The Johnnie Walker whisky maker is the latest company to pull its guidance as the closure of bars and restaurants around the world due to lockdowns imposed by governments hit its sales.
Production facilities in many countries including India and in its key markets of Africa are closed, while in the United States - its biggest market - the closure of bars and restaurants in most states was impacting about 20% of its business there, the company said.
Its shares were, however, up 2.4% in early trade after the company said it would pay its interim dividend in April as planned.
Diageo also said it was seeing a small pickup in sales in retail stores in the United States and Europe in recent weeks, as more people drink at home. Online seller Naked Wines also said it was seeing a boost in business as Britons and Americans order more home deliveries. Consumption in mainland China was slowly recovering with the gradual opening of bars and restaurants, Diageo said in a statement, though global travel retail spending continued to be subdued.
PACE OF RECOVERY
The company in February had estimated that the spread of coronavirus in greater China and the Asia Pacific region could knock up to $260 million off its profit in 2020.
"Given the global nature of the COVID-19 pandemic, and the uncertainty around the severity and duration of the impact across multiple markets, we are not in a position to accurately assess the impact of this on our future financial performance," the Tanqueray gin maker said.
The company had estimated annual underlying net sales growth to be about 2% and earnings before interest to be flat to up 2%, according to analysts.
French spirits company Pernod Ricard and Budweiser beer maker Anheuser-Busch InBev have in recent weeks estimated that the impact from the coronavirus pandemic would reduce current quarter profits by 20% and 10%, respectively.
"(Diageo's) withdrawal of guidance for 2020 (is) not a surprise," Jefferies analyst Edward Mundy wrote in a note.
"Debate will turn to pace of recovery in 2021, which we think is unlikely to be v-shaped given some continued impact on consumption patterns...and destocking risk"
Diageo said it was stopping advertising and promotion "that would not be effective in the current environment" and deferring discretionary capital expenditure projects in an effort to shore up cash.
It recently completed a 1.9 billion pound euro and sterling bond issue and said it had committed bank loans of 2.8 billion.
Diageo also said it was suspending its three-year multi-phase 4.5 billion pound shareholder returns programme for the rest of the year. In its first phase that ended on Jan. 31, the company had paid out 1.25 billion in the form of buybacks.
(Reporting by Siddharth Cavale in Bengaluru, Editing by Saumyadeb Chakrabarty and Emelia Sithole-Matarise)
By Siddharth Cavale