Latest news with #Jhangiani
Yahoo
2 days ago
- Business
- Yahoo
United Spirits rebuffs talk of Diageo IPL asset review
United Spirits has said reports Diageo is mulling its options for its interest in IPL cricket team Royal Challengers Bengaluru are 'speculative'. Citing unnamed sources, Bloomberg said Diageo, which owns the side through its controlling interest in United Spirits, had held talks with possible advisors. In a brief stock-exchange filing today (10 June), the publicly-listed United Spirits said: 'The company would like to clarify that aforesaid media reports are speculative in nature and it is not pursuing any such discussions'. Last month, Diageo CFO Nik Jhangiani said the drinks giant could make 'substantial changes' to its product portfolio in the form of asset disposals. Speaking to analysts, Jhangiani said Diageo had identified opportunities to offload assets that were different in scope to the deals the Johnnie Walker maker had conducted in recent years. 'Clearly we see through our reviews that we've been doing internally and with the board some opportunities for what I would call substantial changes versus portfolio trimming,' Jhangiani said. 'I can't say any more than that but clearly it's going to be above and beyond the usual smaller brand disposals that you've seen over the last three years.' Diageo has offloaded assets including rum brands Cacique and Pampero and Safari liqueur. The group has also sold assets in Africa, although in October it reportedly called off the sale of its Pimm's gin-based liqueur after failing to secure an agreement with potential buyers. Jhangiani was speaking after Diageo announced plans to save around $500m in costs over the next three years. United Spirits acquired its interest in RCB in 2008. According to Diageo's annual report, the group owns just under 55.9% in United Spirits. "United Spirits rebuffs talk of Diageo IPL asset review" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
20-05-2025
- Business
- Yahoo
Johnnie Walker owner Diageo teases selloffs amid tariff impact
This story was originally published on Food Dive. To receive daily news and insights, subscribe to our free daily Food Dive newsletter. Guinness and Johnnie Walker owner Diageo is weighing potential large selloffs as it expects tariffs to spark a $150 million loss. Diageo CFO Nick Jhangiani said on the company's earnings call Monday that the Guinness owner is planning 'substantial changes' to its portfolio that would be 'beyond the usual smaller brand disposals' the company has done over the past three years. In January, Diageo denied reports that it intends to sell Guinness or its stake in Moët Hennessy, the luxury spirits division of LVMH. Close to half of Diageo's net sales in the U.S. are derived from imported spirits produced in Mexico and Canada, with the 'vast majority' coming from tequila. Diageo owns a variety of prominent spirits brands produced outside the U.S., making it vulnerable to President Donald Trump's tariff policy. Imports from Europe are subject to a 10% universal tax, raising costs for alcohol producers as they already struggle with declining demand. Guinness and Bailey's are produced in Ireland; Johnnie Walker hails from scotch capital Scotland; Crown Royal whiskey is from Canada; Ketel One vodka is produced in the Netherlands; and Don Julio and Casamigos tequila are made in Mexico. By potentially selling off one of its flagship brands, Diageo could offset losses it expects to incur if tariffs remain in place. In response to an investor question, Jhangiani was careful not to reveal which brands could be sold. 'With any kind of M&A or disposals transactions, you could get certain things agreed and announced, but timing of transaction closure and cash coming in are very much dependent on a number of factors,' Jhangiani said. Diageo CEO Debra Crew told investors its 6.2% organic net sales growth in North America last quarter was driven by a 'pull-forward of imports to distributors ahead of potential tariffs.' According to Crew, U.S. consumer sentiment dipped substantially in February and March as people cut back their overall spending amid economic uncertainty. But these consumers are 'not so much down-trading' to less expensive spirits, she said. The company is focusing on smaller bottles of its spirits in a bid to win consumers back. 'They want premium products, but their household cash is trapped. So by offering a smaller size of premium products, we are finding that that is working for us in many markets, including the U.S.,' Crew said. Diageo has made portfolio tweaks over the past year as it aims to secure growth through more expensive spirits. It's also building out its U.S. manufacturing arm, investing $415 million in an alcohol facility in Alabama. Last year, the alcohol giant created Diageo Luxury Group, a business division focused on brands that sell products over $100, like Johnnie Walker and Brora scotch. More recently, the company cut ties with former Cîroc Ultra-Premium Vodka spokesman Sean 'Diddy" Combs, trading its ownership of Cîroc for a majority stake in LeBron James-backed Lobos 1707 Tequila. Recommended Reading Diageo to build $415M alcohol plant in Alabama Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Extra.ie
20-05-2025
- Business
- Extra.ie
Diageo to cut €450m in costs due to Trump… but Guinness is safe
