Diageo (DEO) shares fell after the London liquor producer reported fiscal 2020 declines in sales and earnings as demand from bars dropped thanks to coronavirus-related lockdowns.
Diageo's fiscal 2020 operating profit of 2.1 billion pounds ($2.73 billion) was 47% below the year-earlier level as sales fell 8.7% to 11.8 billion pounds ($15.33 billion).
The world's largest spirits maker, took a 1.3 billion pound non-cash write-down for operations in India, Nigeria and Ethiopia and for the Windsor brand in Korea, "reflecting the impact of covid-19 and challenging trading conditions."
"Fiscal 2020 was a year of two halves: After good, consistent performance in the first half of fiscal 2020, the outbreak of covid-19 presented significant challenges for our business, impacting the full-year performance," Chief Executive Ivan Menezes said in a statement.
Net sales excluding acquisitions fell 8.4% overall and rose 2% in North America. Volumes excluding acquisitions were down 11% across the company.
The maker of Johnnie Walker whiskey, Smirnoff and Ketel One Vodka, Tanqueray Gin and many other brands saw its worst annual sales performance in more than a decade, according to Bernstein analysts, Reuters reported.
During the first half of the fiscal year, Diageo's net sales excluding acquisitions rose 4%.
"We have strengthened liquidity, giving us flexibility to continue to invest effectively in the business for the long term. While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 2021," Menezes said.
To build available cash, Diageo has taken measure including pausing a plan to return capital to holders and putting in place an additional credit facility of 2.5 billion pounds ($3.25 billion).
The coronavirus pandemic has forced social-distancing rules, which in turn have closed many bars worldwide.
American depositary receipts of Diageo at last check were down 4.1% at $141.98.