Diageo's Share Price Plummets After Sales Warning in Latin America, Caribbean; Forecasts Reduced Revenue, Profit Growth

Unpredicted "materially weaker" outlook in Latin America and the Caribbean triggers 14% dip in share price, with unforeseen customer shift to cheaper brands, macroeconomic pressures, and Middle East tensions impacting company's market value.

Diageo's share price declined by 14% due to a reduced forecast in sales and profits, primarily driven by a slowdown in business in Latin America and the Caribbean, which accounts for approximately 11% of the company's total sales.
This fall is attributed to a 'materially weaker' outlook in these regions, caused by macroeconomic pressures and customers opting for cheaper alternatives to the company's products.
The company has further decreased its growth expectations due to rising trade investments, lower operating leverage and an unfavorable sales mix caused by customers moving to lower-priced products.
Diageo also cites tensions in the Middle East and the conflict in Gaza as contributing factors to its declining market value, with a notable impact on results as trading has been halted in some parts due to these issues.
Despite the downturn, Diageo maintains a hopeful outlook for future growth, expecting a gradual improvement in organic net sales and operating profits in the second half of the financial year, driven by anticipated moderation in inflationary pressures and planned pricing actions.