Scotch whisky giant launches £375m cutting drive as US tariffs hit
The owner of Johnnie Walker whisky – as well as Lagavulin, Singleton, and Talisker among others – said it would be impacted by a 10% tariff on UK imports into the US, which were untouched by the UK Government's trade agreements with Donald Trump.
It said it believes its current plans will mitigate around half of the impact of these higher costs on its profit and it will work on further measures to offset the impact.
However, it reflects an improving outlook after Diageo said in February that it was bracing for a 200 million US dollar (£161m) hit to profits from tariffs.
READ MORE: How Donald Trump's tariffs have impacted Scotch whisky – in figures
The firm was set to face a significant knock from proposed tariffs on US imports from Canada and Mexico, but was buoyed by an exemption on alcoholic drinks in March.
Diageo also stressed on Monday that it will not be affected by tariffs between the US and China.
It came as the company launched a 500 million dollar (£375.6m) cost-saving programme, in order to support further investment and improving its leverage.
The London-listed firm, which also makes Guinness, Gordon's gin, and Baileys, said it will shift to 'a more agile global operating model' as it seeks to improve its cash flow.
Meanwhile, the company reported that net sales grew by 2.9% to 4.37 billion dollars (£3.28bn) for the three months to March 31, amid a boost from continued strong Guinness sales.
In Europe, sales dipped 1.3% for the quarter as higher Guinness sales were offset by 'further softness' in spirits across key markets.
Organic spirit sales were weaker year-on-year in the region, despite increased demand for tequila.
However, sales in North America grew by 5.9% amid strong shipments of US spirits.
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said that this was a temporary boost in sales that was explained by people stocking up ahead of Trump's tariffs coming into effect.
'These impacts are estimated to have boosted sales by 4% in the third quarter and are expected to largely reverse in the fourth quarter,' Huggins said.
'Even so, there are some positives for investors to take away from this statement.
'Despite the challenging market backdrop, Diageo has reiterated its full-year guidance. The impact of tariffs appears manageable, for now at least.
READ MORE: Co-op board votes to remove all Israeli products from shelves
'In addition, Diageo has launched a productivity programme, aimed at boosting cash flow and margins. This should help get profit moving in the right direction, even if tough trading conditions persist.'
Debra Crew, chief executive of Diageo, said: 'In the third quarter we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 2025.
'We also reiterated our organic operating profit outlook for fiscal 2025, including the impact of tariffs based on what we know at this time.
'We continue to believe in the attractive long-term fundamentals of our industry and in our ability to outperform the market.
'We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
32 minutes ago
- Reuters
TSX futures rise ahead of key US, Canada jobs data
June 6 (Reuters) - Futures tied to Canada's main stock index rose on Friday as investors awaited domestic employment figures and monthly payrolls data from the U.S., while signs of easing tensions between Washington and China fueled trade optimism. The S&P/TSX index futures were up 0.2% at 6:52 am ET (1052 GMT). The monthly U.S. non-farm payrolls report, scheduled at 8:30 am ET, will help investors assess the impact of President Donald Trump's trade policies on the labor market. Canada's monthly unemployment data is also due at 8:30 am ET. This week, Trump doubled tariffs on imports on steel and aluminum; Canada is the largest seller of the metals to the U.S. Canada's Industry Minister Melanie Joly said on Thursday that Prime Minister Mark Carney and Trump are in direct communication as part of Ottawa's bid to persuade Washington to lift tariffs. Meanwhile, a highly-anticipated phone call between Trump and Chinese President Xi Jinping on Thursday, which Trump said led to "a very positive conclusion," offered hope the trade war between the world's two largest economies might start to de-escalate. Additionally, China called on Friday for steps to improve bilateral ties with Canada, saying there were no deepseated conflicts of interest, following a spike in trade tensions with many of Beijing's Western trade partners this year. In commodities, oil prices slipped but were on track for their firstly weekly gain. Gold prices firmed while copper ticked up; both were set for weekly rises. Canada's main stock index edged higher on Thursday as higher oil prices boosted energy shares and investors assessed prospects of Canada reaching a trade deal with the U.S. FOR CANADIAN MARKETS NEWS, CLICK ON CODES: TSX market report Canadian dollar and bonds report CA/ Reuters global stocks poll for Canada , Canadian markets directory
Reuters
33 minutes ago
- Reuters
Morning Bid: Trump-Musk bust-up smolders
