Diageo withdraws forecast, halts shareholder returns program

Diageo Plc, the world's largest spirits maker, abandoned its annual forecast for sales and profit growth and suspended its shareholder returns program for the rest of the year in response to the coronavirus pandemic.

The Johnnie Walker whiskey maker said lockdowns imposed by governments across the world, including the closure of bars and restaurants, had significantly impacted its business. Production facilities in many countries including India and in its key markets of Africa are closed, even though business in mainland China is slowly recovering with the gradual opening of bars and restaurants, Diageo said in a statement.

The company in February had estimated that the spread of coronavirus in greater China and the Asia Pacific region could knock up to $260 million off its profit in 2020. "Given the global nature of the COVID-19 pandemic, and the uncertainty around the severity and duration of the impact across multiple markets, we are not in a position to accurately assess the impact of this on our future financial performance," the company said in a statement on Thursday.

The company pulled its guidance for the year, which called for annual underlying net sales growth to come in towards the lower end of a 4% to 6% mid-term guidance range and operating profit growth to be roughly one percentage point ahead of net sales. Diageo also said it was suspending its three-year multi-phase 4.5 billion pound shareholder returns program for the rest of the year. In its first phase that ended on Jan. 31, the company had paid out 1.25 billion in the form of buybacks.

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