Diageo reports operating profit decline amid ‘challenging year’
Gross margin expansion 'more than offset by investment in overheads, operating profit slightly down'
Print5 August 2025
Diageo has reported an 27.8% operating profit decline, amid a ‘challenging year’, its 2025 Preliminary Results, year ended 30 June 2025 showed.
In a statement, the drinks giant attributed this to exceptional impairment and restructuring costs, unfavourable foreign exchange and a decline in organic operating margin.
Strong portfolio
The Guinness-owner noted that it delivered 1.7% organic net sales growth during the period ‘reflecting the strength of it’s portfolio and its diversified footprint.’
Commenting on the results, Nik Jhangiani, interim chief executive, said: “While we are encouraged by areas of progress and the standout performance from Don Julio, Guinness and Crown Royal Blackberry, there is clearly much more to do across our broader portfolio and brands.
“We recognise the need to drive meaningful growth opportunities in an evolving TBA landscape, and we are sharpening our strategy to accelerate growth.
“Our Accelerate programme is progressing well and is central to creating a more agile operating model. As such, I am pleased to announce that we are increasing our cost savings target by c.$125 million, to c.$625 million over the next three years.
“We are also committed to strengthening our balance sheet and expect to deliver c.$3 billion free cash flow in fiscal 26, increasing financial flexibility whilst continuing to invest for longer term growth.”
Macroeconomic uncertainty
Diageo noted that while macroeconomic uncertainty and the resulting pressure on consumers continues to weigh on the spirits sector, it believes in the attractive long-term fundamentals of its industry and in its ability to continue to outperform as the TBA 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,” Jhangiani concluded.
Read more: Diageo targets €440 million in cost cuts to counter US tariffs
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