Diageo warns coronavirus may knock earnings by up to £200m

Drinks giant Diageo has warned over an earnings hit of up to £200 million this year from coronavirus as the outbreak impacts sales throughout Asia.

The Gordon’s gin and Captain Morgan rum maker said demand has been knocked across greater China, where the outbreak started, as bars and restaurants have been closed, with sales across the rest of Asia Pacific also lower amid a fall in conferences and banquets.

Sales are also being weighed on as the spread of the Covid-19 virus has led to reduced international passenger traffic.

Diageo is bracing for 2020 net sales to be knocked by between £225 million and £325 million due to coronavirus, which is set to impact operating profit by £140 million to £200 million this year.

It said it has seen “significant” disruption since the end of January, which it expects to last at least into March.

But the group is expecting a gradual improvement in sales, returning to normal levels towards the end of its financial year in June.

Diageo said: “Public health measures across impacted countries in Asia Pacific, principally in China, have resulted in restrictions on public gatherings, the postponement of events and the closure of many hospitality and retail outlets.

“Several countries and many businesses have also imposed restrictions on travel.”

It added the outbreak is “dynamic and continues to evolve”.

“It is difficult to predict the duration and extent of any further spread of the Covid-19 outbreak both in and outside of Asia,” Diageo said.

The coronavirus woes come as a further blow to Diageo, which warned over full-year sales last month due to a backdrop of global uncertainty.

It cautioned that full-year sales are expected to be on the lower end of forecasts of between 4% and 6% growth after being affected by volatility in world markets.

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