Latest news with #Diageoplc
Yahoo
19-05-2025
- Business
- Yahoo
Smirnoff, Guinness Parent Diageo Talks About Adverse Tariffs Impact
Diageo plc (NYSE:DEO) shares are trading lower on Monday after the company reported a third-quarter fiscal 2025 trading update that showed steady growth in organic net sales and progress on its operational transformation efforts. The maker of Smirnoff and Guinness posted $4.4 billion in net sales for the quarter ended March 31, marking a 2.9% increase year-over-year. Organic net sales rose 5.9%, driven by stronger pricing and shipment volumes. The company's performance in the third quarter benefited from favorable phasing, which is estimated to have contributed approximately 4% to the group's organic net sales growth. This positive impact was primarily observed in North America, with a lesser contribution from the Latin America and Caribbean region. It is anticipated that this favorable phasing will reverse in the fourth reported a 6% organic net sales growth in North America, primarily driven by strong shipment growth in U.S. Spirits. While U.S. Spirits experienced strong shipment growth, Diageo noted that the overall U.S. Spirits category was softer. U.S. Spirits organic net sales were up 7%. The gain was supported by restocking and import pull-forwards in anticipation of new tariffs. Latin America and the Caribbean delivered a 29% organic sales jump, rebounding from last year's inventory correction and buoyed by improved consumer sentiment in Brazil and Mexico. In contrast, Europe saw flat growth as solid momentum in Guinness was offset by continued softness in spirits. Asia Pacific posted modest gains, mainly due to easier year-ago comparisons, while Africa recorded 10% organic growth, fueled by strong demand in East Africa and Ghana. Chief Executive Debra Crew said the company is 'on track' to meet its fiscal 2025 outlook despite macroeconomic uncertainty and new tariffs on U.K. and EU imports into the U.S. Diageo expects the total impact of these tariffs to reach approximately $150 million annually, though it aims to mitigate roughly half of that through cost controls and pricing strategies. As part of its newly launched 'Accelerate' initiative, Diageo plans to generate approximately $3 billion in free cash flow annually starting in fiscal 2026. The program also includes a $500 million cost reduction plan over three years and targets a reduction in leverage to 2.5–3.0x net debt to EBITDA by fiscal 2028. Diageo reaffirmed its fiscal 2025 guidance for the full year, expecting a sequential improvement in organic net sales growth during the second half. However, it anticipates a slight decline in organic operating profit year-over-year, in line with the first half, due in part to ongoing tariff pressures. Capital expenditures for the year are expected to be near the upper end of the $1.3 to $1.5 billion range, and the company projects a slightly lower effective interest rate than the 4.3% recorded in fiscal 2024. The full-year results will also introduce a revised tax reporting method. Related ETFs: Consumer Staples Select Sector SPDR Fund (NYSE:XLP), iShares Global Consumer Staples ETF (NYSE:KXI). Price Action: DEO shares are trading lower by 1.02% to $113.88 at last check Monday. Image by Evgeniyqw via Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Smirnoff, Guinness Parent Diageo Talks About Adverse Tariffs Impact originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
18-02-2025
- Business
- Yahoo
Is Diageo plc (DEO) One of the Best Dividend-Paying Beverage Stocks to Buy?
We recently published a list of . In this article, we are going to take a look at where Diageo plc (NYSE:DEO) stands against other best dividend-paying beverage stocks to buy. The American consumer staples industry is currently dealing with an evolving landscape, with a key shift being the heightened influence of health considerations on consumer behavior. Health and wellness are now common themes of interest among the younger generation of consumers and the prevalence of weight-loss drugs has also led to a change in consumer's eating habits, including both reducing appetite and altering the kind of foods and drinks they want. READ ALSO: 12 Best Fortune 500 Dividend Stocks To Buy Right Now Many industry players have realized that they'll need to evolve and keep up with their consumers in order to achieve success. A great example is how an increasing number of beverage companies are now working to deliver more with their products, with one prominent trend being better-for-you (BFY) drinks. These are beverages that go beyond the scope of mere hydration and provide a solid benefit, such as supporting energy, gut health, cognition, immunity etc. However, in order for it to sell, a drink also needs to taste good, which presents a challenge in itself since the modern consumer is also wary of high sugar levels and artificial sweeteners. As a result, many industry players are now experimenting with natural sweeteners like allulose, stevia, and monk fruit alongside advanced sweetness modulation technologies. Another major beverage category that is rapidly evolving with shifting consumer trends is that of alcohol. The rising importance of health and wellness has led to an increasing number of younger people drinking less alcohol, with many giving it up altogether. As a result, nearly every major alcohol company has come up with no- and low-alcohol versions of their highly acclaimed brands, making sure they don't miss out on their share of a market that is becoming more and more established every day. The strategy seems to be