Diageo fortunes rest on reviving America’s thirst aimeedonnellan
beat analysts’ expectations of 8%. Chief Executive Ivan Menezes has two flies in his tequila.
To start with, rising rates and foreign-exchange fluctuations have boosted the company’s interest bill: its net finance charge jumped to 292 million pounds in the six months to Dec. 31, a near two-thirds year-on-year increase. More worrying, though, is that growth is slowing in the all-important American market, which RBC analysts reckon accounted for around half of the company’s operating profit in 2022.
It’s possible that drinkers are getting more cautious, fearing a possible recession, and tempering their purchases of pricier booze. Sales in North America grew by just 3% year-on-year in the most recent six-month spell, compared with 14% a year earlier. That’s using so-called organic figures, which strip out one-offs like currency moves. Boss Menezes is hoping that the growth figure will eventually settle in the mid-single digits.
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