Diageo’s interim boss has pledged to get it ‘firing on all cylinders’ after a slump in demand for its drinks.
Chief executive Nik Jhangiani also admitted the Guinness maker would need to cut jobs as part of plans to save an extra £94million.
But he insisted the FTSE 100 giant could eventually cash in on a trend for drinking in ‘moderation’, despite profits sliding 27.8 per cent to £3.2billion for the year to June, a steeper fall than analysts had predicted.
Sales also dipped 0.1 per cent to £15.2billion during the year. Jhangiani explained the decline by saying ‘the consumer wallet is under pressure’.
But the group – which continues its search for a permanent chief executive – singled out a ‘stand-out performance’ from its Don Julio tequila and Crown Royal Blackberry whisky, as well as its ever-popular Guinness stout.
Jhangiani, who took over last month after Debra Crew left suddenly, admitted there was ‘clearly much more to do’.
Profits drop: Diageo’s interim chief exec Nik Jhangiani admitted the Guinness maker would need to cut jobs as part of plans to save an extra £94m
He said the business would increase its cost savings target to £470million over the next three years, up from £376million.
This would include ‘some’ staff losses, he admitted, but said the programme was ‘not really about job cuts or elimination of roles’.
Diageo shares surged 4.9 per cent, or 89p, to 1904p following yesterday’s announcement.
The business has been hit by a cocktail of challenges including Donald Trump’s tariffs and weak demand in key markets such as the US and China.
But Jhangiani insisted there were opportunities to revive sales by ‘sharpening our strategy to get the whole portfolio firing on all cylinders’.
He said: ‘We’re monitoring changes in consumer behaviour, including moderation, which we see as a potential opportunity. Consumers who are moderating are not socialising any less.’
As more drinkers opt for a so-called sober curious lifestyle, the group would explore how to improve its offer in lower alcohol and ‘ready to drink’ products.
He also said there were opportunities to appeal to those who were focused on ‘portion control, calorie control’.
Matt Dorset at Quilter Cheviot said: ‘Diageo continues to have some market leading brands and will need these to do a lot of the heavy lifting until a new chief executive can set a new strategic direction.’
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