Diageo has warned of “slower growth” in the coming months with consumers in its ‘Latin America & Caribbean’ reporting region struggling with macroeconomic issues.
In a trading update today, the group admitted that its previous expectation of “a gradual improvement” in top-line growth in the six months to the end of December, compared to the first half of 2023, now seems unlikely. LatAm & Caribbean [LAC], which delivered a 12-month sales lift of 9% to the end of June, is now forecast to come in down by over 20% in H1 of fiscal 2024, to the end of December.
In late September, Diageo forecast a 5%-to-7% increase in group sales from the current financial year.
"LAC is lapping very strong 20% organic net sales growth, versus the first half of fiscal 23," the company said today. "Macroeconomic pressures in the region are resulting in lower consumption and consumer downtrading. These impacts are slowing down progress in reducing channel inventory to appropriate levels for the current environment.
"Despite slowing category growth, our business continues to win share in most markets, within the categories we participate in."
Of the other reporting regions, 'North America' is poised for a "gradual improvement" in sales increases in H1 fiscal 2024, as is 'Africa'. "In 'Europe'," the group added, "growth continues to be strong despite geopolitical tensions escalating in the Middle East ... .
"In Asia Pacific, we continue to see momentum with good growth, despite slower-than-expected recovery in China."
Predictably, investors reacted badly to today's announcement, with the group's share price down almost 15% at 10.30 on yesterday's close.
Diageo, which retained its medium-term +5%-%7% sales rise guidance, is hosting a 'Capital Markets Day' in New York for the investment community next week.
