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Diageo has issued an unscheduled trading update, warning of weaker than expected performance in its Latin America and Caribbean business.

It said that the region, which accounts for almost 11% of the group’s sales, had seen “materially weaker” performance and was now expected to decline organic net sales by more than 20% year on year, in the first half of its financial year.

Diageo said the region was lapping very strong 20% organic net sales growth from the first half of its previous financial year.

Macroeconomic pressures in the region are resulting in lower consumption and consumer downtrading.

It said these impacts were slowing down progress in reducing channel inventory to appropriate levels for the current environment.

Diageo previously said that group-wide sales would see a gradual improvement in from the second half of its 2023 financial year.

While four of its five regions remain on track, the weakness in Latin America and Caribbean means organic operating profit growth for the first half of of its 2024 will decline compared to the first half of 2023.

Across other regions, it expects to continue to invest additional A&P ahead of net sales and there will be continued, albeit moderating, cost inflation, which will be partially offset by pricing actions.

In the second half of 2024, it expects to see a gradual improvement in organic net sales and organic operating profit growth from the first half while it continues to invest in marketing, and in the business, to drive long-term sustainable growth.

In other regions, it expects to see a gradual improvement in organic net sales in the first half in North America and Africa.

In Europe and Asia Pacific, it sees continued momentum, albeit slower than in the second half of 2023. In Europe, growth continues to be strong despite geopolitical tensions escalating in the Middle East.

Diageo shares have slumped 11.4% to 2,875.2p this morning.

Morning update

The FTSE 100 has dropped 0.5% this morning back to 7,418.5pts.

Along with Diageo, fallers include Ocado, down 6% to 512.4p, Just Eat, down 3.9% to 1,098.1p and THG, down 2.8% to 67.9p.

Risers include Naked Wines, up 2% to 30p, Hilton Food Group, up 0.9% to 692p and McBride, up 0.8% to 50p.

Yesterday in the City

The FTSE 100 closed yesterday up 0.7% at 7,455.7pts.

After trading updates yesterday, fallers included Domino’s Pizza Group, down 6.9% to 345.8p and B&M European Value Retail, down 3.1% to 521.2p.

Other fallers included Hilton Food Group, down 2.8% to 686p, C&C Group, down 2.4% to 140.4p, Imperial Brands, down 0.8% to 1,786.5p and Kerry Group, down 0.6% to €74.00.

WH Smith was up 5.1% to 1,249p after issuing its own annual results.

Other risers included Premier Foods, up 3.7% to 129p, SSP Group, up 3.1% to 197.6p, Naked Wines, up 3% to 29.4p, Pets t Home, up 2.9% to 303.4p, Just Eat, up 2.5% to 1,143p and Fever-Tree, up 2.4% to 1,126p.