This is assuming that the current 10% tariff on UK and European imports into the US remains in place and that Mexican and Canadian spirit imports into the US remain exempt under the United States–Mexico–Canada Agreement.
Diageo – which owns drinks brands including Guinness, Captain Morgan and Smirnoff – hopes to be able to mitigate approximately half of the impact of tariffs on its operating profit moving forward, and said that it will continue to explore further measures that will reduce the effect of tariffs on its core business.
This process will be supported by a close to $500 million cost savings programme.
The firm made the announcement alongside its Q3 trading update, in which it restated its organic net sales and operating profit guidance for the full year.
This is after reported net sales for Q3 increased by 2.9% year-on-year to $4.4 billion, while organic net sales were up 5.9% in the quarter.
Chief executive Debra Crew said that she continued to believe in the “long-term fundamentals” of the alcoholic drinks industry and in Diageo’s ability to outperform the market.
“In the third quarter we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 25,” Crew commented.
“We also reiterated our organic operating profit outlook for fiscal 25, including the impact of tariffs based on what we know at this time
“We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery.”
Crew also touched on the launch of phase one of its Accelerate programme, with further details set to be shared alongside Diageo’s full-year results in August.
“This sets out clear near-term cash delivery targets and a disciplined approach to operational excellence and cost efficiency,” she added.
“It will strengthen Diageo by increasing our effectiveness, agility, and resilience. It will also ensure that we are well-positioned to deliver sustainable, consistent performance while maximising shareholder returns; even if current trading conditions persist.”
