World spirits giant Diageo released disappointing earnings figures Thursday in London, reporting annual profits of 3.12 million pounds, or $5.3 billion, down 10 percent from the previous year.
Diageo is the world's largest spirits maker by sales, with net sales of more than $17.3 billion, down 9 percent from the previous year. Diageo makes Johnnie Walker scotch, Crown Royal Canadian whiskey, Smirnoff vodka, Captain Morgan rum, Bailey's liqueur, Don Julio tequila, Tanqueray gin and Guinness stout.
But there were bright spots: Net sales of Diageo's Bulleit bourbon rose 69 percent, the company reported. Diageo plans to build a $115 million distillery in Shelby County, and a tourist attraction in Louisville.
"Our business has faced macroeconomic and market-specific challenges," CEO Ivan Menezes said. "But we have gained share and expanded margin."
The company attributed the lackluster overall returns to difficulties in China, where a government anti-extravagance campaign has hurt sales of a traditional Chinese spirit called baiju; in Venezuela, where Scotch sales fell 47 percent because of currency devaluation and inflation; and in Africa, where Nigeria's beer market declined 9 percent.
Sales in Russia also slowed to 2 percent growth, and Diageo said the "crisis in Ukraine impacted growth in the rest of Diageo's distributor markets in Eastern Europe."
Diageo did not provide a forecast for the current year but said emerging markets are expected to improve in the second half of the year.