Guinness-owner Diageo posts 28% decline in profit following 'challenging' year

Irish Examiner

12 hours ago

Guinness-owner Diageo has posted a near 28% decline in operating profit during its latest financial year as the company faced slower sales, restructuring costs, and unfavourable foreign exchange rates.
In its preliminary results for its 2025 financial year ending on June 30, Diageo reported net sales of $20.2bn (€17.45bn) - down 0.1% compared to the previous year - with the company citing unfavourable foreign exchange as well as acquisition and disposal adjustments.
The company's operating profit fell to $4.3bn - down 27.8%. It said this was primarily due to exceptional impairment and restructuring costs, unfavourable foreign exchange and a decline in organic operating margin.
In January, the company also raised prices on pints of Guinness as well as its other brands marking the fourth price hike in two years.
Diageo's net cash flow from operating activities increased by $200m to $4.3bn. Its net debt as of the end of June was $21.9bn.
The company recommended a full-year dividend of $1.03 per share.
Interim chief executive of Diageo Nik Jhangiani said the fiscal year had been "challenging" but the results were 'in line with our guidance'.
'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,' he said.
'We are also committed to strengthening our balance sheet and expect to deliver around $3bn free cash flow in fiscal 26, increasing financial flexibility whilst continuing to invest for longer term growth.'
In terms of its outlook for the current financial year, the company said it is focused on driving productivity and meeting its cost savings target which has increased from $500m to $625m.
'In fiscal 26, expect organic sales growth to be similar to fiscal 25 and organic operating profit growth to be mid-single-digit, including the impact of tariffs as at this time,' the company said.
However, the company will now have to contend with the new tariff regime implemented by US president Donald Trump which could impact sales in one of its biggest markets.
Despite the economic uncertainty, and the mounting pressure on consumers, Mr Jhangiani said he 'believe in the attractive long-term fundamentals of our industry and in our ability to continue to outperform' the rest of the industry.
'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.'
There has been turmoil at Diageo in recent weeks following the shock departure last month of its chief executive Debra Crew after a bruising run in which the company's stock has plummeted.
Her tenure has been punctuated by setbacks including a drop in sales on cooling demand in China and the US, and a profit warning after being caught out by piles of unsold inventory in Mexico and Brazil.
The company was forced to scrap its long-held medium-term sales target in February as a result of higher trade friction denting consumer confidence.