Guinness and Gordon's gin maker Diageo sees profits slump in Latin America

30 January 2024 , 11:44

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Guinness maker Diageo has revealed a slump in profits for the second half of 2023 (Image: PA Archive/PA Images)

Diageo, the drinks giant behind Guinness and Gordon's gin, has seen a drop in profits over the past six months.

This is due to a decrease in demand in Latin America and the Caribbean, as well as some customers opting for cheaper drinks. Despite this, the company's British business has seen growth, thanks to a surge in demand for Guinness.

The firm reported an operating profit of $3.3 billion US dollars (£2.6 billion) for the last half of the year, down 11.1% from the same period the previous year. This comes after Diageo issued an unexpected profit warning late last year.

The company reported that net sales fell by 1.4% to $11 billion (£8.7 billion), due to unfavourable foreign exchange rates and a significant drop in sales in its Latin America and Caribbean division. Sales in this region fell by 23%, or $310 million (£244 million) over the half-year.

The company attributed this to weaker consumer demand and high inventory levels in the region. The company saw a 10% increase in net sales in Europe, despite declines in Eastern Europe.

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This was largely due to strong performances in the UK, where sales rose by 9% and 10% respectively. Diageo reported that sales of the popular pint remained "strong" across Britain. The drink continues to be the UK's favourite after it dethroned Carling last year.

The firm also saw a 17% increase in sales for Johnnie Walker across Europe during the half-year. However, gin sales have been weaker, with Gordon's and Tanqueray volumes dropping across Europe. This was largely balanced out by higher prices.

Diageo's boss, Debra Crew, said: "Looking ahead to the second half of fiscal 2024, despite continued global economic volatility, we expect to deliver improvement in organic net sales and organic operating profit growth at the group level, compared to the first half. While the macro environment will continue to present challenges, I am confident that we remain well-positioned and resilient for the long term."

"We are diversified by category, price point and region and will continue to invest behind our iconic brands to maintain our position as an industry leader in total beverage alcohol, an attractive sector with a long runway for growth."

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Lawrence Matheson