Guinness sales in focus as Diageo updates market after boss's exit

Independent

3 days ago

Investors in Diageo will be hoping the continued boom in demand for Guinness will help put the drinks giant back on track following the departure of its boss, and challenging conditions.
The FTSE 100 firm, which also makes Johnnie Walker whisky and Gordon's gin, is among the index's weaker performers this year, with its share price down 28% since the start of 2025.
Tariffs, cautious consumer demand and increased cost pressures have weighed down businesses across the drinks industry.
Diageo is expected to reveal a drop in profits for the past year when it unveils its latest finances on Tuesday August 5, after seeing a slowdown in revenue growth.
A consensus of analysts has predicted that Diageo will report an operating profit of 5.65 billion US dollars (£4.25 billion) for the year to the end of June.
It would reflect a drop after posting a six billion-dollar (£4.5 billion) profit a year earlier.
Meanwhile, it is also expected to reveal organic net sales growth of 1.4% for the year.
Diageo has been buoyed by strong sales of Guinness over the past year, particularly in the UK and Europe, helping to offset declines in some key spirits categories, such as vodka.
In its previous update, the company reported that net sales grew by 2.9% to 4.37 billion dollars (£3.28 billion) for the three months to March 31, as it benefited from increased activity in North America before tariffs came into effect.
In May, the group also launched a 500 million-dollar (£375.6 million) cost-saving programme, in order to support further investment and improve its financial position.
Last month, the company revealed that Debra Crew had stepped down as chief executive with 'immediate effect' and by 'mutual agreement', amid the drop in the firm's value.
AJ Bell's Russ Mould said her departure 'does not provide a huge amount of confidence in the full-year figures to the end of June from the drinks giant'.
'That said, Crew and management stuck to their prior guidance for 2025 and 2026 alongside May's trading update, and that steer will provide the benchmark for these numbers, which will be presented by Nik Jhangiani, who is both interim chief executive and the chief financial officer,' he said.
Investors and analysts will also be holding out for a fresh update on how the company will deal with ongoing tariff costs amid efforts to mitigate the impact of the US administration's increases to import taxes.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: 'Markets will be keeping a close eye on just how well Diageo is managing these ongoing tariff headwinds, which were expected to add around 150 million dollars in annual costs.
'The Johnnie Walker and Guinness maker plans to absorb half through operational efficiencies, with the rest likely passed on through price increases.'