Diageo, the Johnnie Walker and Guinness producer, has announced a plan to save $1 billion over three years after operating profit fell 27.2% in the first half.
The cuts will come from operating framework redesign ($850 million) and supply chain initiatives ($150m), with total restructuring costs of around $1.2bn.
The distiller and brewer posted a 3% fall in net sales to $19.64 billion due to weakness in North America and Asia Pacific, though Europe, LAC, and Africa showed growth.
Reported operating profit fell 27.2% to $3.156bn, largely becauseof $0.9bn in restructuring charges and $1.5bn in impairment charges, primarily related to Türkiye and brand write-downs.
However, adjusted operating profit increased by 2.0% to $5.683bn, with an improved margin of 28.9% and the company recommended a full-year dividend of 50 cents per share, in line with its new policy.
Sir Dave Lewis, chief executive, who will outline his plan at a capital markets day, said: “We look forward to meeting with shareholders this afternoon to share the progress we’ve made over the past six months, the strategic direction we have chosen, and to provide medium-term guidance.
“This new strategy, executing with a new, more agile, competitive and cost-effective operating model, gives us confidence that we can return Diageo to a business consistently creating value for shareholders.
“We remain a business with a very strong premiumisation agenda, but by activating our wider portfolio, we will be able to serve more consumers, across a variety of occasions.
“There is hard work ahead, particularly in North America, where improving performance is a clear priority, but we are confident we can deliver without taking a step back in operating profit. The team and I look forward to sharing more this afternoon and to the work ahead.”
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