United Spirits falls over 6% after Diageo issues profit warning

Shares of liquor company United Spirits slipped as much as 6.34 per cent in the intraday trade on Friday after the parent company Diageo warned that its full-year profits will be dented by the recent sell-off in emerging market currencies. 

Diageo, which has operations across 180 countries, said it expected currency effects to knock 175 million pounds off net sales, compared to a previous estimate of 70 million pounds, which would wipe 45 million pounds off its full-year profit, up from an earlier estimate of 10 million pounds, said a Reuters report. 

However, the maker of Johnnie Walker scotch and Smirnoff vodka said its performance from the start of the year was in line with expectations and its organic sales would grow in line with last year.

While Diageo’s revenue from emerging markets like India or China suffers as their currencies weaken, it is helped by the strengthening of the dollar which has driven such moves.

“The FX update is worth less than 1 percent to EPS but shares already largely reflect the move,” Reuters reported as saying by the analysts from brokerage Jefferies.  “The year has started well.”

At 12:06 am, the stock was trading at Rs 529.65 apiece on BSE, down 5.54 per cent.

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