Guinness-owner Diageo posts 28% decline in profit following 'challenging' year

The company’s operating profit fell to $4.3bn - down 27.8%. It said this was primarily due to exceptional impairment and restructuring costs, unfavourable foreign exchange and a decline in organic operating margin

There has been turmoil at Diageo in recent weeks following the shock departure last month of its chief executive Debra Crew. File Picture

Guinness-owner Diageo has forecast flat sales for this year despite projecting a $200m (€173.3m) impact from tariffs helping to reassure investors after a period of demand and share price turbulence as well as the sudden exit of the previous chief executive.

In its preliminary results for its 2025 financial year ending on June 30, Diageo reported net sales of $20.2bn - down 0.1% compared to the previous year - with the company citing unfavourable foreign exchange as well as acquisition and disposal adjustments.

The company’s operating profit fell to $4.3bn - down 27.8%. The company said this was primarily due to exceptional impairment and restructuring costs, unfavourable foreign exchange and a decline in organic operating margin.

In January, the company also raised prices on pints of Guinness as well as its other brands marking the fourth price hike in two years.

However, shares in the company rose by over 6% in early trading as profit was ahead of previous expectations. Diageo has been battling with prolonged sales weakness, worries about its management and ever-changing US tariff threats.

Interim chief executive of Diageo Nik Jhangiani said the fiscal year had been challenging but the results were “in line with our guidance”.

“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,” he said.

In terms of its outlook for the current financial year, the company said it is focused on driving productivity and meeting its cost savings target which has increased from $500m to $625m.

“In fiscal 26, expect organic sales growth to be similar to fiscal 25 and organic operating profit growth to be mid-single-digit, including the impact of tariffs as at this time,” the company said.

However, the company will now have to contend with the new tariff regime implemented by US president Donald Trump which could impact sales in one of its biggest markets. The EU is subject to a 15% tariff on exports to the US while the UK is subject to 10%.

Diageo forecast organic sales would fall slightly in the first half of its 2026 financial year - which runs to end-June 2026 - with growth more weighted towards the second half.

It increased the estimated impact of tariffs for the year from $150m previously.

Despite the economic uncertainty, and the mounting pressure on consumers, Mr Jhangiani said he “believe in the attractive long-term fundamentals of our industry and in our ability to continue to outperform” the rest of the industry.

“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.” 

There has been turmoil at Diageo in recent weeks following the shock departure last month of its chief executive Debra Crew after a bruising run in which the company’s stock has plummeted.

Diageo's shares have been hammered in recent years, losing 30% of their value this year alone and an even steeper decline since highs seen in 2022, when spirits sales were booming.

Her tenure has been punctuated by setbacks including a drop in sales on cooling demand in China and the US, and a profit warning after being caught out by piles of unsold inventory in Mexico and Brazil.

Additional reporting Reuters