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
Daily Mail
35 minutes ago
- Daily Mail
How to work out if YOU can claim £950 from the car finance scandal - and what to do if you can't find the paperwork
It's the scandal dubbed 'PPI on Wheels', but last week five judges at the Supreme Court dealt a blow to millions of drivers hoping for a payout on their car finance deals. There will be no compensation for customers who were simply unaware commission was being paid when they took out car finance, with the judges declaring this was not enough to count as mis-selling.
Daily Mail
an hour ago
- Daily Mail
How YOU can grab a bargain home in London or a commuter hotspot: Experts say now is the time to get a deal
For the billionaires in Mayfair, Belgravia and Knightsbridge, it does not make happy reading: house prices are down by as much as 35 per cent in prime central London as the rich flee Labour's tax assault. Now the effects are rippling out across the capital and into commuter areas popular with families. Your browser does not support iframes.
Times
2 hours ago
- Times
HMRC could claw back millions in VAT from advance school fees
HM Revenue & Customs could recover more than £500 million in private school fees that have been paid in advance to avoid VAT, tax experts say. Hundreds of millions of pounds in fees were paid upfront before the 20 per cent tax came into effect on January 1 this year. Britain's top 50 independent schools received £515 million in advance fees last year, up from £121 million in 2023, according to analysis by the Daily Telegraph of the latest annual accounts at Companies House and the Charity Commission. Tax experts told The Guardian that money saved using the advance payment schemes could be clawed back by the government. They said HMRC would scrutinise the schemes to check whether they included specific details such as set prices, without which parents could be vulnerable to VAT demands in years to come. Dan Neidle, a tax lawyer and the founder of Tax Policy Associates, said many schools used fee-in-advance schemes such as a deposit. He said: 'We reckoned [there's] a high chance that didn't work from a VAT perspective, because VAT then applies at the point each year's fees are invoiced. The question is whether HMRC will be challenging these.' The Treasury has said the Office for Budget Responsibility considered the use of prepayment schemes when making its forecasts for how much money would be raised by the VAT raid. The Treasury expects VAT on school fees to raise £1.8 billion a year ALAMY Fees gathered from prepayment schemes have risen at the UK's most expensive schools, including Brighton College, which recorded £50.1 million in total prepaid fees last year, an increase of £4.1 million from 2023. Only 86 of its pupils were covered by the school's prepayment scheme in 2023. That figure increased to 819 last year as parents scrambled to beat the VAT deadline. Eton College collected £52.7 million in advance fee payments last year, up £16.6 million from 2023. At Winchester College, fees collected in advance rose to £19 million last year from £4.4 million the year before. More than 50 independent schools have closed or announced plans to shut since Labour imposed VAT on fees. The government predicts that 100 schools could shut over the next three years. Leaders in education said that the policy was already driving out pupils and putting more schools at risk of collapse.
