Diageo Profits Halve to £1.4 Billion

The COVID-19 pandemic has more than halved profits at Diageo, the British drinks group which produces a wide range of global brands such as Guinness, Smirnoff vodka and Ron Zacapa.

Diageo announced on Tuesday that its annual profit after tax fell to £1.4 billion for the financial year ending June 30, compared to £3.16 billion the previous year, as a result of COVID-19 challenges.

In the earnings statement, CEO Ivan Menezes said, “after good, consistent performance in the first half… the outbreak of COVID-19 presented significant challenges for our business, impacting the full-year performance,”  

The company share price fell by 5.5 per cent to £27.22 on the news Tuesday morning. Annual sales were also hit, falling by nine per cent to £11.75 billion. 

The Diageo profits drop came despite higher alcohol sales in the North American market, hit by slumps in most other markets, including difficulties in areas such as Nigeria, India, Ethiopia and South Korea.

“Sometimes seen as having defensive qualities, alcoholic drinks maker Diageo was nursing a pretty nasty COVID-19-linked hangover this morning as it published a disappointing set of full-year results,” said noted AJ Bell investment director Russ Mould according to an AFP report. 

“People may have enjoyed the distraction of a drink at home amid the difficult times of the last few months, but this wasn’t nearly enough to compensate for the hit associated with sales in pubs, restaurants and bars or at big sporting events or music festivals,” he added.