DIAGEO CHIEF LEWIS UNVEILS £740M COST-CUTTING PLAN

Dave Lewis, chief executive of Diageo, has pledged to cut $1 billion in costs over the next three years to revive the drinks giant. The restructuring programme, worth £740 million, is expected to include major job cuts and supply chain reorganisation. Diageo's share price rose 8 per cent following the announcement. Lewis, formerly chief executive of Tesco, is tasked with turning around the FTSE 100 group, which owns brands including Guinness, Johnnie Walker whisky and Smirnoff vodka.

Diageo reported a 2 per cent fall in sales over the year to June 30, with volume sales down 4 per cent. The company said growth in Europe and Africa was outweighed by weaker trading in North America and Asia Pacific. Guinness sales performed strongly in the UK and Ireland, but spirits sales struggled in North America. The business announced a final dividend of 30 cents per share, down from 62.98 cents per share last year, with a full-year dividend of 50 cents per share to be proposed at the annual meeting in November. Reports suggest restructuring plans include halving some teams and closing certain offices.

Lewis's strategy will centre on making Diageo's portfolio more competitive. Full details of the cost-cutting programme are expected to be presented shortly after the initial update. The announcement represents a significant shift in direction for the multinational drinks producer as it seeks to restore profitability and shareholder confidence.