Diageo Warns on Profit Due to 20% Latin America, Caribbean Sales Decline

Diageo, the maker of Johnnie Walker whisky, has issued a profit warning due to a significant decline in sales in Latin America and the Caribbean, causing its shares to drop by 36% this year. The company expects organic operating profit growth to decline in the first half of its current financial year, with sales in Latin America and the Caribbean forecasted to fall by over 20%. This has led to a cut in the company's mid-term outlook, with a revised EBIT growth of 5-7% compared to the previous 6-9%. Despite this, Diageo is still gaining market share in most of its categories in other regions and is considered cheap at 20x FY19 EPS, offering a potential total return of 64% and 20% IRR.