Diageo faces a possible hit of as much as $600 million (€585 million) from US president Donald Trump’s new tariffs on goods from Mexico and Canada.
“In the short term a significant impact on Diageo is likely,” Goodbody analyst Fintan Ryan said in a research note. “Tequila accounted for 11 per cent of group sales in full year 2024 and Canadian whisky was 6 per cent – the majority of the sales in both these categories come from the US,” he added.
The estimates highlight the potential impact on a wide range of businesses from the tariffs. Goodbody estimates the gross impact of the proposed tariffs on Diageo, excluding any mitigations or pass-through, would be $500-600 million on an annualised basis
Diageo shares fell 3.8 per cent on Monday.
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Meanwhile the Northern Ireland arm of the drinks giant more than tripled its profits last year, the group’s latest set of accounts show.
Diageo Northern Ireland made £7.8 million (€9.3 million) in the 12 months ended June 30th, 2024, which was up from a profit of £2.3 million the year before.
The directors said they considered both the results for the year and the group’s trading prospects to be “satisfactory”.
Turnover at the group increase by 5 per cent to £190 million, while cost of sales increased by 3 per cent to £75 million. The Guinness-maker paid a dividend of £9.2 million during the year, which was up from £6.5 million the year before.
The group’s total assets decreased by 3 per cent to £43.4 million, while net assets decreased by 14 per cent to £8.2 million. Total liabilities decreased by £200 million, driven by an increase in current liabilities.
In the accounts, which were filed before President Trump imposed the tariffs, the group highlighted the changing political landscape globally and the threat of tariffs as a key risk to its business.
“Failure to react quickly enough to changing economic and/or political conditions, such as inflationary pressures, currency instability, global trade tensions, heightened political protectionism, changes to customs duties and tariffs and or eroded consumer confidence may impact on the freedom to operate In a market and could adversely impact financial performance,” the group said.
The group also highlighted cyberattacks as one of the key risks facing the business. It said they were becoming “more prevalent” and that there was an increased dependency on third-party IT services and solutions.
“As geopolitical tensions are growing, there is a risk in more sophisticated cyber threats affecting all organisations,” it said. “Therefore, the risk of a cyberattack is heightened.
“The group has strong enterprise-wide cyber risk management processes and policies, and next-generation security technologies, to tackle advanced attacks. There is IT and operations technology disaster recovery and business continuity testing across the key systems.
“The group continues to enhance and deploy next-generation security technologies to tackle advanced attacks and upgrade the enterprise resource planning system and associated processes to ensure they remain resilient.”
The average number of employees at the company during the year was 130, which was down one person. The company spent £7.6 million on staff over the year, which was up from £6.6 million the year before.
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