Guinness owner Diageo unveiled plans yesterday to cut almost € 450 million in costs in the face of US tariffs. However, the drinks giant, which owns brands including Johnnie Walker Scotch whisky, Moet et Chandon Champagne and Gordon's Gin, repeated its statement from January that it has no plans to sell off Guinness. Diageo, which is worth € 50 billion globally, said: 'We are introducing the first phase of our Accelerate programme, which sets out clear cash delivery targets and a disciplined approach to operational excellence and cost efficiency. Pic: Getty Images 'This programme will represent a shift in how we do business, moving to a more agile global operating model, and is underpinned by our strong digital and data capabilities. 'This simplified approach will create a stronger platform to optimise investment and allocate resources effectively towards long-term sustainable growth.' Cost-cutting would come from changes to the company's trade investments and advertising spend, overheads and supply chain, said the firm's finance chief, Nik Jhangiani. Nik Jhangiani. Pic: File Diageo is also expected to dispose of some significant assets to help reduce its leverage ratio from 3.1 times net debt to operating profit at the end of last year to between 2.5 and three times. Any sales could include some major assets, Mr Jhangiani hinted. 'We see… some opportunities for what I would call substantial changes versus portfolio trimming. It's clearly going to be above and beyond the usual smaller brand disposals you've seen over the last three years,' he said. However, that will not include Guinness, where chief executive Debra Crew said 'nothing has changed' with regards to the iconic stout, which was described as 'well-performing'. Pic: Diageo/PA Wire In fact, it is selling so well that some pubs in Britain brought in rationing and shipped in more supplies from Dublin over Christmas to cope with demand. The cost cuts will help Diageo, which is also the world's largest spirits distiller, deliver about € 2.7 billion in free cash flow a year from the next financial year. The company also plans to reduce its debt-to-earnings ratio to between 2.5 and 3 by the fiscal year 2028. Pic: Ross Mahon/Shutterstock 'This will be delivered through a combination of organic growth and positive operating leverage, combined with tighter capital discipline, and appropriate and selective disposals over the coming years,' it explained. U.S. President Donald Trump's 10% tariff on imports from the EU and Britain will mean a € 130 million hit to Diageo's annual operating profit, the firm estimates. The company employs 10,000 people worldwide, including 1,200 in Ireland. It has ten sites around the country, including its HQ at St James's Gate in Dublin, its Baileys plant near Belfast and the Smithwick's brewery in Kilkenny. Asked if the cost savings could mean job cuts or the price of a pint increasing, the company did not respond specifically.
Yahoo
19-05-2025
- Business
- Yahoo
Diageo eyeing 'substantial' asset sales
Diageo could make 'substantial changes' to its product portfolio in the form of asset disposals, CFO Nik Jhangiani said today (19 May). Speaking to analysts, Jhangiani said Diageo had identified opportunities to offload assets that were different in scope to the deals the Johnnie Walker maker had conducted in recent years. 'Clearly we see through our reviews that we've been doing internally and with the board some opportunities for what I would call substantial changes versus portfolio trimming,' Jhangiani said. 'I can't say any more than that but clearly it's going to be above and beyond the usual smaller brand disposals that you've seen over the last three years.' Diageo has offloaded assets including rum brands Cacique and Pampero and Safari liqueur. The group has also sold assets in Africa, although in October it reportedly called off the sale of its Pimm's gin-based liqueur after failing to secure an agreement with potential buyers. Jhangiani was speaking after Diageo announced plans to save around $500m in costs over the next three years. The Tanqueray maker said the move would help the company invest in 'future growth' and improve its 'operating leverage'. Diageo said the cuts were part of a broader initiative – dubbed 'Accelerate' – that will see 'a shift in how we do business', including developing a 'more agile global operating model'. Under the plans, the UK-listed group also said it expects to generate around £3bn free cash flow a year from its 2025/26 fiscal year. Asked where the $500m in savings would come from, Jhangiani pointed to Diageo's 'trade investment', its spending on A&P, overheads and the company's supply chain. 'The … piece … around overheads. We've highlighted in the release how we want to think about our operating framework and model choices to really leverage our scale but continue to build a much more agile and resilient [company] but then drive efficiency and effectiveness how we do things,' he explained. Jhangiani said Diageo plans to provide more detail on the Accelerate programme in August, when the company is scheduled to report its full-year financial results. He added: 'Our supply teams continue to do a great job as we look at offsetting inflationary pressures but there's also broader efficiency plays that we'll be looking at within supply and part of that goes back to some of the work that the team has done with the supply agility programme, so those will start coming through as well.' Just Drinks has approached Diageo to ask what impact the savings plan could have on jobs. At the