Diageo extends terms of payment to 90 days
Globally, Guinness’ net sales declined 4 percent in the six months to December 2014, driven by a weaker performance in Nigeria, Indonesia and Britain, and the drinks company’s suppliers are going to feel the heat. Diageo, which owns Guinness beer has around 200 Irish suppliers, is extending its standard repayment term to 90 days from 60 days, Irish media reported on 30 January 2015.
That will put significant pressure on suppliers’ budgets as it will slow the flow of cash into their business.
Diageo said: “We have written to all our key manufacturing suppliers to make them aware that from 1 February 2015 we are moving where possible to a different procurement process of 90 days payment terms for future tenders. Current payment terms with suppliers remain unchanged.”
The company said it would not look to move suppliers to the new arrangements unless an agreement is reached.
Reporting half year figures (until end of December 2014) on 29 January 2015, Diageo said that operating profits fell 18 percent to GBP 1.7 billion (USD 2.6 billion). Net sales dipped 1 per cent to GBP 5.9 billion (USD 8.9 billion).
Sales in North America, by some distance Diageo’s biggest and most profitable region, declined 2 percent in the period. Diageo called a slowdown in the U.S. spirits industry just before Christmas and has admitted its Smirnoff brand has struggled in the past year.
