Shares in Diageo were lower in London trading after profits at the maker of Guinness and Johnnie Walker fell by almost 30% amid a downturn in alcohol sales.
The world’s largest spirits firm revealed operating profits fell 27.8% to $4.33bn (£3.3bn) in the year to June 30.
Sales in the 12 months to the end of June fell 0.1% to $20.2bn. Diageo’s organic sales volumes rose 0.9%.
It comes weeks after the group said Debra Crew had stepped down as chief executive with “immediate effect” and by “mutual agreement”, following a decline in Diageo’s share value.
Interim chief executive Nik Jhangiani said: “While macroeconomic uncertainty and the resulting pressure on consumers continues to weigh on the spirits sector, we believe in the attractive long-term fundamentals of our industry and in our ability to continue to outperform as the TBA (total beverage alcohol) landscape evolves.
“We are focused on what we can manage and control and executing at pace.
“The board and management are committed to delivering improved financial performance and stronger shareholder returns on a sustained basis.”
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Robinhood UK lead analyst Dan Lane said: “The bull case around Diageo was that younger people were drinking less but upping the quality, except higher inflation has meant consumers can’t quite reach the top shelf anymore and are seemingly trading down as well as slowing down.
“Diageo was banking on its premium portfolio so, with that strategy on the rocks, we need to hear a lot more about plans for its cabinet of standard household names now too.
The fact that profits and margins have struggled so much, even at the height of Guinness’s popularity, has quite rightly sounded alarm bells.
“The past few years have seriously tarnished Diageo’s all-weather reputation. Swapping its ‘something for everyone’ brand stable for premium bottles was a risk that clearly paid off until inflation started to bite. We’re now seeing what happens when you pin your hopes on one strategy and, crucially, don’t fix the roof while the sun’s still shining.”
Shares in Palantir were almost 6% higher in pre-market trading as the AI software provider topped Wall Street estimates, surpassing $1bn in quarterly revenue for the first time.
In its second quarter, Palantir posted earnings per share of $0.16, beating consensus estimates of $0.14 and up 77% from the same quarter last year. Revenue came in at $1.004bn, Palantir's first quarter surpassing the billion-dollar mark on a quarterly basis. The company's top line also beat analyst forecasts for $939.25bn and was up 48% year-over-year.