paying off, as according to Nielsen, non-alcoholic beer, wine, and spirits collectively surpassed $565 million in sales in 2023, up 35% from the year before. Sales of Guinness 0.0, the zero-alcohol version of the highly beloved Irish stout, surged by nearly 50% between February 2023 and February 2024, putting it among the Best Selling Non Alcoholic Beers in the US. A recent looming threat for the American beverage industry has emerged in the form of tariffs. President Donald Trump has announced a 25% tariff on all steel and aluminum being imported into the US, eliminating previous country exceptions and exemptions. The blanket tariffs, set to go into effect next month, will have serious consequences for the beverage industry since nearly 75% of all new beverage launches in North America now appear in aluminum cans, according to supplier Crown. An increase in input costs will inevitably lead to a rise in prices for end consumers, causing serious problems for some beverage categories that are already struggling, such as craft beer. A short-term solution could be resorting to alternative packaging materials, such as glass or plastic, but that will undoubtedly come with its ecological concerns and ramifications. Or perhaps, this packaging problem could be a blessing in disguise and lead to some much-needed creative destruction and forever change the industry, since the drinks aisle has always been a hot spot in terms of innovation. According to data from Janus Henderson's Global Dividend Index, the global beverage industry paid a total of $9.6 billion in dividends in Q3 2024, up 31.5% YoY and 96% more from the same period in 2019. However, the Food & Beverage index, which represents companies across various sub-industries in the sector, has delivered modest returns over the last year. The index has risen by 4.62% over the last 12 months, against gains of almost 22.9% by the broader market. To collect data for this article, we looked up various companies working in the beverage sector, picked out the ones that pay dividends, and ranked them by their number of hedge fund investors according to the Insider Monkey database, as of Q3 2024. Following are the Best Beverage Dividend Stocks to Buy Now. At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (). A close-up of bottles of whisky and other alcoholic beverages from a winery. Number of Hedge Fund Holders: 26 A global leader in premium drinks, Diageo plc (NYSE:DEO) is a British multinational alcoholic beverage giant with over 200 brands and sales in nearly 180 countries. Scotch whisky is Diageo's largest segment and it produces over 100 individual scotch brands, including the world's best-selling Scotch whisky, Johnnie Walker. In fact, the company owns nearly half of the Scotch whiskey stock currently in the maturing stage, which represents a position that is impossible to replicate by competitors. Diageo plc (NYSE:DEO) is going through tough times and the company's share price has fallen by more than 25% over the last year. In the first half of FY 2025, sales of the London-based company declined by 0.6% to $10.9 billion. Operating profit also fell to $3.2 bn, down 4.9% YoY. However, the company held or grew a share in 65% of its total net sales in measured markets in the first six months of FY 2025. Diageo also delivered share gains in almost all of its largest markets, including the US, most of Europe, and Greater China. Diageo plc (NYSE:DEO) remains financially strong and increased its free cash flow by $125 million to almost $1.7 billion in the first six months of FY 2025. The company's balance sheet will be further strengthened by its decision to divest its 80.4% shareholding in Guinness Ghana to Castel Group for $81 million, as it continues to refine its operating model in Africa. Diageo maintained its half-year dividend at $0.405 per share, reflecting a cautious stance amid market uncertainties. Oakmark Global Select Fund stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2024 : 'Diageo plc (NYSE:DEO) is a global producer, distributor and marketer of premium drinks with more than 200 brands and sales in nearly 180 countries. The U.K.-based holding company's portfolio includes leading brands, such as Johnnie Walker, Guinness, Don Julio, Crown Royal, Smirnoff, Baileys, Casamigos and Captain Morgan. As a market leader, Diageo's scale provides meaningful competitive advantages in terms of distribution and marketing, which enables the company to invest more than its peers while still generating strong returns on capital. In addition, we like that the company's portfolio is well diversified by geography and category, which helps mitigate against earnings volatility related to economic cyclicality and shifting consumer preferences. Industry destocking and what we believe is temporary weaker demand have weighed on the share price recently, which provided an attractive re-entry point to invest in this dominant beverage company at a below-average price.' Overall, DEO ranks 10th on our list of best dividend-paying beverage stocks to buy. While we acknowledge the potential for DEO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DEO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
30-01-2025
- Business
- Yahoo
Jim Cramer Says Diageo plc (DEO) Has Been a ‘Horrendous' Stock
