Covid-19 halves Diageo profits

Whisky bottles of Johnny Walker, one of Diageo's main brands
Photo: andrebanyai / Shutterstock.com

Spirits producer Diageo has seen its full-year profits halved due to the Covid-19 crisis and had to lower the value of its brand portfolio (including Guinness, Johnny Walker and Smirnoff) by 1.5 billion euros.

 

Continuing volatility

British drinks giant suffered badly from Covid-19 in its financial year 2019-2020 (ending 30 June): its net profit halved from 3.16 billion to 1.4 billion pounds. 1.3 billion pounds (1.5 billion euros) was an impairment "due to Covid-19 and challenging trading conditions" in Ethiopia, India, Korea and Nigeria.

 

The company's annual turnover dropped by 9 % to 11.75 billion pounds (13 billion euros), driven down by a 12 % drop on the European market. CEO Ivan Menezes warns that recovery is not certain and volatility will continue long into the current financial year.

 

This is an extremely challinging period - possibly the most challenging one yet, Menezes said. Especially beer consupmtion is down (- 20 % in Europe) as pubs were closed and most events cancelled. Whisky is also one of the big victims of this crisis - it makes up more than a third of Diageo's turnover with labels like Crown Royal, Johnny Walker, Lagavulin and Talisker.