5th Aug 2025 09:46
(Alliance News) - Diageo PLC on Tuesday reported a decline of more than a third in its bottom line in the financial year that ended in June, as a slight decline in net sales was compounded by impairment and restructuring costs, unfavourable currency movements, and narrowed operating margins.
Even so, the London-based brewer and distiller, which owns brands ranging from Guinness stout to Johnnie Walker whiskey, said its results were in line with guidance.
There were "areas of progress", including booming sales of Guinness and of Don Julio tequila, Interim Chief Executive Nik Jhangiani said, but "there is clearly much more to do across our broader portfolio and brands".
Jhangiani, previously Diageo's chief financial officer, took over as interim CEO last month after Debra Crew departed immediately as CEO "by mutual agreement" amid profit warnings and a share price decline.
"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," Jhangiani said.
Diageo said net sales were USD20.25 billion in the financial year that ended June 30, down 0.1% from USD20.27 billion the year before. Organic growth was 1.7%, however, it said.
Pretax profit was USD3.54 billion, down 35% from USD5.46 billion in financial 2024. Exceptional operating items cost Diageo USD1.37 billion in the recent year, compared to a gain of USD56 million on the same line the year before. Non-operating exceptional items were another USD220 million hit, compared to a USD70 million cost in financial 2024.
However, operating profit before exceptional items was USD5.70 billion, down 4.1% from USD5.95 billion, though down just 0.7% organically. Operating profit margin before exceptional items was 28.2%, narrowed by 68 basis points.
Both net sales and adjusted operating profit were slightly better than market expectations. These had been USD20.20 billion for net sales and USD5.65 billion for adjusted operating profit.
Drinks volume was down 0.2%, though up 0.9% on an organic basis. By region, organic volume was down 0.8% in North American and 4.3% in Europe, but up 3.9% in Asia-Pacific, up 3.2% in Latin America and Caribbean, and up 3.7% in Africa.
By product category, organic volume was down 2% for Scotch, 4% for vodka, 3% for rum and 1% for gin, but up 15% for tequila and 5% for both Canadian whisky and Chinese white spirits. Don Julio tequila volume was up 41%. Beer volume was up 6% organically, with Guinness stout up 14%.
Looking ahead, Diageo on Tuesday said it expects organic sales growth in financial 2026 to be similar to what it recorded in financial 2025. Organic operating profit growth is expected to be in a mid-single-digit percentage, with the company saying this forecast includes the impact of tariffs as they currently stand.
Diageo declared a 62.98 US cents final dividend, unchanged on a year before. This gives a full-year dividend of 103.48 cents, also unchanged.
Diageo shares were up 6.7% to 1,936.00 pence, the third biggest gainer in the FTSE 100 index, itself up 0.3%.
By Tom Waite, Alliance News editor
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