Diageo eyes £625m in cost savings after profits tumble
The London-listed spirits giant said it is seeking to secure £625 million in cost savings, increasing from a previous target of £500 million savings.
Nik Jhangiani, interim boss of the firm, said the savings plan is 'not about job cuts' but added that 'there will be some' as a result. He stressed that the group could still increase its overall workforce.
Diageo said it expects to secure these savings over the next three years from advertising and promotion efficiencies, reduced overheads and supply chain improvements.
The increased savings plans come amid a period of upheaval at the group after the departure of its previous boss last month.
Debra Crew stepped down as chief executive with 'immediate effect' and by 'mutual agreement', following a recent decline in Diageo's share value.
Tariffs, cautious consumer demand and increased cost pressures have weighed down businesses across the drinks industry.
On Tuesday, Diageo reported that net sales dipped 0.1% to 20.2 billion US dollars for the year, although organic sales grew by 1.7%.
It said the drop in net sales was driven by unfavourable currency rates and changes to its brand portfolio.
In Europe, Diageo reported that net sales were up 0.4%, with a 6.7% rise in Great Britain, despite a decline in the volume of sales.
It said stronger sales in Britain were driven by the continued strong demand for Guinness, although this was held back by 'supply constraints' which saw some pubs run short of the Irish stout earlier this year.
The firm revealed that operating profits fell 27.8% to 4.33 billion dollars (£3.3 billion) in the year to June 30.
Mr Jhangiani said: '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 and in our ability to continue to outperform as the TBA (total beverage alcohol) landscape evolves.
'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.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Libya Herald
17 minutes ago
- Libya Herald
Brega begins its fuel truck e-tracking system to counter smuggling
Libya's Brega Oil Marketing Company, the National Oil Corporation's (NOC) subsidiary charged with fuel imports and distribution, announced today that it has started its automated fuel truck tracking system. Brega said the operations and automated tracking room was inaugurated by its Chairman, Fouad Ali Balrahim, in the presence of Board members and several managers and company officials. A quantum leap Brega said the step is a quantum leap in direct communications with the drivers of the company's fuel trucks and immediate response to any emergency faced by the company's drivers, as well as enforcing regulations on speed compliance and good behaviour on the public road. Brega said that among the most important advantages of the system are: * The possibility of direct communication with drivers. * SOS emergency alarm system. * Ability to stop the truck engine remotely. * Accurate identification of cargo unloading locations. The project was implemented under the supervision of the General Directorate of Information and Communications Technology, and will manage the main operations room of the tracking process in cooperation with the departments concerned with controlling the movement of fuel trucks. This project, Brega added, underscores its commitment to digital transformation and enhanced oversight to serve the public interest. If successful, a possible quantum leap in Libya's anti-fuel smuggling efforts? Successive Libyan governments since the 2011 revolution have made unsuccessful efforts to counter the country's huge cross land and sea border fuel smuggling problem. Last month, Naji Issa, Governor of the Central Bank of Libya put the country's annual fuel smuggling bill at about LD 20 billion (US$ 2.7 bn). This equates to about a third of all annual government fuel subsidies. The launch of e-tracking of fuel trucks is part of the government's wider effort to counter this fuel smuggling across land to neighbouring countries and across the sea to states where fuel prices are unsubsidised to the high levels of Libya. A subsidised litre of petrol in Libya today costs LD 0.15 – about US$ 0.02. It will be recalled that in July 2024, Tripoli based Libyan Prime Minister, Abd Alhamid Aldabaiba, and the head of the Audit Bureau, Khaled Shakshak, attended a workshop on launching an enhanced fuel truck tracking and fuel monitoring system on Brega fuel trucks. This ''anti-fuel smuggling system'' involves converting the fuel outlet valves on fuel delivery trucks from simple mechanical valves that can be opened by anyone at any time, to electronic valves that can only be opened at the targeted petrol station. The system also includes an electronic fuel gauge to measure the amount of fuel delivered; electronically sealed fuel inlets and control cameras fitted to the delivery truck. In parallel to this, an electronic gauge is to be installed at the fuel tanks in petrol stations. Formation of a technical committee At the workshop, the Prime Minister directed the formation of a technical committee from all relevant authorities to evaluate the system and the practical steps to be taken to ensure its implementation throughout the country. Fuel consumption quotas for citizens and unsubsidized prices for foreigners Moreover, at the July 2024 workshop, subsequent possible and more advanced phases of the system included fitting electronic fuel pumps at petrol stations that can identify if the refuelling citizen's car has used up its allotted subsidised fuel consumption quota, if it is reported as stollen, or if