LONDON, June 5 (Reuters) - What matters in U.S. and global markets today Donald Trump's hotly anticipated meetings with the leaders of the world's two other biggest economies ended up being sideshows compared to his online bust-up with billionaire backer Elon Musk. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * White House aides scheduled a call between Donald Trump and Elon Musk for Friday, Politico reported, after a huge public spat that saw threats fly over government contracts and ended with the world's richest man suggesting the U.S. president should be impeached. * U.S. President Donald Trump and Chinese leader Xi Jinping confronted weeks of brewing trade tensions and a battle over critical minerals in a rare leader-to-leader call on Thursday that left key issues to further talks. * China has signalled for more than 15 years that it was looking to weaponise areas of the global supply chain, a strategy modelled on longstanding American export controls Beijing views as aimed at stalling its rise. The scramble in recent weeks to secure export licences for rare earths shows China has devised a better, more precisely targeted weapon for the trade war. * By any measure, the recent resilience of U.S. stocks is remarkable, with Wall Street powering through numerous headwinds to erase all its tariff-fueled losses and move into positive territory for the year. Reuters columnist Jamie McGeever explains why the rally may still have some juice left in it. * There are some tentative early signs that weak thermal coal prices are starting to boost import demand among Asia's heavyweight buyers China and India. Read Reuters Columnist Clyde Russell to find out more. Trump-Musk bust-up smolders For markets trying to navigate everything from creeping signs of labor market weakness to the latest European Central Bank easing, the spat between the U.S. president and the world's richest man proved more than a distraction. It remains to be seen if it overshadows the May payrolls report later on Friday. The extraordinary sparring match drew in other major political and business figures and included potentially seismic accusations and threats. In turn, the share price of Musk's Tesla .TSLA plummeted almost 20% at one point, dragging Wall Street stock indexes and crypto tokens deep into the red. The public feud appeared to cool off somewhat overnight and allowed stock futures to regain some lost ground. But the fact that the spat overshadowed the other major events of the day was another marker of this administration's unpredictability. The substance of the row was over Trump's "one big beautiful" fiscal bill that Musk thinks is a "disgusting abomination" due to the amount of spending. The bill, which has yet to be passed by the Senate, is expected to add $2.4 trillion to the U.S. debt over the next decade, based on CBO estimates. The vast bulk of this will likely be incurred over the next four years. In the background, the call between Trump and China's President Xi Jinping delivered no breakthroughs in the trade row apart from warmer words and an agreement to resume talks. The Oval Office meeting with Germany's Chancellor Friedrich Merz was relatively positive about trade and diplomatic issues. Earlier in the day, the ECB cut rates again as expected and suggested that there may be a pause at its next meeting and that it could be near the end of its easing cycle now that 'real' inflation-adjusted rates are back near zero. The euro hit a six-week high on Thursday regardless, although it gave back those daily gains today. Rising weekly U.S. jobless claims, meantime, cast a shadow over today's release of the May employment report. Consensus forecasts are for a slowdown in payroll growth to 130,000. Treasury yields , which ebbed and flowed all day on the conflicting signals from the trade meetings and stock gyrations, are back hovering at the week's lows ahead of the jobs report. Even though Federal Reserve officials continue to signal caution about the uncertain outlook ahead, markets are now priced for a resumption of Fed cuts by September. Into the already confusing mix, the Treasury released its annual report on potential currency manipulation overseas, adding Switzerland and Ireland to its watchlist, which already includes China, Japan, Germany, South Korea, Taiwan, Singapore and Vietnam. The list likely carries more heft than usual amid multiple tense trade negotiations. Markets assume the U.S. may pressure other countries to let their currencies appreciate versus the dollar as part of deals to avert severe tariffs being re-imposed next month. The Swiss National Bank responded on Friday by saying it would intervene in currency markets where necessary to keep inflation on track. Intervention to cap a super-strong franc has been a critical monetary tool used over the past decade and may need to be tapped again now that Swiss inflation has returned negative just as the SNB's key interest rate is set to return to zero in June. Elsewhere, China's yuan slipped against the dollar while falling to a near two-year low versus its major trading partners on Friday as the Trump-Xi call fell short of many expectations. Stock markets overseas were mixed on Friday as Wall Street remained on edge and the U.S. jobs report loomed. In the euro zone, first-quarter GDP was revised higher to show twice the growth originally estimated: 0.6% quarter-on-quarter, leading to an annual rate of 1.5%. India's central bank cut key rates by a larger-than-expected 50 basis points to 5.5%, its steepest cut in five years. It also slashed its cash reserve ratio - funds that banks are required to hold - by 100 bps to 3% in a surprise move aimed at boosting lending and speeding up policy transmission. In single stocks, Tesla shares recovered around 5% in Frankfurt on Friday, having closed down 14% in New York yesterday amid the Trump-Musk spat. It lost about $150 billion in market value yesterday, which caused the erstwhile member of the 'Magnificent Seven' megacaps to drop to ninth in the list of most-valuable firms behind Broadcom and Berkshire Hathaway. Broadcom's shares (AVGO.O), opens new tab, however, fell 4% in extended trading overnight as its forecast-beating earnings seemed to underwhelm the Street. In Bank of America's