Diageo (NYSE: DEO), which owns Guinness, Johnnie Walker whiskey and Smirnoff vodka, warned that the spread of coronavirus in China and around Asia could knock up to £200m off its 2020 profit as pubs and restaurants remain shut.
It estimated the negative impact of the virus on the group’s organic net sales and organic operating profit of between £225-£325m and £140-£200m respectively.
Diageo share price plummeted sharply from around $170 at the beginning of the year to $150 at present amid trader’s concerns over the negative impact of coronavirus spread.
The bars and restaurants account for the majority of revenue, which are mostly closed in several key provinces of China over the past month. “We have seen significant disruption since the end of January, which we expect to last at least into March,” the company said. “Thereafter we expect a gradual improvement, with consumption returning to normal levels towards [June].”
London-listed Diageo has also seen sales decline in key markets such as South Korea, Japan, and Thailand.
The impact of the Cocoronavirus has ripped through US financial markets this week. The US S&P 500 has lost $1.7trn in value over the last two days alone. This indicates a loss of close to 6%, the largest two-day loss since August 2015. Dow Jones Industrial average also lost close to 5% of value in the last couple of days while NASDAQ plunged almost 8%. All three major indices turned negative for this year following the latest selloff.
However, a safe-haven commodity such as gold has seen its price increase at a robust pace, representing investors rush towards these assets. Gold is currently trading around $1,655 per ounce after hitting a seven-year high in Monday trading.