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Diageo stock is pounded
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September 24, 1998: 1:01 p.m. ET
Company's shares dive 5 percent amid worries about global crisis
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NEW YORK (CNNfn) - Shares of food and beverage giant Diageo PLC were hammered Thursday amid fears future earnings will be hit hard by economic crises in Latin America and Asia.
On the London stock exchange, the company's shares were off more than 5 percent, or 30 pence, at 488 by midday.
On the New York Stock Exchange, Diageo (DEO) stock fell 4.95 percent, or 1-13/16, to 34-13/16 early Thursday afternoon.
Diageo reported annual earnings in line with estimates, but a continuing decline in global whiskey sales and a warning from its North America food division, Pillsbury, unnerved investors.
"Eventually, the effects of what is happening in Asia and Latin America, if it does get worse, will feed through," Chief Executive John McGrath said.
But McGrath insisted the world's largest alcoholic beverages maker is in "good shape" to take on whatever is thrown at it.
While Asian sales are poor, they haven't got any worse, he added.
Diageo reported earnings before tax and exceptional items of $3.12 billion (1.850 billion pounds) in the year to June, compared with a pro forma $3.25 billion (1.93 billion pounds) the previous year.
But the Pillsbury division, which makes Haagen Dazs ice cream, Green Giant vegetables and Old El Paso Mexican food, warned of lower earnings in the first half if sales don't improve.
On a more positive note, Diageo said its merger late last year of Guinness and Grand Metropolitan resulted in cost savings of $489 million (290 million pounds), well above most brokers' estimates of $422 million (250 million pounds).
When the merger was announced, the company said it would achieve $330 million (195 million pounds) savings in the third year.
The merger has resulted in eliminating duplication in the wine and spirits division among Guinness, Grand Metropolitan and French partner LVMH Moet Hennessy Louis Vuitton in 55 markets around the world. 
-- from staff and wire reports
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Diageo
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