Diageo: Brexit impact ‘neutral to positive’

Brexit’s impact on Diageo will be “neutral to positive” depending on the UK Government’s ability to secure free-trade deals with other nations, the group’s CEO has said.

Ivan Menezes believes the drinks industry has received a “tremendous” amount of support from the UK government

Speaking in London following the publication of his firm’s H1 2017 financial results today, Ivan Menezes said the industry had received a “tremendous” amount of support from Theresa May’s government as the UK prepares to leave the European Union.

“[T]he clarity on Brexit we now have is very helpful,” he said. “The impacts are neutral to positive depending on when we open up markets and FTA agreements.

“I would say that we are getting a tremendous amount of support from the May government. The key here is opening up export markets and creating the conditions for Scotch to thrive.”

Menezes said that India should be a priority for the UK to target a FTA due to its high import tariffs, adding that the UK “could move ahead of the EU” in securing a deal.

However, the CEO said he would like to see an FTA for all spirits imported into India, rather than just those from the UK.

John Kennedy, Diageo’s president of Europe, Russia and Turkey, also said he doesn’t expect the devaluation of the pound sterling will lead to significant price increases.

“We are a global company so don’t make immediate moves on currency,” he said. “We manage it on a global basis.”

Diageo expects that in its full 2017 fiscal year, the strengthening US dollar against the euro will enhance net sales by £1.4bn (US$1.7bn) and operating profit by about £460m (US$582m).

Menezes said of the company’s overall performance in H1 2017: “We have gone through a lot of changes on how we operate around the world and it’s pleasing to see that momentum come through.

“The world is still choppy and it’s not easy, but our resilient performance reflects the strength of our company.”