Diageo reports US$20.2B in annual sales as tariffs, currency headwinds impact profit 

UK – Diageo, one of the world’s leading beverage alcohol companies, has reported a 0.1% decline in net sales for the financial year ending 30 June 2025, bringing total reported sales to US$20.2 billion.  

The decline was attributed to unfavourable currency exchange rates and adjustments to the company’s brand portfolio. 

The company’s reported operating profit fell 27.8% to US$4.3 billion. This decline was primarily driven by exceptional impairment and restructuring costs, adverse foreign exchange movements, and a reduction in organic operating margin. The reported operating profit margin dropped by 819 basis points compared to the previous year. 

In its European markets, Diageo posted a 0.4% rise in net sales, supported by a 6.7% increase in Great Britain. The growth in Britain was largely fuelled by continued strong demand for Guinness.  

However, the company noted that earlier in the year, supply constraints affected the availability of the popular stout in some pubs, tempering overall performance in the region. 

In response to ongoing pressures, Diageo has increased its cost-saving target to £625 million (US$721.3M) , up from the previously announced £500 million (US$577.1M).  

The company plans to achieve these savings over the next three years through measures such as advertising and promotion efficiencies, reduced overheads, and supply chain optimisation. 

Nik Jhangiani, the interim CEO, stated that the savings initiative is not primarily focused on workforce reductions, although he acknowledged that “there will be some” job losses. He added that the overall employee count could still grow, depending on the group’s evolving needs. 

The company also highlighted the impact of newly imposed tariffs under the U.S. administration. Diageo estimates that it will face a US$200 million annual cost due to the tariffs introduced by the White House. These include a 10% levy on UK imports and a 15% duty on EU spirits, while imports from Canada and Mexico remain exempt. 

The tariffs on UK goods took effect on 30 June 2025, coinciding with the implementation of the UK-US trade deal.  

The new 15% tariff on EU goods is set to begin on 7 August. Diageo has undertaken contingency planning, including inventory management and supply chain reallocation, in an effort to offset approximately half of the tariff impact on its operating profit. 

Looking ahead to fiscal year 2026, Diageo expects its organic sales growth to remain consistent with 2025, while organic operating profit growth is forecasted to reach mid-single digits, incorporating the projected impact of the tariffs. 

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