Guinness and Johnnie Walker owner Diageo has seen its half-year profits almost halve after it was hammered by the closure of pubs and bars in the face of the coronavirus pandemic.
Shares slid in early trading after it revealed that operating profits dived 47% to £2.1 billion in the year June 30, as it was also hit by a £1.3 billion write-down across its operations in India, Nigeria, Ethiopia and Korea.
Total sales fell by 9% to £11.8 billion for the year despite being boosted by growth in sales in North America.
Kathy Mikells, chief finance officer of the company, told the PA news agency that sales in the US were “resilient” as shoppers continued to buy tequila and other spirits to drink at home.
She said: “It was a year of two distinct halves due to Covid-19.
“But we did see improvements continue through the fourth quarter, with sales moving higher in April, May and June, so we are confident in our current position.”
The company said that European drinkers have recently turned increasingly to rum, which saw sales jump by 3%, on the back of strong sales for Captain Morgan.
Ivan Menezes, chief executive of the company, said: “Through these challenging times we have acted quickly to protect our people and our business, and to support our customers, partners and communities.
“The actions we have taken to strengthen Diageo over the last six years provide a solid foundation to respond to the impacts of the pandemic.
“We are now a more agile, efficient and effective business.”
William Ryder, equity analyst at Hargreaves Lansdown, said: “Diageo is still a great business, still owns some terrific brands and whisky is still a very difficult market for newcomers to break into.
“The hit to earnings should be short-lived provided the global economy doesn’t take too long to recover.
“We think the group will continue to do well long term, but management will have to focus more on debt reduction than they probably would have liked.”
Shares in the company fell by 5.9% to 2,710p in early trading.