Guinness owner Diageo warns profits could drop $258M due to coronavirus
The coronavirus is proving a hangover-sized headache for British booze giant Diageo.
The liquor company behind Guinness, Johnnie Walker, Smirnoff and Captain Morgan warned on Wednesday that the epidemic could slash $258 million from its profits this fiscal year as bars and restaurants remain shuttered. The deadly outbreak could also hit Diageo’s 2020 net sales to the tune of $420 million, the company said in a press release.
“Bars and restaurants have largely been closed and there has been a substantial reduction in banqueting,” the company said of its business in China, where the epidemic has killed more than 2,700 people. “We have seen significant disruption since the end of January which we expect to last at least into March.”
Diageo’s US-listed shares opened 1.7 percent lower at $149.94 Wednesday before paring the losses to about 1.3 percent as of 12:14 p.m.
The booze seller said it expects liquor consumption in China to return to normal by the end of the fiscal year, which ends June 30, as travel in Asia slowly opens up again.
Booze consumption in other Asian markets, including Japan, South Korea and Thailand, has also suffered thanks in part to reduced tourism and events getting postponed, Diageo said. Its estimates don’t account for the virus’s effect on markets outside the Asia Pacific region, however.
Fears about the coronavirus’ spread outside China to other countries with big economies, including South Korea and Italy, pushed the US stock market into a deep selloff this week before rebounding Wednesday.
While the bulk of cases remain in China, at 78,073, and its neighboring South Korea, at 1,261, the virus has been spreading to other continents. Italy now has 383 cases, more than the 172 in Japan, and Iran follows Japan with 139 cases.
On Tuesday, the US Centers for Disease Control and Prevention warned Americans to brace for an outbreak here to disrupt their daily lives even as the number of US cases remains low, at 57.
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