We recently compiled a list of the . In this article, we are going to take a look at where Diageo plc (NYSE:DEO) stands against the other stocks on Jim Cramer's radar. Jim Cramer, host of Mad Money, recently discussed some of the significant challenges the alcohol industry is facing. He pointed out that as the end of January approaches, the wine and spirits industry might be hoping for a quick resolution to what he described as a "disaster of a month," caused by "Dry January." He questioned whether the slowdown in alcohol consumption during this month would continue into February, admitting that he wasn't sure, but expressing concern that the industry could be facing deeper problems. One of Cramer's major concerns was that most alcohol companies have not acknowledged the full extent of the difficulties they may be facing. 'They say we're experiencing a post-COVID normalization because of excessive alcohol consumption during the pandemic. That's why I say they're holding their breath to see if the mocktails and the zero-alcohol beers quickly disappear by Saturday when January comes to an end. Look, I think these companies are about to have a rude awakening when dry January turns into drier-than-expected February and then we might even spiral from there.' READ ALSO Jim Cramer Breaks Silence On DeepSeek AI Sell-Off & Discusses These 12 Stocks and Jim Cramer Talked About These 11 Stocks Recently Cramer highlighted several key factors contributing to the decline in alcohol consumption. He first noted the rise of cannabis, which has become much more affordable in many states, offering a legal high without the risk of a hangover. He pointed out that we are no longer in the era of Smokey and the Bandit and suggested that cannabis could be stealing market share from alcohol. Secondly, Cramer referenced a recent warning from the U.S. Surgeon General about the links between alcohol consumption and the increased risk of various cancers, including breast and liver cancer. He emphasized that there is no safe level of alcohol consumption when it comes to cancer prevention, which he said could have a significant impact on health-conscious consumers. He added: 'Third, young people just don't like to drink as much as they used to. Some profess health worries. Others know that the liquor companies jacked up prices during the pandemic and now refuse to take them down. Fourth, ubiquitous GLP-1 weight loss drugs can stop your craving for alcohol in its tracks.' He mentioned that studies indicate heavy drinkers tend to reduce their alcohol consumption when they start using these medications. Taken together, Cramer argued that these trends represent a significant challenge for the alcohol industry. Despite these challenges, Cramer suggested that there is still hope for the alcohol business, but it will require innovation. He emphasized the importance of creating new and exciting drink options that stand out in a crowded market. Value pricing, he said, will also be crucial. He stressed that the days of endless price hikes without any pushback or creativity are over. Cramer expressed confidence that social drinking would remain part of people's lives, but he warned that alcohol could end up in the same category as tobacco if companies do not adapt. 'Let's drop the normalization wrap, please. This is not normal. The liquor companies need to be clever, thoughtful, and exciting, or they should just go find another business.' Our Methodology For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 29. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey's database of 900 hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). A close-up of bottles of whisky and other alcoholic beverages from a winery. Number of Hedge Fund Holders: 26 Calling Diageo plc (NYSE:DEO) stock 'horrendous', Cramer remarked: 'Diageo's been a horrendous stock, befits a company that makes the Johnnie Walker and all his cousins, the Captain, Don Julio, Tanqueray, Casamigos, ugh, Ketel One, Crown Royal, and Bulleit.' Diageo (NYSE:DEO) produces, markets, and sells a diverse range of alcoholic beverages, including spirits, beer, and non-alcoholic products, under various well-known brands. As Cramer discussed alcohol stocks in December 2024, he said: 'If we see some signs that younger people are drinking more or the GLP-1s aren't having as much of an effect or impact on alcohol, then I'll happily change my mind on both Brown-Forman and Diageo. But until then, you know what? I got to stay on the sidelines.' It is worth noting that Oakmark Funds stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2024 investor letter: 'Diageo plc (NYSE:DEO) is a global producer, distributor and marketer of premium drinks with more than 200 brands and sales in nearly 180 countries. The U.K.-based holding company's portfolio includes leading brands, such as Johnnie Walker, Guinness, Don Julio, Crown Royal, Smirnoff, Baileys, Casamigos and Captain Morgan. As a market leader, Diageo's scale provides meaningful competitive advantages in terms of distribution and marketing, which enables the company to invest more than its peers while still generating strong returns on capital. In addition, we like that the company's portfolio is well diversified by geography and category, which helps mitigate against earnings volatility related to economic cyclicality and shifting consumer preferences. Industry destocking and what we believe is temporary weaker demand have weighed on the share price recently, which provided an attractive re-entry point to invest in this dominant beverage company at a below-average price.' Overall DEO ranks 3rd on our list of the stocks on Jim Cramer's radar. While we acknowledge the potential of DEO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DEO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article was originally published at Insider Monkey. Sign in to access your portfolio
