Top-line growth at Diageo dampened by emerging market weakness

17th Apr 2014 07:10

Year-to-date organic revenue growth at beverages group Diageo has been held back by sales declines in the third quarter due to weakness across many emerging markets.The company, famous for spirits brands Johnnie Walker, Captain Morgan and Smirnoff as well as Guinness stout, said that organic net sales fell by 1.3% in the three months to March 31st.Growth in North America, Western Europe and the Latin America and Caribbean region was outweighed by falls in Africa, Eastern Europe and Turkey, and Asia Pacific.As a result, overall growth over the first nine months of Diageo's financial year was just 0.3%, down from 2% in the first half.The company said that currency movements and "economic weakness" affected consumer confidence across many emerging markets in the third quarter, while consumer trends in the developed world were in line with those in the first half.Chief Executive Ivan Menezes said Diageo's performance reflects a "challenging environment". While trading in North America remains resilient and improvements are being seen in Western Europe, he said: "In the emerging markets currency volatility and caution about the outlook for [economic] growth are negatively impacting business and consumer confidence."Menezes added: "The current emerging market weakness does not reduce our confidence in the long term growth opportunities of these markets and we have continued to invest to build our brands and routes to consumer for the future. Current trends will however impact top line growth this financial year, but strong management of our cost base means that we remain committed to the delivery of our margin expansion goals."BC