Diageo led the FTSE 100 fallers this morning after its shares dropped almost two per cent following a trading update.
Although Diageo said it was trading in line with expectations, investors were spooked by a jump in Sterling today and the impact of factors which are set to push growth into the second half of this year.
Diageo pointed to a ban on alcohol sales near highways in India as having an impact on performance in the region, while the later timing of Chinese New Year is set to also affect the phasing of growth.
Analysts at RBC Capital Markets said there was nothing "sinister" about the flagged events, but "given that both of these were known about at the time of the full year results back in July we wonder why it wasn’t pointed out then."
Analysts at Jefferies said the drop of 2.7 per cent today was part of a share de-rating as new chairman Javier Ferran signals change for the company, which analysts said is on the brink of "the start of a new chapter".
In a presentation to analysts yesterday afternoon, the company also highlighted some challenging conditions in Europe, Russia and Turkey.
Analysts at Liberum commented: "Price/mix has been rather anemic over the past three years and management is cautiously guiding low-single digit top line growth in this context. We see no imminent signs of meaningful recovery in the region."
The trading update comes ahead of Diageo's AGM today.
Chief executive Ivan Menezes said: "Underlying momentum and progress in implementing productivity gives us continued confidence in our ability to deliver sustainable growth. We re-affirm our expectation of mid-single digit top line growth and 175bps of organic operating margin improvement over the three years ending 30 June 2019.”