Diageo, the producer of Johnnie Walker whisky, has cautioned investors about an anticipated decline in organic operating profit growth in the first half of the current financial year. The company attributes this downturn to a “materially weaker” performance in Latin America and the Caribbean, expressing concerns about macroeconomic pressures leading to reduced consumption and consumer downtrading in the region.
As a result of these challenges, Diageo foresees a decline of over 20% in sales in the Latin America and Caribbean (LAC) market during the six months ending in December. The LAC market represents nearly 11% of the company’s total sales. In contrast, the company notes strong growth in Europe, despite geopolitical tensions in the Middle East, albeit at a slower pace compared to the second half of the previous financial year.
This announcement has led to an 8.5% decline in Diageo’s shares in early trading, making it the top loser on London’s blue-chip index.
Diageo’s performance in the first half of the fiscal year will be closely monitored by investors as the company navigates challenges in specific regions amid global economic uncertainties.