LONDON (ShareCast) - (Sharecast News) - Beverages giant Diageo has pulled its medium-term guidance ahead of incoming tariffs on Mexican and Canadian imports by the Trump administration, saying it cannot yet accurately predict how additional duties will affect its financial performance.
At the weekend, Donald Trump announced the implementation of 25% tariffs on goods imported into the US from Canada and Mexico, with both countries promising to impose retaliatory protectionist measures on US products in response.

Diageo's tequila portfolio, which given geographic origin requirements must be made in Mexico, and its Canadian whisky brands would be mainly affected by the protectionist measures, the spirits manufacturer said on Tuesday.

"Announcement of these tariffs and the potential for further developments increases the complexity in providing updated guidance given this evolving situation. In particular, while we are encouraged by the momentum built in H1, building on this may be more challenging as we work through the disruption from these developments," Diageo said.

The company said it would update the market with guidance when it can more accurately assess the impact of tariffs.

The news came as Diageo published its interim results, which showed that FX movements dented both sales and profits in the first half ended 31 December.

Reported net sales were down 0.6% at $10.9bn, as unfavourable FX offset a 1.0% increase in organic net sales. Operating profit was down 4.9% at $3.16bn, weighed down by FX as well as a 132-basis point decline in operating profit margins to 30.3%.

Nevertheless, the company reported a resilient performance amid a "challenging industry backdrop as consumers continue to navigate through inflationary pressures", said chief executive Debra Crew.

"Growth in four of our five regions was supported by market share gains. Notably, in North America, we outperformed the market with high quality share growth and positive organic net sales growth, driven by strong execution and momentum in Don Julio and Crown Royal."

For the second half, Diageo had expected to build on first-half momentum and deliver a sequential improvement in organic net sales growth, but said: "The confirmation at the weekend of the implementation of tariffs in the US could however impact this building momentum. We still expect to continue to deliver strong market share performance."

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