Spirits maker Diageo just missed full-year profit forecasts on Tuesday and warned challenges could persist into next year as sales sank in Latin America and the Caribbean, sending shares down 8% in early trading.
The maker of Johnnie Walker whisky and Tanqueray gin has struggled to restore investor confidence after unsold inventory in Mexico and Brazil led to a profit warning and a loss of market share in the United States, its biggest territory.
The company attributed the 4.8% decline in its annual organic operating profit largely to a 21.1% slump in sales in Latin America and the Caribbean, a high-margin region.
Chief Executive Debra Crew said steps taken to resolve its problems in the region and elsewhere to spur performance were bearing fruit.
While these efforts could return the company to growth eventually, Crew said it was difficult to say when the company would see net sales increases of between 5% and 7% per year - its medium-term goal.
"It's really hard to call... What we are doing is controlling what we can," she said, adding that factors like low consumer confidence and high inflation also affected sales.
RBC Capital analyst James Edwardes Jones said this was "not reassuring" given comments from other consumer companies, which have warned US consumer confidence is under pressure.
"We expected these results to be grim, and so they were," he said.
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.
(Reporting by Emma Rumney, Editing by Louise Heavens and Bernadette Baum)
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