19th Sep 2019 08:18
(Alliance News) - Drinks giant Diageo PLC on Thursday cautioned the firm is "not immune" to changes in global trade policy, amid a trade war between the US and China.
Diageo owns brands such as Captain Morgan rum, Johnnie Walker whisky, Smirnoff vodka, and Guinness.
Nevertheless, Diageo said trading in its year ending June 2020 has started well. Based on the current environment, Diageo sees organic net sales for the year growing around the middle of its 4% to 6% guided range.
Organic operating profit for the full year is seen growing "roughly one percentage point" ahead of the rate of organic net sales.
"This is consistent with what we are targeting over the medium-term. Due to a strong prior year comparable, for the first half we expect organic operating profit growth to be in-line with or slightly behind organic net sales growth," said Chief Executive Ivan Menezes.
"However, we would not be immune from significant changes to global trade policy and continue to monitor this closely."
Shares in the company were down 0.7% in early trade in London on Thursday at 3,248.00 pence each.
In the most recent development in the US-China trade spat, China's Vice Minister of Finance Liao Min led a trade delegation to Washington on Wednesday ahead of high-level talks scheduled for October.
Liao is travelling at the invitation of the US, the Finance Ministry said Tuesday.
Earlier this month, Chinese Vice Premier Liu He spoke on the phone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin and agreed to meet next month in a renewed attempt to end their countries' year-long trade war.
Washington last week postponed a tariff hike until mid-October while China rolled back tariffs on US pork and soybeans and exempted some chemical products from additional tariffs. Both sides described the moves as "gestures of goodwill."
On Tuesday, workers at Diageo distilleries suspended strike action after a last-minute pay deal was offered. Members of Unite and GMB across Scotland's distilleries and bottling plants had been scheduled to stop working from 10pm on Tuesday.
It would have seen almost two-thirds of all Diageo workers take part in a series of rolling strikes over 10 days, according to representatives of the unions.
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