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Times
28 minutes 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
Daily Mail
an hour ago
- Daily Mail
The countries where you can earn more than the UK
Many Brits put in dozens of hours at work each week, while their wages barely grow. The average worker in the UK works for 1,524 hours a year, earning a median of £45,688, according to the Organisation for Economic Co-operation and Development (OECD). Research by Remitly has revealed there are places abroad where Brits could bank the same while putting in hundreds of hours less. Eight out of the top ten countries are in Europe too, so British workers wouldn't need to travel far. Luxembourg ranked the highest, with an estimated hourly rate of £48.69 it's a big leap from the UK's average of £29.98. Workers in the Western European country only need to be at their desks for 125 days to bank the average UK salary. That's a huge 78 days difference in the number of working days needed in Britain. The average Luxembourger could work 480 hours less a year and still match the UK median wage, according to the analysis. However, it's important to note the cost of living in Luxembourg is 14% higher than in the UK. Iceland followed closely in second place, with employees banking £47.87 on average. Workers will only have to put in 127 days to match the British salary, meaning 76 days less. However, the cost of living is a whopping 41.5% higher compared to Britain. Norway came third, with an estimated hourly pay of £40.25, meaning employees could work 151 days and match the UK average salary. It may not stretch as far though, with the cost of living being 21% more in Norway. Denmark, Austria and Sweden were all similar, with 153, 155, 155, and 157 days needed to match Brits and their pay. In Germany, the cost of living is around 1% less than the UK and the hourly rate averages at £38.81. This means workers could put in 46 fewer days a year and still match the median British salary. America ranked eighth, followed by Australia and Sweden that have average hourly rates of £35.31, £32.23 and £32 respectively. Meanwhile, workers in Mexico would have to put in 6,211 hours to match the UK's salary. That's the same as more than 8.5 months of working every day, according to the study.
Times
an hour ago
- Times
Domino's Pizza shares fall after profit guidance cut
Domino's Pizza has cut its annual profit guidance, warning of weak consumer confidence and higher employment costs. Shares in the pizza delivery group dropped more than 15 per cent on Tuesday after it said it expected underlying earnings before interest, taxation, depreciation and amortisation (ebitda) of between £130 million and £140 million, down from a previous range of £140.8 million and £149.7 million. The shares fell 41p, or 16.7 per cent, to 205p in afternoon trading. Andrew Rennie, chief executive, said there was 'no getting away from the fact' that the market had become tougher. That had meant that a strong performance across the first four months did not continue into May and June. The government has refused to rule out another round of tax increases in the autumn budget despite warnings of job cuts and higher shop prices. Businesses have faced higher labour costs since employers' national insurance contributions increased in April alongside a rise in the national living wage. Retailers are also concerned about the knock-on impact of Labour's workers' rights bill on the sector. Papa John's, the Kentucky-based fast-food chain, announced the closure of 74 of its UK pizza takeaway stores on Tuesday as its UK business revealed pre-tax losses of £21.8 million. Rennie said a tough backdrop and uncertainty over tax hikes in autumn had led consumers to 'sit back on their heels', adding: 'I'm definitely concerned about more tax hikes, particularly for our franchisees.' Domino's operates a franchise structure in Britain with its UK-listed entity, Domino's Pizza Group, acting as the master franchiser. The company said average profitability at its UK stores fell 5 per cent to £77,000 over the half-year after a significant increase in labour costs, with franchisees also taking a 'more cautious approach' to opening new outlets. 'We're a small business with lots of entrepreneurs so the cost hits them much more than it does us,' Rennie said. 'We're talking tens of millions.' However, he insisted the pizza chain was well-positioned to 'weather the storm' and would not 'cut corners on services or products' in response. 'When you've been around 40 years, you want to be around another 40,' he said. 'You don't make short-term decisions that are going to hurt the business … It's a moment in time, it's going to pass.' Founded by the philanthropist Tom Monaghan in 1960, Domino's opened its first UK store in Luton in 1985. Rennie opened his own Domino's store in Darwin, Australia, at the age of 26. These days, the company delivers more than 106 million pizzas to its UK customer base each year and is listed on London's FTSE 250 exchange. Domino's reported a 14.8 per cent decline in underlying pre-tax profit for the 26 weeks ended 29 June, down to £43.7 million. On a statutory basis, profit dropped by nearly a third to £40.5 million. Group revenue increased overall by 1.4 per cent to £331.5 million, alongside a 1.3 per cent rise in wider system sales to £777.8 million as Domino's benefited from 'exceptional demand' for its Ultimate Hot Honey Pepperoni Pizza and partnerships with the delivery services Just Eat and Uber Eats. So far this year the company has opened 11 new stores with nine franchise partners.
