Diageo has estimated the COVID-19 outbreak will have a negative impact on organic net sales of between £225 million (US$286 million) and £325 million (US$414 million) in the company’s current fiscal year. The drinks company added that organic operating profit is expected to take a hit of between £140 million (US$178 million) and £200 million (US$255 million).
As reported, Diageo said in its interim results that the coronavirus would impact the performance for the fiscal year ending June 2020, but that the company was unsure of the scale.
Diageo has now released a more detailed trading update on the estimated impact of COVID-19. It said the outbreak had impacted travel retail through a “significant reduction in international passenger traffic, especially in Asia” and that any recovery in traffic was assumed to be gradual, meaning a weaker performance in this channel for the rest of the fiscal year.
The update added that the on-trade in Greater China had suffered from bars and restaurants being largely closed. The company said it was expecting this to gradually improve before reaching normal levels towards the end of the fiscal year.
Elsewhere in Asia Pacific, Diageo said the postponing of events and conferences had impacted performance, especially in South Korea, Japan and Thailand. This is expected to improve gradually in the period from April to June, Diageo added.
“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,” the company said.
“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.”
