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Diageo drinks group says hit by weak sales in China

AFP

Diageo -- which owns the Johnnie Walker brand of whisky -- said profit after tax fell 8.0 percent to £2.248 billion ($3.79 billion, 2.83 billion euros)Diageo -- which owns the Johnnie Walker brand of whisky -- said profit after tax fell 8.0 percent to £2.248 billion ($3.79 billion, 2.83 billion euros)

Diageo -- which owns the Johnnie Walker brand of whisky -- said profit after tax fell 8.0 percent to £2.248 billion ($3.79 billion, 2.83 billion euros)Diageo -- which owns the Johnnie Walker brand of whisky -- said profit after tax fell 8.0 percent to £2.248 billion ($3.79 billion, 2.83 billion euros)

Diageo, the British maker of alcoholic drinks, announced a drop in annual net profit on Thursday, blaming the fall on sliding sales in China.

Profit after tax fell 8.0 percent to £2.248 billion ($3.79 billion, 2.83 billion euros) in Diageo's financial year that ran to June 30, compared with its performance in 2012/13.

The group makes Guinness stout and Johnnie Walker whisky.

"Emerging market weakness, often currency related, but also including some specific issues, such as the anti extravagance measures in China, has led to weaker top line growth," chief executive Ivan Menezes said.

A Chinese government campaign against corruption has cut consumption of top-branded consumer goods.

Diageo's international brands dropped 14 percent in China during the company's last financial year, largely driven by weakness in demand for its whisky.

Diageo, which makes also Captain Morgan rum, Baileys liqueur and Smirnoff vodka, has meanwhile begun its latest trading year with the announcement earlier this month that it had won majority control of India's United Spirits.

United Spirits gives Diageo the firm's vast distribution network for its flagship Johnnie Walker, the whisky of choice for India's upper middle classes, and other products.

But most importantly United Spirits gives Diageo entry into the popular lower-priced, domestically-made segment of the whisky market.

India has long been in the sights of Menezes, who aims to source at least 50 percent of Diageo's sales from emerging markets, up from 42 percent now, as developed market growth slows.

Date created : 2014-07-31