weekly tally of fund flows, U.S. stocks saw outflows of $7.5 billion, the third week of exits, while European shares saw inflows of $2.6 billion, the eighth week of inflows. Weekend reading suggestions * 'BLUE BONDS': European countries should seize the moment to boost the size and liquidity of jointly-issued euro sovereign debt, and a solution could be to replace a proportion of the stock of national bonds with senior Eurobonds, or 'blue bonds'., opens new tab So says a 'working document' from Peterson Institute senior fellow and former IMF chief economist Olivier Blanchard in a paper jointly written with Citadel's Angel Ubide. * NUCLEAR BLIND SPOTS: United Nations nuclear watchdogs appear to have lost track of some critical elements of Iran's nuclear activities since U.S. President Donald Trump ditched a 2015 deal that imposed strict restrictions and close supervision by the International Atomic Energy Agency. Reuters Francois Murphy and John Irish report on key blind spots that include not knowing how many centrifuges Iran possesses or where the machines and their parts are produced and stored. * OCEAN ECONOMY: Trade in the global 'ocean economy', opens new tab hit as much as $2.2 trillion in 2023, about 7% of total world trade, but this trade is increasingly threatened by climate change and environmental problems, the United Nations trade and development arm UNCTAD showed in a report this week. The ocean economy grew faster than the world economy at large in the five years to 2020 and an estimated 100 million jobs depend on it. * 'TRUMP DOCTRINE': The emerging foreign policy under President Donald Trump resembles a 'look the other way' doctrine, opens new tab or a 'none of our business' doctrine, argues former George W. Bush State Department official Richard Haass on Project Syndicate. "The U.S. sought to change the world, annoying some and inspiring others. Those days are gone, in some ways for better, but mostly for worse. The US has changed. It is coming to resemble many of the countries and governments it once criticized." * MAGNETIC FEW: A small team in China's Ministry of Commerce decides the fate of the global auto industry, one rare earth magnet export permit at a time. China holds a near-monopoly on rare earth magnets, a key component in electric vehicle motors, and it added them to an export control list in April as part of its trade war with the United States. Reuters' Laurie Chen and Lewis Jackson show how it falls to the Bureau of Industrial Security and Import and Export Control, part of China's Ministry of Commerce, to review export permits for the rare earth magnets, vital for car motors, wind turbines and even U.S. F-35 fighter jets. * FINANCE AND AI: Artificial intelligence advances in the financial sector, opens new tab offer enhanced data analysis, risk management and capital allocation, but there are problems too, according to a paper on CEPR's VoxEU website. As AI systems become more widespread, they introduce challenges for regulators tasked with balancing the benefits of innovation with the need for financial stability, market integrity, consumer protection and fair competition. * DRONE ATTACK: Ukraine's 'Operation Spider's Web', opens new tab last weekend used smuggled drones to attack bomber aircraft deep inside Russia, and the 'remarkable event' could affect the future of conflict, argues Council on Foreign Relations fellow Michael Horowitz. The attack "clearly shows that even targets deep in a country's territory could now be at risk". * IMF EUROPE: The case for closer European economic integration, opens new tab has become more compelling as external challenges multiply, according to Alfred Kammer, director of the International Monetary Fund's European Department. Stressing the need for the completion of the single market, Kammer said capital markets integration has been too slow and that cross-border flows have been frustrated by persistent fragmentation. "If history is a guide, Europe can turn adversity to advantage." * ALPINE TRUSTS: Liechtenstein is examining tightening control of scores of Russian-linked trusts abandoned by their managers under pressure from Washington. Reuters' John O'Donnell and Oliver Hirt cite sources in reporting that the country, one of the world's smallest and richest, is home to thousands of low-tax trusts, hundreds with links to Russians. Chart of the day Supply chain stress ticked up in May, data from the Federal Reserve Bank of New York said on Thursday. The bank noted that its Global Supply Chain Pressure Index for May rose to 0.19 from -0.28 in April, only the second time it stood in positive territory this year and the highest reading since the 0.20 seen in August of last year. Although the index remains subdued compared to the post-pandemic surge, growing concerns about the impact of the tariff war - particularly the impact of China's restrictions on rare earth and minerals exports on the global auto industry - will ensure policymakers keep a close eye on these pressures for any signs of re-emerging inflation. Today's events to watch * U.S. May employment report (8:30 AM EDT), April consumer credit (3:00 PM EDT); Canada May employment report (8:30 AM EDT) Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
The Guardian
an hour ago
- The Guardian
Trump and Musk joust in astonishing social media duel
