London-listed drinks maker Diageo forecast a $150 million (€133.8m) hit from the US trade tariffs annually.
The company, which makes Guinness, Johnnie Walker whisky and Gordon’s gin, is one of the world’s top spirits makers and operates from more than 130 sites across the world.
“We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery,” Debra Crew, the company’s chief executive, said.
Diageo has been struggling with sales and has seen its London-listed share price decrease by more than 21% in the last 12 months.
As part of the firm's turnaround efforts, it announced a $500m (€446m) cost savings programme over three years, “which will enable both reinvestment in future growth and improved operating leverage”, noted the report.
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According to the company’s latest trading statement, organic net sales were up 5.9% in the third quarter of Diageo’s current financial year ending in March 2025.
Net sales for the third quarter increased by 2.9% to $4.4bn (€3.9bn) compared to the previous year.
“In the third quarter, we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 25,” Crew said. “We also reiterated our organic operating profit outlook for fiscal 25, including the impact of tariffs based on what we know at this time.”
The company is expecting continuous growth in its organic sales for the last quarter of its fiscal year ending in June 2025, compared with the first half of fiscal 25.
But the firm also expects “a slight decline in organic operating profit” in the second half of fiscal 25 compared with the prior year, already factoring in the impact of the tariffs.
For the following fiscal year, starting in July 2025, Diageo expects to deliver positive operating leverage, with organic profit growth ahead of organic net sales growth. It forecasts to deliver $3bn (€2.68bn) free cash flow, too.