Home Business News Diageo profits plummet after bar closures hit sales

Diageo profits plummet after bar closures hit sales

by LLB Finance Reporter
4th Aug 20 3:54 pm

Diageo have seen their half year profits plummet as a result of the hospitality industry was forced to close seeing profits fall by 47% to £2.1bn in the year to 30 June.

The drinks owner who own Guinness and Johnny Walker said they took a further hit by £1.3bn write down across operations in Nigeria, Ethiopia, India and Korea.

Despite growth in sales in North America, Diageo saw total sales fall by 9% to £11.8bn in the year.

Kathy Mikells, chief finance officer of the company, told the PA news agency, US sales were “resilient” as drinkers continued drinking at home.

Mikells said, “It was a year of two distinct halves due to Covid-19.

“But we did see improvements continue through the fourth quarter, with sales moving higher in April, May and June, so we are confident in our current position.”

van Menezes, chief executive of the company, said, “Through these challenging times we have acted quickly to protect our people and our business, and to support our customers, partners and communities.

“The actions we have taken to strengthen Diageo over the last six years provide a solid foundation to respond to the impacts of the pandemic.

“We are now a more agile, efficient and effective business.”

William Ryder, equity analyst at Hargreaves Lansdown added, “Diageo is still a great business, still owns some terrific brands and whisky is still a very difficult market for newcomers to break into.

“The hit to earnings should be short-lived provided the global economy doesn’t take too long to recover.

“We think the group will continue to do well long term, but management will have to focus more on debt reduction than they probably would have liked.”

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