it belongs to a foreigner. Foreigners could pay higher unsubsidised fuel price The system could be set up so thatforeigners would pay a higher unsubsidized price for petrol. Quotas are the average worked out by the government of how much fuel the average Libyan citizen consumes per day/week/month/year. Fuel consumption quotas are part of the government's plans to reform fuel subsidies by paying citizens directly the average amount of fuel they consume while raising fuel prices. This is to reduce the abusive consumption and smuggling of fuel across Libya's porous borders. . Attorney General holds anti-fuel smuggling high summit Ten expatriates convicted for smuggling 1.185 million litres of fuel off the coast of Zuwara Committee discusses regulation and fuel smuggling prevention system provided by Al-Namaa Oil Investment Company PM Aldabaiba attends workshop on an experiment of an electronic system to prevent fuel smuggling Secular and religious agree on need for Libya's gradual energy subsidy reform IMF study entitled 'Energy Subsidy Reform in Libya' concludes that reform is crucial as subsidies lead to overconsumption and premature resource depletion NOC chairman Bengdara says his organisation is not a security force to combat fuel smuggling ( Aldabaiba forms ministerial committee to study mechanism for fuel subsidy reform – again ( Supreme Council for Energy adopts NOC 2023-2027 plan, including alternative energy project ( Attorney General bans 15 petrol stations for fuel smuggling abroad ( Prosecutor orders fuel supply ban on 32 petrol stations accused of complicity in fuel smuggling ( Upon Attorney General's order, Brega stops supplying 32 petrol stations accused of fuel smuggling ( At Gharian cabinet meeting, Aldabaiba explains fall in black-market value of dinar and resounds alarm over fuel subsidies ( Ministry of Oil concerned about negative effect of UN report on fuel smuggling on sector investment ( Zawia Public Prosecutor orders detention of militia commander guarding Zawia refinery for fuel smuggling ( Attorney General takes measures to combat Zawia refinery fuel smuggling through security apparatus ( Economy Minister follows up on fuel distribution and counter-smuggling efforts including GPS tracking In an effort to counter fuel smuggling, the Economy Minister orders fuel trucks to be fitted with GPS tracking devices ( GPS truck tracking to be used to counter fuel smuggling, profiteering by fuel distributors will be penalized ( Libya's fuel smuggling: a new Swiss connection is revealed ( Alternatives to fuel subsidies with cash payments delivered to Aldabaiba ( Libya evaluating subsidies for renewable energies – within existing fuel subsidies ( Prime minister Aldabaiba forms Ministerial committee to study reforming fuel subsidies, orders payment of family grant, increases pensions ( Brega claims it can assess demand, manage smooth fuel distribution and reduce its smuggling ( Libya's annual fuel bill rose to US$ 12 bn due to increased electricity production ( Fuel quantities, smuggling and subsidy reform – and increased oil production through PPP discussed at summit meeting ( 44 Brigade continues fight against fuel smugglers – LibyaHerald GPS truck tracking to be used to counter fuel smuggling, profiteering by fuel distributors will be penalized – LibyaHerald Libya's fuel smuggling: a new Swiss connection is revealed – LibyaHerald AG issues arrest warrants, freezes bank accounts of fuel smuggling petrol station owners. – LibyaHerald Fuel smugglers' sites bombed by Air Force, petrol stations shut down as part of continuing anti fuel smuggling drive – LibyaHerald PC Air Force supports NOC's anti-fuel smuggling initiative – LibyaHerald Libyan fuel smuggling is part of an international smuggling network: Attorney General's office – LibyaHerald Tunisians make large fuel smuggling bust on border – LibyaHerald Coast guard arrests two tankers on suspicion of fuel smuggling – LibyaHerald Attorney General investigates petrol company executives over fuel smuggling – LibyaHerald Brega to inspect all petrol stations in its continued anti-fuel smuggling drive – LibyaHerald
Finextra
36 minutes ago
- Finextra
Wells Fargo enlists Google Cloud for agentic AI play
Wells Fargo is expanding its relationship with Google Cloud to roll out agentic AI across its operations. 0 The US bank and Google Cloud teamed up in 2022 to launch an AI virtual assistant, called Fargo, for retail customers. The expanded relationship will see employees - including branch bankers, investment bankers, marketers, and customer relations and corporate teams — with AI agents and tools, taking advantage of Google Agentspace, a unified platform to build, manage, and adopt agents at scale. For its corporate and investment bank, Wells Fargo is building agents to help employees answer, triage, and summarise complex foreign exchange post-trade inquiries, as well as navigate policies and procedures across internal data sources and systems. For call centre and branch staffers, agents can automate routine tasks like balance inquiries and debit card replacements, reducing wait times. This, says Google, will free up time for bankers and traders, allowing them to focus more on client relationships. "Consider contract management, where Wells Fargo handles roughly a quarter of a million documents related to vendor agreements," says a Google blog. "A custom agent can rapidly query these extensive documents — identifying contracts with specific clauses, payment terms, contract types, and other important contract information, driving consistency and efficiency."
