DIAGEO ANNOUNCES £1BN TURNAROUND PLAN AS SALES DECLINE

Diageo, the world's largest spirits manufacturer, announced a three-year savings programme worth $1 billion on Thursday, prompting its share price to rise nearly 4% in morning trading. The company, which owns Johnnie Walker, Smirnoff, Tanqueray, Captain Morgan, Don Julio and Guinness, said restructuring costs associated with the programme will total $1.2 billion. Chief Executive Dave Lewis stated the new strategy would establish "a more agile, competitive and cost-effective operating model" and restore consistent shareholder value.

For the year ending 30 June, Diageo reported organic net sales declined 2% to $19.6 billion compared with the previous year. Adjusted operating profit rose 2% to $5.7 billion, driven largely by cost savings that were partially offset by tariffs. The company recorded a 35.1% increase in ready-to-drink beverage and cocktail sales, attributed to the FIFA World Cup and the launch of Casamigos ready-to-serve cocktails alongside strong performance from Bulleit and Ketel One products. Analysts at Citi suggested the results would drive the stock upward, noting that cost savings larger than expected outweighed weaker revenue forecasts, resulting in higher-than-expected operating profits.

Diageo identified maintaining competitive core brands aligned with consumer trends as a key priority. The company plans to deliver savings principally during 2027 and 2028, with additional supply chain benefits anticipated in subsequent years. The programme follows a period of challenging trading across the global spirits sector.