Diageo Profits Drop 28 Percent Amid $200M US Tariff Hit, Increases Cost Cuts

Diageo, the British spirits and beer giant known for brands like Guinness, Smirnoff, and Johnnie Walker, reported a significant decline in profits for the financial year ending June 2025, with operating profit falling nearly 28 to 30 percent amid challenging market conditions and restructuring costs. The company attributed part of its profit decline to the impact of US tariffs imposed under President Donald Trump's administration, expecting a $200 million annual hit, though it has taken steps such as inventory and supply chain adjustments to mitigate about half of this impact. Interim CEO Nik Jhangiani, who replaced Debra Crew following her sudden departure, highlighted ongoing economic uncertainty and pressured consumer spending as key challenges but emphasized the company's commitment to accelerated growth through a sharpened strategy. Diageo also raised its cost-saving targets from $500 million to $625 million over three years to offset tariff and other financial pressures, with certain key brands like Don Julio and Guinness showing robust sales growth. The company is currently searching for a permanent CEO to navigate through this difficult period, which includes a soft environment in major markets like North America, Latin America, and Asia-Pacific. Despite the profit slump and market headwinds, Diageo's shares rose following the announcement, reflecting investor optimism about its cost-saving measures and strategic responses.