SCOTCH whisky giant Diageo has declared it is on track to grow sales and profits this financial year, but warned it was not immune from “significant changes to global policy”.
The Bell’s and Johnnie Walker distiller, which averted strike action in Scotland over a pay dispute at the eleventh hour this week, said it expects to grow organic net sales around the “mid-point of the 4% to 6% range”. Organic operating profit is growing around one percentage point ahead of organic net sales, chief executive Ivan Menezes said in a trading statement issued ahead of the firm’s annual meeting yesterday.
“This is consistent with what we are targeting over the medium-term,” added Mr Menezes.
“Due to a strong prior year comparable, for the first half we expect organic operating profit growth to be in line with or slightly behind organic net sales growth.
“However, we would not be immune from significant changes to global trade policy and continue to monitor this closely.”
Diageo’s reference comes as it looks increasingly likely that the UK will exit the European Union on October 31 without a deal. While the UK Government continues to talk up its chances of a deal, its counterparts in Brussels say no real progress can be made until Prime Minister Boris Johnson provides formal written proposals.
Last week Chivas Brothers, Diageo’s biggest rival, warned that sales of Scotch could be hit in North America if US President Donald Trump imposes import tariffs on European spirits. Alexandre Ricard, executive chairman of Chivas-owner Pernod Ricard, said: “The US is a huge market for European spirits, particularly for Scotch, Irish (whiskey) and Cognac, so it would have somewhat of an impact of course.”
On Tuesday, workers at Diageo’s plants in Scotland suspended strike action after a last-minute pay deal was offered.
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