Investment: Diageo wakes up with an emerging hangover
Friday 25 September 1998
Since then the bottom has fallen out of emerging markets and the share price has fallen equally sharply, down a further 21p to 497p yesterday.
Diageo yesterday tried to please the market by producing another pounds 100m of cost savings and maiden results that were in line with reduced expectations. But the underlying picture is still mixed. Stripping out the long list of exceptionals, operating profits from continuing operations were only 5 per cent ahead at pounds 1.9bn.
In spirits and wine, some brands did well but group sales rose by just 2 per cent, held back by underperforming brands and a precipitous 40 per cent fall in sales volumes in Asia. Diageo is selling or discontinuing the worst performers and the company reckons its core brands should be able to grow sales by 5 to 8 per cent a year.
Diageo says Asian markets have stabilised, but now trade in South America is showing signs of softening. There were worries, too, about the food division, where a warning about competitive pressures prompted analysts to downgrade current-year forecasts.
Diageo remains optimistic, however. It claims that its unparalleled distribution system will give it a wider reach than its rivals. It also says that its enlarged development power will help pump out more winners such as the lemonade-flavoured vodka that is powering away in Australia.
Still, there is much to be done. On forecasts of pounds 1.8bn for the current year, the shares trade on a forward rating of 14. Given the uncertainty about emerging markets, there is no rush to buy.
Swedish stars ask fans for £195 pledges on crowd-funding website
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
sportNapoli 2 Arsenal 0: Gunners must now face either Real Madrid, PSG, Bayern Munich, Atletico Madrid or Barcelona in knock-out stages
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
filmFilm producers sue Warner Bros for $75m over Hobbit films
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
techLuke Blackall reports on precision engineered prams and babygros that monitor your child 24-7
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 4 Exeter to Edinburgh and back in a day: How one fresher's lost bet left him facing a 900-mile round trip
- 5 Selfie at funeral: Cameron squeezes in on Obama snap at Mandela memorial
- < Previous
- Next >
iJobs Money & Business
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£50000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...
£70000 - £90000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...