British drinks group Diageo, the maker of Guinness stout and Smirnoff vodka, on Tuesday said falling-out from the coronavirus pandemic cut its annual profits by more than half. PHOTO | FILE London
British drinks group Diageo, the maker of Guinness stout and Smirnoff vodka, on Tuesday said falling-out from the coronavirus pandemic cut its annual profits by more than half.
Diageo, which produces also Baileys liqueur and Johnnie Walker whisky, said profit after tax slid to £1.4 billion ($1.8 billion, Sh194.4 billion) in the 12 months to June 30.
That compared with net profit of £3.16 billion (Sh443.06 billion) one year earlier.
Significant challenges
"After good, consistent performance in the first half… the outbreak of Covid-19 presented significant challenges for our business, impacting the full year performance," chief executive Ivan Menezes said in the earnings statement.
Diageo was the biggest faller on London’s FTSE 100 index in morning trade, with its share price down 5.5 percent at £27.22.
"Sometimes seen as having defensive qualities, alcoholic drinks maker Diageo was nursing a pretty nasty Covid-19-linked hangover this morning as it published a disappointing set of full year results," noted AJ Bell investment director Russ Mould.
Hit in sales
"People may have enjoyed the distraction of a drink at home amid the difficult times of the last few months, but this wasn’t nearly enough to compensate for the hit associated with sales in pubs, restaurants and bars or at big sporting events or music festivals," he added.
Annual sales dropped nine per cent to £11.75 billion.It meanwhile booked an impairment charge of £1.3 billion — reflecting the impact of Covid-19 and challenging trading conditions in parts of Asia and Africa.Mirroring other distilleries during the pandemic, Diageo has supplied alcohol to make anti-bacterial hand sanitiser to boost stocks worldwide.Diageo, the world’s biggest spirits maker is the main shareholder in East African Breweries Limited, whose subsidiary is Kenya Breweries Limited, the maker of Tusker, Pilsner among other brands.