatty, outgoing or spontaneous when meeting strangers...


An exclusive article form Orestis Karipis In the 1930’s and 1940’s acid was the weapon of deceived husbands and wives in the Western world...


In food, if there is one thing you can say without fear of contradiction, it is this: Britain loves burgers. The UK market is...

Copyright © 2020 All Rights Reserved