Drinks giant Diageo could face whopping £160m profits hit if Trump goes ahead with tariffs on Canada & Mexico
It comes after the firm had a shock profit warning last year
DRINKS giant Diageo has warned it could face a £160million hit to its profits if Donald Trump presses ahead with tariffs on Canada and Mexico.
It is heavily exposed — with 42 per cent of its US revenues coming from Mexican-made tequila, while its popular Crown Royal whisky is made in Canada.
The night before Diageo’s results its board was holed up digesting the decision of the US President to delay the tariffs on Canada and Mexico by a month.
The FTSE 100 company yesterday scrapped its growth targets in light of the “fluid” nature of Mr Trump’s threats of a trade war.
CEO Debra Crew said her firm was “in dialogue” with the US administration and had raised its big presence in the US, where it also has 11 factories.
It is now trying to navigate the threat by bringing in as much stock into the US from Mexico and Canada before the import levies come into force.
It comes after the firm had a shock profit warning last year.
It faced a slowdown in sales after lockdowns during the pandemic sent demand for its spirits soaring.
Finance chief Nik Jhangiani said Diageo was having some success getting cash-strapped consumers in the US to keep buying its premium spirit brands in smaller, more affordable, bottles.
Guinness remains a bright spot for Diageo with “double digit” sales growth reported.
It boomed in popularity to the extent it rationed supplies to pubs last year.
Ms Crew said: “It was literally a sell-out year.”
Diageo ruled out any plans to sell-off the brand following inaccurate speculation last week.
It attributed the rapid rise of Guinness sales to more young and female drinkers opting for the “black stuff” throughout the year.
Guinness is now investing £30million in boosting capacity at its St James’s Gate brewery in Dublin and opening a new beer factory, with enough capacity to make 354million pints.
Kendall tequila to be shot down?
MODEL Kendall Jenner’s foray into the tequila trade could make her vulnerable to Trump’s tariffs on Mexico, a drinks boss said yesterday.
Debra Crew said her Diageo firm would be in a better place than the string of celebrity tequila drinks.
She said: “You can’t be a celebrity if you don’t have your own tequila brand it seems.”
Kendall launched 818 Tequila in 2021.
But Ms Crew said super- markets were sceptical about new entrants over shelf space being squeezed and tariffs making it harder for start-ups.
“It’s so crowded”, she said.
In 2021, Diageo spent $1billion on George Clooney’s Casamigos premium tequila brand.
SHELL IN OIL FIELD RESTART
SHELL is reopening its Penguins oil field in the North Sea after it spent four years out of action.
The firm has drilled new wells and opened a floating production and storage facility it claims will have 30 per cent lower carbon emissions.
Shell, battling a ruling barring development of its Jackdaw North Sea gas field, has been able to act as it has not had to apply for a new licence.
It expects to produce up to 45,000 barrels a day from the site 150 miles north-east of the Shetland Islands, which it first opened in 2002.
Oil will be refined outside the UK before returning as petrol and diesel.
The gas will be transported to Scotland for use in the UK’s gas network.
Spokesman Zoë Yujnovich said the Penguins field, Shell’s first North Sea facility in two decades, “is a source of the secure domestic energy production people need today”.
SHOVE AT YOUGOV
YOUGOV’S co-founder Stephan Shakespeare is returning as interim chief executive of the polling firm after boss Steve Hatch was shown the door.
Mr Hatch, previously at Facebook owner Meta, is leaving after just 18 months.
Under his tenure YouGov issued a shock profit warning and shares have plummeted by 70 per cent in the past year.
Yesterday the firm said its data division had returned to “low-single” digital growth.
CREST FALL FEAR
HOUSEBUILDER CREST NICHOLSON has issued a warning on its future in the event of a severe economic downturn occurring.
It issued a “going concern” warning that it could breach its debt interest covenants with banks in the event of a “severe but plausible” macroeconomic scenario in the UK.
It comes as the FTSE 250 company announced a pre-tax loss of £143.7million in the financial year to October 31.
The firm’s boss Martyn Clark said it had been a “challenging year”.
FOOD inflation eased for the first time in six months to 3.3 per cent in January from 3.7 per cent, according to stats by Kantar.
New Year health kicks saw Brits spend £193million more on fruit and veg than in December.
OCTOPUS LOSSES
OCTOPUS ENERGY, which overtook British Gas as the UK’s biggest supplier, swung into the red after expanding abroad and hiring 3,000 staff.
It posted a £95million loss for the year to April, compared to profits of £362million in 2023.
That is despite revenues holding at £12.4billion after gaining 2million customers from acquiring Bulb Energy and Shell Energy.
Octopus absorbed £74million from pricing bills below the cap and handing out electric blankets, but marketing costs doubled to £88million.