Diageo delivers on annual forecasts, shares jump
Shares in the world's top spirits maker rose over 6% in early trade, after Diageo also reported full-year profit ahead of expectations for its 2025 financial year, which ended in June.
The maker of Johnnie Walker whisky and Smirnoff vodka has been battling with prolonged sales weakness, worries about its management and ever-changing U.S. tariff threats.
Following the surprise exit of former CEO Debra Crew last month, it is now looking for a new CEO, opens new taband finance chief, opens new tabto turn around its performance, and guide it through a plan announced in May to cut costs and make substantial asset sales by 2028.
Interim CEO Nik Jhangiani told journalists on a call that the board is working quickly and he expected a decision on who will take the helm permanently by the end of October.
"We have delivered what we said we would deliver," he said of the company's full-year performance, adding however there was a lot more to do to get the company back to full potential.
All spirits makers have struggled amid prolonged, industry-wide sales declines as high interest rates and inflation have hit consumers' wallets.
Diageo's shares have been hammered in recent years, losing 30% of their value this year alone and an even steeper decline since highs seen in 2022, when spirits sales were booming.
Rising competition from alternatives like cannabis drinks, shifts towards drinking less, the emergence of weight-loss drugs and threats of steep tariffs in the U.S., Diageo's largest market, have also made investors nervous.
Analysts said Diageo's performance and outlook for its current financial year were encouraging in a difficult environment, and in line with forecasts.
"These results might not be awesome in our opinion, but they fulfil the first criteria of consumer staples companies in that they were as expected," James Edwardes Jones, analyst at RBC Capital Markets, said in a note.
Diageo forecast organic sales would fall slightly in the first half of its 2026 financial year - which runs to end-June 2026 - with growth more weighted towards the second half.
It increased the estimated impact of tariffs for the year from $150 million previously, and also increased its cost savings target to $625 million, about $125 million more than its previous aim.
Diageo faces tariffs of 10% and 15% on the United Kingdom and European Union under trade deals brokered with Washington, though spirits companies still hope to win an exemption in talks with the EU.
Organic sales increased 1.7% in fiscal 2025, beating analysts' average forecast of 1.4% in a company poll.
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