Coronavirus to cut sales of Johnnie Walker maker by up to $422 million
LONDON, United Kingdom – British drinks group Diageo, the maker of Guinness stout and Smirnoff vodka, on Wednesday, February 26, said the coronavirus would slash annual sales by up to £325 million ($422 million, 388 million euros).
Diageo, which produces also Baileys liquor and Johnnie Walker whiskey, said sales for the group's financial year ending June 30 would be impacted by between £225 million and £325 million owing to the spreading virus.
Operating profit would be hit by between £140 million and £200 million, it added in a statement.
Diageo said "significant disruption since the end of January" to its business in China was expected "to last at least into" next month.
"Thereafter, we expect a gradual improvement with consumption returning to normal levels towards the end of fiscal 2020."
Diageo added that in other Asian countries affected by the outbreak, notably Japan, South Korea, and Thailand, it expects a gradual improvement in trade throughout the group's final quarter of 2019-2020.
"The COVID-19 situation is dynamic and continues to evolve and these ranges exclude any impact of the COVID-19 situation on other markets beyond those mentioned," Diageo said.
"We remain confident in the growth opportunities in our Greater China and Asia Pacific business.
"We will continue to invest behind our brands, ensuring we are strongly positioned for the expected recovery in consumer demand," it added.
The new coronavirus epidemic swelled on Wednesday with cases in South Korea surging past 1,000 after deaths soared in Iran and infections appeared in previously untouched countries, prompting dire warnings that the world was not ready to contain it.
The virus has rapidly spread in parts of Asia, Europe, and the Middle East, even as the number of fresh cases and deaths decline at the disease epicenter in China.
Diageo shares slumped 2.5% to £28.85 in early trading on London's benchmark FTSE 100 index, which was down 1.5% overall. – Rappler.com