News Column

Diageo Annual Profit Takes A Hit On Emerging-Market Slowdown

July 31, 2014

Rowena Harris-Doughty

LONDON (Alliance News) - Alcoholic beverage giant Diageo PLC Thursday posted a fall in both profit and sales in its last financial year, hit by a combination of weaker consumer demand, a hefty slowdown in Asia and other emerging markets, currency rate movements, and de-stocking issues in Asia.

Diageo, the world's largest spirits producer and a major producer of beer and wine, reported a pretax profit of GBP2.71 billion for the financial year ended June 30, lower than the GBP3.06 billion profit it recorded a year earlier.

Basic earnings per share fell to 89.7 pence from 98 pence the prior year.

The group declared a 9% increase in its final dividend for the year to 32.0 pence.

Net sales slowed to GBP10.26 billion in the year from GBP11.30 billion a year earlier, partly on the back of weaker demand in emerging markets.

"Our regional performance has been mixed. In North America we have again delivered top line growth and significant margin expansion and our Western European business is now stable. Emerging market weakness, often currency related, but also including some specific issues, such as the anti-extravagance measures in China, has led to weaker top-line growth," said Chief Executive Officer Ian Menezes in a statement.

Emerging markets, once the driving force behind growth in the business, have begun to slow, while developed markets like North America and Western Europe are now helping drive growth in the business as trading has picked up in the regions.

Diageo shares were off 0.2% at 1,785.00 pence at the open Thursday.

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Source: Alliance News

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