Diageo reports 0.6% decline in half-year sales, scraps annual sales forecast 

UK – Beverage giant Diageo has reported a 0.6 percent decline in reported net sales to US$10.9 billion for the half-year ended December 31, 2024, attributing the drop to unfavorable foreign exchange rates despite an increase in organic net sales. 

The company’s profit before tax fell 1.2 percent to US$2.8 billion, down from US$3.3 billion in the same period last year.  

Organic operating margins declined by 69 basis points, primarily due to continued investment in overheads, which was partially offset by reduced marketing expenditures and positive gross margin expansion. 

Reported net sales declined by 3 percent due to unfavorable currency exchange and a reclassification related to a route-to-market change. However, organic net sales showed resilience, helping to cushion the overall decline. 

In Europe, Diageo reported a 3 percent increase in reported net sales, primarily due to a hyperinflation adjustment in Türkiye, a business transfer from the Asia Pacific region to Europe, and overall organic growth. 

The spirits segment saw a 3 percent decline, while beer revenues surged by 13 percent, led by Guinness. Sales of Guinness 0.0, the non-alcoholic variant, nearly doubled.  

CEO Debra Crew acknowledged the challenge of meeting demand but assured that beer production would be ramped up, pointing to the new brewery in County Kildare, Ireland. 

Diageo Africa achieved high single-digit growth, supported by volume expansion and strategic pricing, despite challenging macroeconomic conditions.  

In the first half of fiscal year 2025, Diageo completed the sale of its majority stake in Guinness Nigeria PLC. On January 28, 2025, the company also announced its agreement to sell its stake in Guinness Ghana Breweries PLC.  

The Africa region is now managed through two strategic markets: East Africa and SWC Africa, consolidating previously separate markets such as Nigeria, Africa Regional Markets, and South Africa. 

Tariff Uncertainty and Growth Target Withdrawal 

Diageo has withdrawn its previous annual sales growth target of 5 -7 percent, citing market uncertainties, including potential U.S. tariffs and weak demand in key markets. 

On Monday, U.S. President Donald Trump temporarily delayed the imposition of 25 percent tariffs on imports from Mexico and Canada, granting a 30-day reprieve. However, concerns remain regarding future trade policy decisions. 

Chief Financial Officer Nik Jhangiani estimated that the proposed tariffs, if implemented in March, could lead to a US$200 million hit to operating profit for the fiscal year ending June 2025. 

“We feel today that we could cover about 40% of that before any pricing action,” Jhangiani stated. 

CEO Debra Crew noted that while the tariff risk had been anticipated, its implementation could disrupt the company’s momentum.  

“It also adds further complexity in our ability to provide updated forward guidance given this is a new and dynamic situation,” she said. 

Executives outlined several measures to mitigate the impact of tariffs, including resource reallocation, adjustments to the supply chain, and potential pricing strategies.  

Diageo stated it has already implemented inventory management initiatives, such as preemptively shipping stock into key markets before new duties come into effect. 

Company officials emphasized that the proposed tariffs would apply to input costs rather than retail prices.  

Going forward, Diageo remains focused on optimizing its global supply chain and strengthening market resilience as it navigates a shifting economic landscape. 

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