Diageo Reports 12% Drop in Profit Amid Tariff Concerns

Diageo plc experiences a downturn with a 12% drop in profits. Investors should closely monitor the implications of US tariffs on its future performance.

Date: 04-02-2025

AI Rating: 4

Profit and Earnings Per Share Impacted
Diageo's profit attributable to shareholders dropped by 12% to $1.94 billion from $2.21 billion. This decrease is compounded by a similar drop in basic earnings per share, which fell to 87.1 cents from 98.6 cents last year. Additionally, the earnings per share before exceptional items decreased to 97.7 cents from 108.1 cents year-over-year.

Revenue Metrics
Net sales experienced a slight decline of 1%, down to $10.90 billion from $10.96 billion. Although organic net sales returned to growth, increasing by 1%, the volume dropped by 1%, reflecting potential issues in overall demand despite positive price/mix adjustments.

Future Guidance and Tariff Effects
The company indicated that the outlook for the second half is impacted by the implementation of tariffs in the US. Before considering these tariffs, Diageo anticipated continued growth in organic net sales. However, with current macroeconomic and geopolitical uncertainty affecting many of its key markets, Diageo has removed its guidance of 5-7% organic net sales growth.

Dividend and Market Share
Despite the challenges, Diageo confirmed an interim dividend of 40.50 cents per share, same as last year, showing its commitment to returning value to shareholders. The company expects to maintain strong market share performance moving forward.

Stocks: DEO