Diageo issues profit warning amid coronavirus fears
Whisky giant Diageo has issued a profit warning as the COVID-19 (Coronavirus) outbreak intensifies across the globe.
The Johnnie Walker owner released its interim results on the 30th January and highlighted the company’s expectation of an impact from the virus’ outbreak. However, Diageo has said it was not able to quantify the impact of at that time.
As a result, the firm has provided an update on the expected range of the adverse impact in fiscal 2020 of the evolving COVID-19 situation.
Due to the closure of bars and restaurants in Greater China, the postponement of events, reduction in conferences and banquets in South Korea, Japan and Thailand, alongside a decrease in tourism in these countries, Diageo estimates a negative impact in the 2020 fiscal year.
Due to such conditions, Diageo estimates the negative impact in fiscal 2020, on the group’s organic net sales and organic operating profit, to be in a range of £225m to £325m and £140m to £200m, respectively, with the timing and pace of recovery determining the impact within these estimated ranges.
The update from the whisky producer comes after it reported a decline in sales of Scotch Whisky in January. The company’s interim results revealed that global performance in Scotch softened to flat.
Commenting on the impact of the Coronavirus, Diageo said: “The COVID-19 situation is dynamic and continues to evolve and these ranges exclude any impact of the COVID-19 situation on other markets beyond those mentioned above. We will continue to monitor the situation closely.
“As the situation continues to unfold, our primary concern remains the welfare of our colleagues, their families and their local communities and we will continue to provide all support possible. Authorities in China and in other impacted countries have taken strong and decisive action and continue to work tirelessly to contain the spread of the virus.
“Public health measures across impacted countries in Asia Pacific, principally in China, have resulted in: restrictions on public gatherings, the postponement of events and the closure of many hospitality and retail outlets. Several countries and many businesses have also imposed restrictions on travel. “
Diageo is not the only whisky producer anticipating a profit hit arising from the virus. Earlier this month, Pernod Ricard, the owner of Chivas Brothers, issued a profit warning in light of the outbreak.