Diageo's Leadership Uncertainty and Weak Sales Dampen Investor Sentiment

Global premium alcohol giant Diageo's quarterly earnings fell short of expectations, leaving investors unsettled by leadership uncertainties. The group's first-quarter sales data, ending in late September, was disappointing.

This performance update comes during the company's annual shareholder meeting but failed to provide investors with any news regarding a successor to former CEO Debra Crew, as hoped for by Chair Sir John Manzoni. Debra Crew departed abruptly in July by mutual agreement, and the current interim CEO Nik Jhangiani's position remains unconfirmed.

Diageo cautioned that full-year sales and profit growth would be lower than previously forecast, citing continued weakness in its two key markets, the United States and China. The sluggish performance and unclear leadership situation led to a further dip in the company's share price in early trading in London.

The group anticipates organic sales growth for the entire fiscal year, ending June next year, to be flat to slightly down, with organic profit growth slowing to low-to-mid single digits. Net sales for the first quarter stood at 4.9 billion USD, a 2.2% decrease year-on-year. While organic volume grew 2.9%, negative price/mix factors offset some of this increase.

Nik Jhangiani expressed dissatisfaction with the current performance and stated a focus on controllable aspects, including taking swift action to improve efficiency, prioritizing investments, and adapting more rapidly to the evolving consumer landscape. He mentioned good progress in efficiency improvements, with an aim to save 625 million USD within three years.

Additionally, the group estimates the impact of US tariffs to be 200 million USD, though it hopes to mitigate this to 100 million USD. Regarding asset disposals, Diageo's Indian subsidiary United Spirits confirmed it is reviewing its ownership of the Royal Challengers Bangalore cricket team. CEO Praveen Someshwar stated in a release that Royal Challengers Sports Pvt Ltd has been a valuable and strategically important asset, but it is non-core to United Spirits' spirits business. This review is expected to be completed before the start of the next Indian Premier League season.

2025-11-06

Source: https://www.thedrinksbusiness.com/2025/11/diageo-sales-fall-as-leadership-uncertainties-unsettle-investors/