Diageo – which owns Guinness, Johnnie Walker, Baileys, Smirnoff and Captain Morgan – saw operating profit fall to $4.3 billion due to “exceptional impairment and restructuring costs” as well as “unfavourable foreign exchange and a decline in organic operating margin”.
Meanwhile, reported net sales declined 0.1% year-on-year to $20.2 billion.
The news comes less than a month after CEO Debra Crew stepped down by mutual agreement, with former CFO Nik Jhangiani taking on the role on an interim basis. Deirdre Mahlan has since been named as interim chief financial officer with a search for a permanent CEO ongoing.
Commenting on the results, Jhangiani said it had been a “challenging year” for Diageo and that there is work to be done across its portfolio of brands.
“While we are encouraged by areas of progress and the standout performance from Don Julio, Guinness and Crown Royal Blackberry, there is clearly much more to do across our broader portfolio and brands,” Jhangiani explained.
“We recognise the need to drive meaningful growth opportunities in an evolving TBA landscape, and we are sharpening our strategy to accelerate growth.”
Over the next three years Diageo is aiming to save close to $625 million, part of its Accelerate programme which is focused on productivity, driving cash and growth.
In 2025/26, the firm projects organic operating profit growth to be mid-single-digit, including the impact of tariffs as at this time.
“While macroeconomic uncertainty and the resulting pressure on consumers continues to weigh on the spirits sector, we believe in the attractive long-term fundamentals of our industry and in our ability to continue to outperform as the TBA landscape evolves,” Jhangiani continued.
“We are focused on what we can manage and control and executing at pace. The Board and management are committed to delivering improved financial performance and stronger shareholder returns on a sustained basis.”
Reacting to Diageo’s results, F&B sector analyst Julian Wild explained that the figures were better than the market feared, which has resulted in a share price rise.
“There are lots of headwinds, not least US tariffs and a general flatness in the spirits sector,” Wild added.
“Diageo has a cost-cutting and asset sale plan and it will be for the new leadership team, when appointed, to deliver on a slimmer cost base.
“Overall, Diageo is in a relatively good place and, whilst the outlook is a modest rise in sales and profitability, the right levers are being pulled.”
