LONDON (Reuters) - Diageo (L:DGE), the world's largest distilled drinks maker by sales, posted weaker-than-expected earnings on Thursday, hurt by a slowdown in China and volatility in other emerging markets.
Over the last year, the maker of Johnnie Walker Scotch whisky, Smirnoff vodka and Guinness stout has grappled with a host of issues in emerging markets - including currency devaluations, a tax increase on one of its beers in Kenya and a steep decline in sales of Chinese baiju spirit, due to government-enforced austerity measures.
That decline led the company to take a writedown on the value of its business, worth about 79 million pounds on a net basis.
Diageo reported earnings of 95.5 pence per share before exceptional items for the full year ended June 30, down from 103.1p a year before and below analysts' forecasts around 97.7p.
Net sales fell 9 percent to 10.3 billion pounds, while the average forecast was 10.5 billion, according to Thomson Reuters data.
Diageo did not provide a forecast for the current year, but Chief Financial Officer Dierdre Mahlan told reporters trading in North America and western Europe should continue in a similar trend as recently, though emerging markets should improve, probably in the back-half of the year.
"While we expect those to improve, the top line performance will be dependent, to some degree, on how quickly those economies come back," Mahlan said.
Sales volume, which measures the amount of drinks sold, fell 5 percent in Diageo's Asia Pacific and Africa, eastern Europe and Turkey divisions and 1 percent in North America and Latin America. Western Europe was flat.
Weak spots include China and southeast Asia, where volume fell 20 and 25 percent respectively, and Venezuela, where a currency devaluation and inflation cut Scotch sales 47 percent.
(Reporting by Martinne Geller; Editing by Jane Merriman and David Holmes)