LONDON—U.K.-based drinks group Diageo PLC on Wednesday cautioned that currency movements will have a bigger impact than previously expected on its results for the 2016 financial year as higher prices deter customers in emerging markets.

The maker of Johnnie Walker whisky and Smirnoff vodka said currency movements would reduced its operating profit by £ 150 million ($230.5 million) in the year ending June 30, 2016 compared with the 2015 financial year, when it reported an operating profit of £ 2.8 billion.

That compares with an estimate of a £ 100 million impact issued in July, when Diageo also forecast that exchange rates would reduce revenue by £ 370 million.

Shares in Diageo gained 0.3% in early trading despite the worse-than-expected currency impact.

"Our outlook for this financial year included the possibility that further currency weakness could impact demand for premium spirits in the emerging markets," Diageo noted Wednesday, saying it still expects to finish the year with improved revenues and margins.

The company said trading has progressed in line with its plan since the start of the current financial year in July.

"Volume has grown mid-single digit reflecting both improved volume growth trends and comparison against weakness at the start of last year, especially in U.S. spirits," it said, adding that price increases have been "muted."

Diageo forecast "mid-single digit organic top line growth on a sustained basis" from the 2017 financial year, helped by improvements in productivity.

Write to Ed Ballard at ed.ballard@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

September 23, 2015 05:05 ET (09:05 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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