Diageo PLC's share price fell by 14% in early trading in London due to a sharp slowdown in its business in Latin America and the Caribbean.
The company expects sales in the region to decline by more than 20% in the six months to the end of December.
The region accounts for approximately 11% of Diageo's total sales.
Diageo PLC, a leading spirits and beer company, has experienced a significant decrease in its market value due to a sharp slowdown in its business in Latin America and the Caribbean. The company's share price fell by 14% in early trading in London, with some reports indicating a drop of up to 16%. The downturn is attributed to macroeconomic pressures and customers opting for cheaper products. The region accounts for approximately 11% of Diageo's total sales.
The company expects sales in the region to decline by more than 20% in the six months to the end of December. This is a significant hit to the company's profits as the region is a substantial contributor to its total sales. The company has also been affected by tensions in the Middle East and the conflict in Gaza, which have further impacted its results.
Diageo's CEO, Debra Crew, has acknowledged the impact of these global events on the company's results. The company, known for producing popular brands such as Johnnie Walker whisky and Smirnoff vodka, anticipates lower growth and profit in the second half of its fiscal year compared to last year due to the significantly weaker outlook in the Latin America and Caribbean region.
The company's warning of a slowdown in growth and the subsequent drop in its share price highlights the challenges faced by global companies in navigating complex macroeconomic pressures and geopolitical tensions. It also underscores the importance of diversification in a company's global operations to mitigate risks associated with specific regions.
Sales in the region, which accounts for nearly 11% of Diageo's total sales, are expected to decline by more than 20% in the six months to the end of December.