Diageo profit drops, missing estimates as Latam sales sink

LONDON (Reuters) – Diageo (LON:) reported 4.8% decline in annual profit on Tuesday, just short of analyst expectations, due to a steep decline in sales in Latin America and the Caribbean.

The world’s top spirits maker has been battling to restore investor confidence after a build up of unsold inventory in Mexico and Brazil led to a profit warning and a loss of market share in its biggest territory, the United States.

The maker of Johnnie Walker whisky and Tanqueray gin said the decline in its annual organic operating profit was largely due to a 21.1% fall in sales in Latin America and the Caribbean, a profitable region for the company.

Chief Executive Debra Crew said the company had taken steps to resolve its problems in the region and improve its performance elsewhere too.

“We are confident that when the consumer environment improves, the actions we are taking will return us to growth,” she said in a statement.

Analysts had expected a 4.5% fall in annual operating profit. Diageo had previously said sales in Latin America and the Caribbean would fall by between 10% and 20%.

Overall, group net sales were also slightly worse than forecast, declining 0.6% organically.