17th Apr 2014 06:59
LONDON (Alliance News) - Spirits and alcoholic beverage giant Diageo PLC Thursday reported another dip in sales in the third quarter due to further volume declines and weaker Emerging Markets.
Diageo, the world's largest spirits producer, and a major producer of beer and wine, said that organic net sales were down 1.3% in the third quarter ended March 31, while volume fell by 1%.
Diageo said current exchange rates would wipe around GBP330 million off of its operating profit for the year ending June 30.
"The third quarter saw currency and economic weakness impact consumer confidence across many emerging markets while consumer trends in the developed markets were in line with those in the first half," the company said in a statement.
Over the nine months to March 31, organic net sales were up marginally at 0.3%, although reported net sales dropped 7.4%, which it said was due to currency movements and the termination of its distribution agreement with tequila brand Jose Cuervo. Volume over the nine months period declined 2%.
During the third quarter, organic net sales dropped 19% in Asia Pacific, hit by political instability in Thailand, and lower trade confidence in a number of markets, and continued weakness in its Chinese white spirits business. Organic net sales were down 5.2% in Africa, Eastern Europe and Turkey, despite growth in Turkey and improving trends in Nigeria, due to a slowdown in South Africa and a further decline in Senator Keg sales in Kenya. India and the Middle East both delivered double digit growth, it said.
In Latin America and the Caribbean, organic net sales were up 27.7%, due to further improvements in Brazil, and a stronger performance in the western part of the region, which benefited from a weaker comparative quarter.
"This stronger performance was partially offset by weakness in Mexico, while the use of a new exchange rate to translate Diageo's business in Venezuela reduced the market's overall contribution to regional growth," the company said.
Diageo said that developed markets like North America and Western Europe are helping drive growth in the business now, with trading having picked up in the regions, while emerging markets, once the driving force behind growth in the business, have begun to slow.
Diageo shares last traded at 1910.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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