Diageo has withdrawn its guidance on group organic net sales growth and organic operating profit growth for fiscal 2020, due to the impact of COVID-19 outbreak.
In a trading update the Guinness owner said that given the global nature of the COVID-19 pandemic, and the uncertainty around the severity and duration of the impact across multiple markets, it is not in a position to accurately assess the impact of this on its future financial performance.
“During this challenging time, our top priority is to safeguard the health and well-being of our people, while taking necessary action to protect our business," said Ivan Menezes, chief executive, Diageo.
Current Trading Environment
Social distancing measures, including the closure of the on-trade channels, have been introduced in most of it markets, the drinks giant noted.
The group said that it is tracking changes in consumer behaviour during this time and adjusting its plans and resources in response.
"I am confident in Diageo’s long-term strategy and our ability to move quickly in this difficult environment," Menezes added.
Cost Mitigation
In the short term, the company said that it is reducing discretionary expenditure and reallocating resources across the group.
As part of these mitigation measures, it is stopping A&P spend that will not be effective in the current environment, it added.
The group said that it is tightly managing working capital and deferring discretionary capital expenditure projects.
"We will continue to execute with discipline and invest prudently to ensure we are strongly positioned for a recovery in consumer demand," he said.
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