Diageo share price plunges on SEC probe revelation

on Jul 24, 2015
Updated: Oct 21, 2019

Diageo’s (LON:DGE) share price dipped this morning, after the UK’s largest spirits maker emerged as a subject of a US regulatory probe. The Securities and Exchange Commission (SEC) is investigating if the company has been shipping excess inventory to distributors to boost its results, the Wall Street Journal first reported yesterday, citing people familiar with the matter.

The maker of Smirnoff vodka and Johnnie Walker whiskey confirmed that it had received an inquiry from the SEC regarding its distribution in the US. “Diageo is working to respond fully to the SEC’s requests for information in this matter,” a company spokeswoman said, while the SEC declined to comment.
North America accounts for about a third of Diageo’s $17.58 billion in sales and around 45 percent of operating profit. Sales have been in decline in the region since 2011. Sending more product to distributors than they had ordered could potentially have allowed Diageo to report increased sales and shipments data, according to regulators.

Next week, Diageo will release its second-quarter results and is likely to be quizzed further by shareholders and analysts about the SEC inquiry. In April, the FTSE 100-listed group said net sales fell 0.7 percent in the third quarter, weighed down by flagging global demand and the after-effects of a weak economic recovery.
Diageo’s US-listed shares fell four percent to $114.90 in New York after news of the SEC probe broke yesterday. In London trading today, the group’s share price had fallen 1.26 percent to 1,882.50p by 10:32 BST. The stock has been relatively flat so far this year, having gained just around two percent since January.
As of 10:57 BST, Friday, 24 July, Diageo plc share price is 1,882.25p.

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