TIDMDGE
RNS Number : 1219E
Diageo PLC
26 February 2020
26 February 2020
Trading Update - Impact of COVID-19 outbreak
When we released our interim results on 30 January 2020, we
commented on the expectation of an impact from the Coronavirus
(COVID-19) outbreak, which we were not able to quantify at the
time. We are now providing an update on the expected range of the
adverse impact in fiscal 2020 of the evolving COVID-19
situation.
As the situation continues to unfold, our primary concern
remains the welfare of our colleagues, their families and their
local communities and we will continue to provide all support
possible. Authorities in China and in other impacted countries have
taken strong and decisive action and continue to work tirelessly to
contain the spread of the virus.
Public health measures across impacted countries in Asia
Pacific, principally in China, have resulted in: restrictions on
public gatherings, the postponement of events and the closure of
many hospitality and retail outlets. Several countries and many
businesses have also imposed restrictions on travel.
It is difficult to predict the duration and extent of any
further spread of the COVID-19 outbreak both in and outside of
Asia. Based on current information we have made assumptions to
estimate the fiscal 2020 impact on the performance of the following
businesses:
Greater China:
-- Bars and restaurants have largely been closed and there has
been a substantial reduction in banqueting. As the majority of
consumption is in the on-trade, we have seen significant disruption
since the end of January which we expect to last at least into
March.
-- Thereafter, we expect a gradual improvement with consumption
returning to normal levels towards the end of fiscal 2020.
On-trade, in other impacted countries in Asia Pacific:
-- The outbreak in several other Asian countries, especially
South Korea, Japan and Thailand, has led to events being postponed,
a reduction in conferences and banquets, and a drop in tourism
which have all impacted on-trade consumption.
-- We expect gradual improvement throughout the fourth quarter of fiscal 2020.
Travel Retail, mainly in the Asia Pacific region:
-- The outbreak has caused a significant reduction in
international passenger traffic, especially in Asia.
-- Recovery of passenger traffic is assumed to be gradual,
resulting in weaker performance for the remainder of fiscal
2020.
On this basis, we estimate the negative impact in fiscal 2020,
on the group's organic net sales and organic operating profit, to
be in a range of GBP225m to GBP325m and GBP140m to GBP200m,
respectively, with the timing and pace of recovery determining the
impact within these estimated ranges. The COVID-19 situation is
dynamic and continues to evolve and these ranges exclude any impact
of the COVID-19 situation on other markets beyond those mentioned
above. We will continue to monitor the situation closely.
We remain confident in the growth opportunities in our Greater
China and Asia Pacific business. We will continue to invest behind
our brands, ensuring we are strongly positioned for the expected
recovery in consumer demand.
For further information please contact:
Investor Relations :
Vinod Rao +44 (0) 7834 805 733
Andy Ryan +44 (0) 7803 854 842
investor.relations@diageo.com
Media Relations:
Dominic Redfearn +44 (0) 7971 977 759
Jessica Rouleau +44 (0) 7925 642 561
press@diageo.com
About Diageo
Diageo is a global leader in beverage alcohol with an
outstanding collection of brands across spirits and beer
categories. These brands include Johnnie Walker, Crown Royal, J B,
Buchanan's and Windsor whiskies, Smirnoff, Cîroc and Ketel One
vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and
Guinness.
Diageo is a global company, and our products are sold in more
than 180 countries around the world. The company is listed on both
the London Stock Exchange (DGE) and the New York Stock Exchange
(DEO).
Celebrating life, every day, everywhere
Cautionary statement concerning forward-looking statements
This document contains 'forward-looking' statements. These
statements can be identified by the fact that they do not relate
only to historical or current facts. In particular, forward-looking
statements include all statements that express forecasts,
expectations, plans, outlook, objectives and projections with
respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of changes in interest or exchange rates, the availability
or cost of financing to Diageo, anticipated cost savings or
synergies, expected investments, the completion of any strategic
transactions or restructuring programmes, anticipated tax rates,
changes in the international tax environment, expected cash
payments, outcomes of litigation or regulatory enquiries,
anticipated changes in the value of assets and liabilities related
to pension schemes and general economic conditions. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements, including
factors that are outside Diageo's control. Any forward-looking
statements made by or on behalf of Diageo speak only as of the date
they are made. Diageo does not undertake to update forward-looking
statements to reflect any changes in Diageo's expectations with
regard thereto or any changes in events, conditions or
circumstances on which any such statement is based.
An explanation of non-GAAP measures, including organic
movements, is set out on page 49 of Diageo's interim results for
the six months ended 31 December 2019 published on 30 January
2020.
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END
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