The pitfalls of operating in emerging markets certainly show up in global distiller and brewer Diageo 's (DGE) numbers. The top line showed signs of life on a constant currency basis, and excluding M&A, with organic net sales up 2 per cent. But having exposure to countries such as Nigeria and Russia - which have seen substantial weakness in the naira and rouble in the past year - meant reported profits fell. Management expects exchange rates to hit net sales by roughly £260m this financial year.
Developing economies are supposed to be the growth engine behind Diageo, but constant currency net sales in Africa rose just 3 per cent, as the 15 per cent growth in beer turnover was offset by a decline in scotch. Asia's sales growth was also meagre at 2 per cent on the same basis but a plus point here was the 18 per cent rise in underlying operating profit. Chief financial officer Kathryn Mikells said pricing across Asia has been good meaning margins had "improved strongly" thanks largely to performance in India and its increased stake in United Spirits. Meanwhile, revenues in its largest market, the US, fell by 2 per cent.