Thursday preview: Diageo reports half year amid tough trading conditions
Drinks maker Diageo is expected to report a slump in half-year interims on Thursday, reflecting weak sales in Asia.
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Beijing’s decision to cut back on luxury spending has affected Diageo’s Asian division. Stagnant demand in Western Europe and North America has also put a dampener on the company.
First-quarter net sales dropped 1.5% and volume fell 3.5%.
“We expect the tough trading to have continued into the second quarter,” Numis said.
The broker also estimated currency headwinds would impact results. It predicts earnings before interest and tax (EBIT) of £1.8bn, compared to £2.04bn the previous year.
The owner of Guinness and Johnnie Walker whisky has meanwhile warned suppliers that it plans to take three months to pay its bills, putting pressure on its supply chain. Diageo is said to be extending the number of days it takes to make payments from 60 days to 90 days on all new contracts and tenders from 1 February.
Following the earnings session will be a raft of European economic data including Eurozone consumer confidence, German unemployment and German inflation.
Analysts forecast the Eurozone sentiment index fell slightly to 101.6 in January from 1007 in December.
A report on German unemployment is expected to show a 10,000 drop in January while the jobless rate is projected to remain unchanged at 6.5%.
German consumer prices may reveal a 0.1% drop in January after a 0.2% gain in December, analysts predicted. The figures come amid concerns about the risk of deflation in the euro-area. The European Central Bank this month announced a major quantitative easing programme to help move inflation closer to its target of just below 2%.
Thursday 29 January
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