Diageo share price subdued as group posts trading statement

Diageo’s (LON:DGE) share price has slipped marginally lower in today’s session, as the company updated on its recent trading, saying that it was not ‘immune’ to changes to global trade policy. The Johnny Walker and Smirnoff maker, however, said that its 2020 fiscal year had started well.

As of 11:50 BST, Diageo’s share price had given up 0.34 percent to 3,258.50p, underperforming the broader London market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.58 percent higher at 7,356.44 points. The group’s shares have added just under a quarter to their value over the past year, as compared with less than a one-percent gain in the Footsie.

Diageo updates on trading

Diageo’s chief executive Ivan Menezes said in a statement this morning that the company’s fiscal 2020 year had started well and that based on the current environment, it continued to expect organic net sales growth to be toward the mid-point of the four percent to six percent range and organic operating profit growing roughly one percentage point ahead of organic net sales.

Due to a strong prior year comparable, the company expects its first-half organic operating profit growth to be in-line with or slightly behind organic net sales growth. Menezes, however, cautioned that Diageo “would not be immune from significant changes to global trade policy and continue to monitor this closely”.

Today’s statement comes after the maker of Johnny Walker and Smirnoff posted its full-year results in July, posting a 5.8-percent rise in reported net sales, with organic growth partially offset by acquisitions and disposals.

Analysts on blue-chip group

Liberum Capital reaffirmed the Johnny Walker as a ‘hold’ today, without specifying a target on the Diageo share price, while Shore Capital placed the company ‘under review’. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 3,388.93p.