Diageo said today third-quarter revenue declined on reduced orders from US distributors and maintained its profit forecast.
Sales excluding acquisitions and currency effects fell 7 per cent in the three months ended March 31st, the London-based company said today in a statement.
The drop was worse than the 5 per cent decline estimated by five analysts surveyed by Bloomberg News, and compared with a 3 per cent gain in the first half.
Diageo reiterated its full-year guidance for operating profit growth of 4 to 6 per cent.
The maker of Smirnoff vodka and Johnnie Walker whisky said US distributors and wholesalers cut inventory levels by 1 million cases at the end of the quarter, while Russia has suffered a “significant decline”.
Rival Pernod-Ricard SA cut its full-year forecasts last month after saying so-called organic sales in the third quarter shrunk by 12 per cent, also citing reduced stocks in the US in the economic decline.
“This period has been so volatile with the de-stocking issue,” Jonathan Cook, an analyst at ABN Amro Bank NV in London with a “hold” recommendation on Diageo, said by phone.
“I didn’t expect the sales to be down in this kind of range, but it’s a small positive they reconfirmed guidance.” The stock has fallen 8.3 per cent this year, while Pernod has dropped 7 percent.
“Trading in markets around the world has weakened in the second half of the fiscal year,” chief executive Paul Walsh said in the statement.
Net assets declined to £4.19 billion ($6.33 billion) on March 31st from £4.61 billion at the beginning of the quarter.
Diageo said growth in earnings per share will be in the “double digits” for the year ending June 30th.
Bloomberg