Good morning. Elon Musk has called for Donald Trump's impeachment and in effect claimed the president was part of Jeffrey Epstein's alleged child sexual abuse ring in an extraordinary social media blow-up between the former allies on Thursday. Trump did not hold back either, threatening to end federal contracts and tax subsidies for the billionaire's companies as the feud that had been brewing flared up on their respective social media platforms. In the saga's most explosive movement, Musk tweeted: 'Time to drop the really big bomb: Donald Trump is in the Epstein files. That is the real reason they have not been made public. Have a nice day, DJT!' The post followed Trump threatening to cut subsidies for Musk's companies as it would save 'billions'. What is the origin of the feud? Tensions have been mounting for weeks over a Republican spending bill that Musk has been critical of. How is it affecting Musk's bottom line? Tesla's shares plunged by about 14.2% on Thursday at market close after the pair traded barbs. The US is imposing sanctions on four judges from the international criminal court (ICC) for what it has termed its 'illegitimate actions' against the United States and Israel, the secretary of state has announced. Marco Rubio announced the sanctions against Solomy Balungi Bossa of Uganda, Luz del Carmen Ibáñez Carranza of Peru, Reine Adélaïde Sophie Alapini-Gansou of Benin and Beti Hohler of Slovenia on Thursday after Donald Trump instructed cabinet officials to devise sanctions against the court. Why were these judges targeted? Two of the judges authorized the arrest warrants against the Israeli prime minister, Benjamin Netanyahu, and the former defense minister Yoav Gallant, while the other pair authorized an ICC investigation into abuses by US personnel in Afghanistan. Has the US targeted others before? Yes – it sanctioned the ICC's chief prosecutor, Karim Khan, after he pursued arrest warrants for Netanyahu and Gallant. As a result, Khan has lost access to his email and had his bank accounts frozen, the Associated Press reported. A district judge in Boston has blocked the Trump administration's ban on Harvard's foreign students from entering the United States after the university argued it had violated federal law. The Ivy League school argued that the administration failed to back up the president's claims that the students posed a threat to national security and asked Judge Allison Burroughs to block the ban. The filing also argued that the administration's national security argument was unsound as, under the ban, the same people were able to still enter the country – just not attend Harvard. The development came while hundreds of thousands of Chinese students in the US struggle with an uncertain future after the state department said last week that it would 'aggressively' revoke visas for Chinese students. Why did Trump ban Harvard from accepting international students? The White House spokesperson Abigail Jackson has called Harvard 'a hotbed of anti-American, antisemitic, pro-terrorist agitators' – claims the school denies. Harvard argues Trump is angry because it has refused to give in to the administration's demands to shape the school's governance, curriculum and ideology of staff and students alike. Russia's overnight missile and drone barrage on Kyiv overnight killed four people after Vladimir Putin vowed revenge for Ukraine's attack on its bomber fleet. The IDF has recovered the bodies of two Israeli-American hostages in their 70s who were abducted during Hamas's 7 October attack, in an overnight operation in southern Gaza. El Salvador is using emergency gang violence legislation to seize land that was granted to people following the country's civil war. The University of Michigan is using private, undercover investigators to surveil pro-Palestinian campus groups, the Guardian can reveal, with the records from the school's governing body showing that the university paid at least $800,000 between June 2023 and September 2024 to Ameri-Shield, the parent company of the private security group City Shield. Five students who have been followed, recorded or eavesdropped on said it appeared largely to be an intimidation tactic. Disneyland recently announced an animatronic recreation of Walt Disney, intended to give visitors a sense of 'what it would have been like to be in Walt's presence', earning a rebuke from his granddaughter Joanna Miller. Long a fascination for cinema, posthumanism is starting to feel worryingly current, writes Stuart Heritage, after experts this year voiced concerns about Neuralink, Elon Musk's brain implant company. When a Swiss village was wiped out in seconds after a glacier collapsed above it on 28 May, attention turned to why it happened – and how global heating will make such events more common. This podcast tells the shocking story. Sabemos que sacar sillas o mesas a la puerta es tradición en muchos pueblos, pero la vía pública está regulada. Si la Policía pide retirarlas, hazlo por respeto y convivencia. Con civismo y sentido común no hay molestias. ¡Gracias por colaborar! Police in a small Andalucían town have unleashed a storm after they chose to illustrate a call for people not to disturb their neighbors late at night with … a picture of six older women sitting outside. The move violated the silent Spanish injunction that forbids any attempts to alter the habits of the country's cherished older people – particularly given the long tradition of the outdoor sit-down chat as the heat of the day gives way to the cool of the evening, known as tomando el fresco, or taking the cool air. The social media response was full of force and sarcasm. One typical example: 'We need to put an end to this serious issue – no more impunity for grannies who sit out to enjoy the fresh air.' First Thing is delivered to thousands of inboxes every weekday. If you're not already signed up, subscribe now. If you have any questions or comments about any of our newsletters please email newsletters@
