Shares in Diageo are down more than 3% this morning after the world's largest spirits group reported lower sales and profits amid falling demand in Latin America and the Caribbean, one of its key whisky export markets.
The company - which produces more than 100 original Scotch brands including the world's best-selling Johnnie Walker - said sales in the six months to the end of December fell by 1.4% to $11 billion (£8.68bn). This was driven by a 23% decline in what is referred to as the LAC region which accounts for around 11% of group sales, but is a high margin business and therefore has a bigger impact on profits.
READ MORE: Scotch whisky giant Diageo warns net zero under threat
Reported operating profit in the first six months was 11.1% lower at $3.3bn, falling short of a consensus estimate of $4.11bn.
Diageo had warned in November of a build-up in unsold stock in Latin America following a slowdown in demand for expensive spirits. A further decline of 10% to 20% is expected in the second half.
"The first half of fiscal '24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year and faced an uneven global consumer environment," chief executive Debra Crew said.
"Excluding LAC, our group organic net sales grew 2.5%, driven by good growth in Europe, Asia Pacific and Africa. While North America delivered sequential improvement in line with our expectations, we are focused on returning to high-quality share growth as consumer behaviour continues to normalise in our largest region."
Sales in North America were down 1.4% marking a further loss of share in Diageo's biggest market. The company said it expects gradual improvement in North America in the second half despite uncertainty in the consumer environment.
"While the macro environment will continue to present challenges, I am confident that we remain well-positioned and resilient for the long term," Ms Crew said.
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