Diageo has said that its trading expectations are unchanged from its results in July, despite the "challenging" global environment for the firm and the industry.
The drinks firm, which owns brands including Guinness, Johnnie Walker and Smirnoff, said it is looking to increase its strength "through operational excellence, productivity and strategic investments to win quality market share".
In a statement, Diageo’s chief executive, Debra Crew, said that while consumers "continue to be cautious", it has made good progress on its strategic initiative, including its US route-to-market enhancements, and is progressing well in Nigeria to complete its business restructure.
In July, the firm saw its global sales drop for the first time since the COVID pandemic by 1.4% in the year to the end of June.
However, UK sales increased by 5% in the same period, as a result of the rise in the popularity of Guinness and related endeavours including the alcohol-free version and its Nitrosurge home-pouring technology.
Investment director at AJ Bell, Russ Mould, said that although the update wasn’t "cheery", it will come as some relief to shareholders, after shares at the firm had increased following the update.
Mould stated: "The company is pulling some levers internally to position itself for a recovery in demand, with CEO Debra Crew under some pressure to deliver after a difficult year-and-a-bit in charge. Crew took over from her longstanding predecessor Ivan Menezes after his sad passing, hardly the most auspicious circumstances from which to start.
"The problems the company faced in Latin America, where it had far more inventory than it needed, hinted at issues with controls and discipline in at least one area of the business. Having staked a position very much in premium spirits, which paid off during the pandemic when people were unable to go out and were buying high-end whisky, tequila and rum to consume at home, Diageo really needs to see a recovery in this part of the market.
"If Diageo remains in the doldrums for much longer it could attract activist interest or potentially a takeover bid. There could conceivably be pressure to break up the group with Guinness being hived off from the spirits brands."
Recent Stories