Times
an hour ago
- Times
Is this a good time to buy shares in Diageo?
The latest annual results from Diageo give every impression of papering over the cracks, reporting flat sales and lower profits, having lost a chief executive. Nik Jhangiani, the interim chief executive, produced as much positive spin as he could, even on the supercharged $625 million cost-saving programme, but could not disguise a 'challenging' environment led by rapidly changing tastes that, in the US at least, extends to competition from cannabis drinks. Operating profits fell 27.8 per cent to $4.3 billion, but before $1.4 billion of exceptional items the reduction was trimmed to 0.7 per cent, giving a healthy 21.4 per cent profit margin. The main exceptional was the sale of the US-based Ciroc subsidiary. Net profit was 39.1 per cent lower at $2.5 billion, translated into a similar-sized drop in earnings per share to 105.9 cents. That has just about let Jhangiani pay a 62.98 cents final dividend to maintain the annual payout at 103.48 cents. The stock market's reaction was to mark the shares up 89p to £19.04, suggesting investors were expecting worse. We will not have a clear picture of where the group is heading until the board confirms Jhangiani in the top job or hands it to someone else, probably in October. Whoever it is will have to do something drastic to halt Diageo shares' steady three-year decline. As Jhangiani said: 'We have a lot to do.' The stop-gap plan is to cut costs even more, promote the group's current winning brands — Guinness stout, Don Julio tequila, Johnnie Walker scotch and the blackberry-infused Canadian whisky Crown Royal — and move as quickly as possible to catch the surprisingly rapid transition to low-alcohol drinks. While no one brand can on its own put a rocket under annual sales of $20.2 billion, Jhangiani dropped hints yesterday that his researchers are stretching every sinew to come up with an alcohol- and calorie-light successor to longstanding hits such as Baileys Irish Cream. They have taken 40 per cent of the calories out of that with Baileys Deliciously Light, but so far have been unable to do without the alcohol. Meanwhile, Jhangiani is desperately trying to get his head around the unpredictable leisure habits of Gen Z, who are influenced by health considerations, other claims on their wallets and less compulsion to hit the bars on a night out. 'We need to make sure our offerings are tailored to social occasions,' he said. A lot of that boils down to moderation, the catch-all management term for no and low alcohol. While Guinness 0.0 has become a banker brand, the picture is fuzzy elsewhere. Price resistance is turning into shrinkflation with smaller spirits bottles in Asian supermarkets. And that is also influencing the alcohol content of ready-made cocktails. Overhanging the price question is President Trump's tariff campaign, which is due to add 10 per cent to UK exports to the US and 15 per cent on dispatches from Europe. Diageo reckons this could cost it $200 million a year at the operating profit level, mainly affecting the group's lucrative spirits brands. However, Jhangiani hopes to be able to offset as much as half of that with clever pricing. The Scotch Whisky Association buttonholed Trump on his recent Scottish visit to point out that if production were moved to the US, the product would no longer qualify as scotch. While gin, vodka and other spirits are a different matter, it will take years and plenty of capital to build distilleries in the US. However, Diageo has made a start with a factory in Alabama. Demand in the US and China is expected to be weaker for some time, and Europe is fragmenting. The group's former southern Europe sales force is being broken up into separate Spanish, French and Italian units to cater for different tastes. That adds to the costs that Jhangiani is trying to squeeze, while protesting that this need not mean job cuts. 'We want more feet on the street,' he said. Despite Monday's positive stock market response, in the face of strong headwinds for the next few years the company does not yet have a workable recipe to take the shares back up to anywhere near their 2022 level. Maybe it will have to turn into a full-blown soft drinks company. Advice AvoidWhy Future unclear until the CEO issue is sorted out
