Johnnie Walker Maker Diageo Eyes $1 Billion in Savings as New Boss Looks to Turn Things Around — Update

By Joshua Kirby

Spirits giant Diageo said it aims to save some $1 billion over the coming years through a restructuring after booking a drop in sales and profit.

The group, whose stable of alcoholic drinks includes Guinness stout, Smirnoff vodka and Johnnie Walker whisky, said the $1 billion in savings will begin in the current fiscal year, and will be achieved from work on operations and on its supply chain. Costs related to the program will amount to $1.2 billion, with around $752 million booked in its fiscal year through June.

"These savings will allow us to invest in the turnaround without needing to reduce operating profit" on an adjusted basis, Chief Executive Dave Lewis said.

For fiscal 2027 through next June, the group expects organic growth in its operating profit in the low-to-mid-single digits, including part of the planned cost savings. Divestment of the Kenya-based East African Breweries and an Indian cricket team, Royal Challengers Bengaluru, should, meanwhile, boost the group's debt-to-earnings ratio, it said.

Sales are likely to be flat on year, with North America sales continuing to fall after sliding more than 8% in fiscal 2026. Other regions, including Europe, by contrast, saw growth in sales over the year. Over the medium term, Diageo aims to see sales growth pick up pace, and expects its bottom line to get a boost from the savings and a more favorable product and price mix.

Improving performance in North America remains a "clear priority," Lewis said. The group will also work to lean more on its wider portfolio, while continuing its agenda of premiumization, he said.

Lewis, a former boss of British grocer Tesco, was brought in to lead from the start of the year with a remit to turn things around for the group.

For the recently ended fiscal year, the London-listed group made net sales of $19.64 billion, down 2% from a year earlier on an organic basis. That was in line with analysts' expectations, according to consensus figures provided by the company. Operating profit fell 27% to $3.16 billion, a drop associated with the restructuring costs, with the operating margin sliding some 5.35 percentage points to 16.1%.

"This new strategy, executing with a new, more agile, competitive and cost-effective operating model, gives us confidence that we can return Diageo to a business consistently creating value for shareholders," Lewis said.

Shares rose more than 5% following the update, reaching their highest level since February.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

August 06, 2026 07:10 ET (11:10 GMT)