end of Diageo's 2021/22 financial year, the company announced a 'supply chain agility programme' to cover the subsequent five years, efforts designed to boost productivity and, then CEO Ivan Menezes said, 'strengthen our supply chain, improve its resilience and agility'. Asked on today's call if that programme was ongoing or would be part of the new Accelerate efforts, CEO Debra Crew said: 'We've had some different productivity numbers flying around and supply agility as well and what was included in what. As Nik came in – and he talked about it at the first half results – we stepped back, have re-cut and taken a look across all of these programmes because some of these productivity things that were laid out were under very different macro conditions, different growth expectations, different capex expectations, etc. 'As part of that $500m, the supply agility, the programmes that are ongoing will be included in that. We're trying to give better transparency to sort of one number that's all inclusive of all of these efforts.' The announcement came alongside a trading update for the third quarter of Diageo's current financial year, three months that ran to the end of March. Net sales increased 2.9% to £4.38bn and were up 5.9% on an organic basis. The company said the 'phasing' of its sales boosted its organic net sales by around four percentage points. Diageo said its volumes rose 2.8% organically. In North America, Diageo's reported net sales rose 5.9% during the quarter. On an organic basis, the company's spirits sales in the region were up 7%, with depletions growing by around 5%. Diageo said distributors had pulled forward imports in anticipation of changes to tariffs. In Europe, despite 'strong momentum' from Guinness, the group's net sales dipped 1.3%, with organic sales 0.4% lower. Crew said: 'The Guinness performance, putting that aside, it has been impacted by consumer pressure and just uncertainty surrounding all the geopolitical conflict and we are seeing that impact in having some downtrading on spirits. 'Price-mix, we are seeing a downward pressure. It's hard to see, because Guinness gives us such great price-mix. You see overall Europe showing very positive price-mix but we definitely are seeing downtrading on the spirit side. We do have a very standard-priced portfolio within Europe, so we're having to navigate through that but, no doubt, that is one of the pieces of uncertainty that we're really feeling in the market as well.' Shares in Diageo were down 0.93% at 2,132p at 12:45 BST. "Diageo eyeing 'substantial' asset sales" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
19-05-2025
- Business
- Business Times
Guinness-owner Diageo plans cost cuts, asset sales to reduce debt
[BENGALURU] Diageo unveiled a plan on Monday (May 19) to cut US$500 million in costs and make substantial asset disposals by 2028, as the maker of Johnnie Walker whisky and Guinness beer looks to turn around its performance and reduce its debts. Cost cuts would come from changes to Diageo's trade investment and advertising spend, overheads and supply chain, finance chief Nik Jhangiani told investors. The world's largest spirits maker is also expected to dispose of some significant assets, but hold on to its Guinness brand, to help reduce its leverage ratio from 3.1 times net debt to operating profit at end-2024 to between 2.5 and three times. 'We see... some opportunities for what I would call substantial changes versus portfolio trimming,' Jhangiani said. 'It's clearly going to be above and beyond the usual smaller brand disposals you've seen over the last three years.' CEO Debra Crew later told reporters that 'nothing has changed' with regards to well-performing beer label Guinness, which Diageo ruled out selling earlier this year. The cost cuts will help Diageo deliver about US$3 billion free cash flow per annum from fiscal 2026, the company said. It also revised down its expected hit from US tariffs as the threat of levies on Mexico and Canada receded. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The plan did not include large-scale redundancies, though some changes to headcount through approaches such as slower hiring may be included, Crew said. Jhangiani joined in September as the company struggled with falling sales and wavering investor confidence. Investors welcomed his plans, though its stock gave up earlier gains to trade 0.7 per cent down by 1111 GMT. 'You can see that (Diageo) is gradually getting its act together again,' said Richard Scrope, manager of the VT Tyndall Global Select fund that holds Diageo stock. Tariff hit reduced Turning around a 'supertanker' like Diageo however, takes time, said Rob Burgeman, investment manager at another Diageo investor RBC Brewin Dolphin. The company still faces difficult trading conditions in key markets like the US and Europe. US President Donald Trump's 10 per cent tariff on imports from places like Britain and the European Union will also deal a US$150 million hit to Diageo's operating profit per annum, the company estimated. That is lower than the roughly US$200 million it had previously estimated for the second half alone. Since its previous estimate in February, threats of a 25 per cent levy affecting Mexican tequila and Canadian whisky have not materialised. The company reported a 5.9 per cent rise in third-quarter organic sales, largely thanks to an acceleration in shipments to North America ahead of the imposition of tariffs. REUTERS
