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Johnnie Walker drinks giant Diageo today saw its shares tumble as it slashed full-year profit targets.
The shares fell more than 4% - by 44p to 953p - as chief executive Paul Walsh said he was reducing his earnings goals for this year because of concerns about the strength of the world economic recovery.
Having already cut its targets for operating profit growth from between 7% and 9% to between 4% and 6% in February, Walsh today lowered that expectation to "low single-digit" percentage growth for the financial year ending in June 2010.
"While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery and the current year will be challenging," Walsh said.
Part of the problem was that the company was entering a period with tough comparatives from the highly profitable months a year earlier.
But Diageo has seen sales growth tipping downwards over the past year as the economic crisis stopped people drinking its high-end brands and trade down to cheaper alternatives.
Underlying turnover was flat in the year to the end of June although underlying operating profit increased 4% thanks largely to the weak pound and cost-cutting measures.
A star performer was its Ketel One vodka brand, in which it bought a 50% stake last year just as rival firms were bidding to spend far bigger money on the Absolut vodka brand.
Johnnie Walker and Baileys, however, suffered badly from the trend for trading down.
Walsh said he remained ready to seize takeover opportunities, adding further fuel to speculation that the company may be looking at bidding for Moët champagne or Jose Cuervo tequila.
There had been talk that the group would bid for the rest of LVMH's drinks unit, of which it currently owns a third.
Walsh said: "If something comes along that is of strategic importance we will move."
Shares in Diageo have underperformed the Footsie by 6% this year but have fared better than rival Pernod Ricard, which said last month that it would post flat sales for the year.
