UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
19 May 2025
Commission File Number: 001-10691
DIAGEO plc
(Translation
of registrant’s name into English)
16 Great Marlborough Street, London, United Kingdom, W1F 7HS
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F X
Form
40-F
Diageo
PLC – Diageo issues fiscal 25 Q3 trading
statement
Dated
19 May 2025
Diageo issues fiscal 25 Q3 trading statement
Strong Q3 organic net sales growth. On track for full year with
sequential improvement in H2
●
Reported net sales
for the third quarter increased by 2.9% to $4.4bn, with positive
organic growth partially offset by unfavourable foreign exchange
and disposals.
●
Organic net sales
were up 5.9% in the quarter, with organic volume up 2.8% and
positive price/mix of 3.1%.
●
Performance in the
quarter was supported by favourable phasing which we estimate
contributed c.4% of Q3 group organic net sales growth, mainly from
North America and to a lesser extent Latin America and Caribbean,
and is expected to reverse in Q4.
●
All regions
delivered positive price/mix except Asia Pacific where continued
consumer downtrading and adverse market mix impacted net
sales.
●
Full year fiscal 25
guidance for organic net sales and operating profit
reiterated.
●
Launching first
phase of Accelerate programme to create a more agile operating
model. We expect to sustainably deliver c. $3bn free cash flow per
annum from fiscal 26, increasing as performance improves. This is
supported by a c.$500m cost savings programme, which will enable
both reinvestment in future growth and improved operating leverage.
We expect to return to well within our target leverage ratio range
of 2.5 – 3.0x no later than fiscal 28 providing us with a lot
more flexibility, and which will also be supported by appropriate
and selective disposals over the coming years.
Debra Crew, Chief Executive, said:
“In
the third quarter we delivered strong organic net sales growth and
are on track to deliver on our guidance of sequential improvement
in organic net sales performance in the second half of fiscal 25.
We also reiterated our organic operating profit outlook for fiscal
25, including the impact of tariffs based on what we know at this
time. We continue to believe in the attractive long-term
fundamentals of our industry and in our ability to outperform the
market. We view the near-term industry pressure as largely
macro-economic driven, with continued uncertainty impacting both
the timing and pace of recovery.
Consistent
with our strategic priorities and our focus on what we can manage
and control, we are introducing the first phase of our Accelerate
programme. This sets out clear near-term cash delivery targets and
a disciplined approach to operational excellence and cost
efficiency. It will strengthen Diageo by increasing our
effectiveness, agility, and resilience. It will also ensure that we
are well-positioned to deliver sustainable, consistent performance
while maximising shareholder returns; even if current trading
conditions persist.
We look
forward to sharing more detail on Accelerate with our full year
results in August.”
|
|
Q3 ended 31 March 2025
|
|
9 months to 31 March 2025
|
||||||
|
|
Reported F25
|
Reported F24
|
Reported growth
|
Organic growth
|
|
Reported F25
|
Reported F24
|
Reported growth
|
Organic growth
|
|
|
$m
|
$m
|
YoY %
|
YoY %
|
|
$m
|
$m
|
YoY %
|
YoY %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
4,376
|
4,253
|
2.9
|
5.9
|
|
15,277
|
15,215
|
0.4
|
2.4
|
|
Volume
|
-
|
-
|
-
|
2.8
|
|
-
|
-
|
-
|
0.6
|
Quarterly
financials are unaudited. See pages 7-8 for an explanation and
reconciliation of non-GAAP measures. Unrounded financials –
due to rounding, the numbers in this and other tables in this
release may not always cast or calculate. Unless otherwise noted,
commentary throughout this release refers to organic net sales
movement for the third quarter ended 31 March 2025 compared to the
third quarter ended 31 March 2024.
Update on implications of recent tariff developments
Assuming
the current 10% tariff remains on both UK and European imports into
the US, that Mexican and Canadian spirits imports into the US
remain exempt under USMCA, and that there are no other changes to
tariffs, the unmitigated impact of these tariffs is estimated to be
c.$150m on an annualised basis. Tariffs between the US and China do
not have a material impact on our business. We expect that given
the actions that we have in place already, before any pricing, we
will be able to mitigate around half of this impact on operating
profit on an ongoing basis. Looking ahead, we will continue to work
on measures to mitigate this impact further. Our long track record
of managing international tariffs gives us confidence in our
ability to navigate this successfully. The expected impact in
fiscal 25 and fiscal 26 is included in our guidance.
Fiscal 25 full-year outlook
Organic net sales growth
The
increased growth rate in Q3 compared to the first half of fiscal 25
is mainly driven by phasing and does not change our expectations
for fiscal 25 full-year growth from those communicated at fiscal 25
interim results in February 2025. In the second half of fiscal 25,
we continue to expect to deliver a sequential improvement in
organic net sales growth compared with the first half of fiscal
25.
Organic operating profit growth
We
continue to expect a slight decline in organic operating profit in
the second half of fiscal 25 compared with the prior year, broadly
in line with the decline in the first half. This includes the
impact of the tariffs currently announced which will impact fiscal
25.
Taxation
From
and including our full year results for fiscal 25, we are changing
how we report the effective tax rate, both pre and post exceptional
items, and will exclude the share of after-tax results of
associates and joint ventures from profit before tax. This will
present a simpler calculation and is consistent with peer
reporting. The historical impact of applying this approach over the
last four years can be found in the appendix of this
release.
On this
new basis, we expect the tax rate before exceptional items for
fiscal 25 to be in the region of 25%, broadly in line with fiscal
24, which was 25.1% on the same basis.
Effective interest rate
Given
current market conditions and our debt maturity profile, we now
expect the effective interest rate for the full year fiscal 25 to
be slightly below full year fiscal 24, which was 4.3%.
Capital expenditure
In
fiscal 25, as guided previously, we expect capital expenditure for
the full year to be towards the upper end of the previously guided
range of $1.3-1.5bn.
Leverage
We
continue to expect leverage at the end of fiscal 25 to remain above
the target leverage range of 2.5 to 3.0x (net debt to EBITDA), and
now expect this to be in the range of 3.3 to 3.5x.
Fiscal 26 full-year outlook
We
continue to expect to deliver positive operating leverage, with
organic profit growth ahead of organic net sales growth. This
includes the impact of US tariffs based on what we know at this
time. We also expect to deliver c.$3bn free cash flow from the
Accelerate programme.
Update on progress on reshaped priorities – introducing
Accelerate
Today
we are introducing the first phase of our Accelerate programme
which sets out clear cash delivery targets and a disciplined
approach to operational excellence and cost efficiency. This
programme will represent a shift in how we do business, moving to a
more agile global operating model, and is underpinned by our strong
digital and data capabilities. This simplified approach will create
a stronger platform to optimise investment and allocate resources
effectively towards long-term sustainable growth.
This
includes:
●
Consistent cash delivery: we expect to
sustainably deliver around c.$3bn free cash flow per annum from
fiscal 26, increasing as the business performance
improves.
●
Cost savings: c.$500m cost savings
programme over three years which will enable both reinvestment in
future growth and improved operating leverage.
●
Commitment to deleveraging: we expect to
be well within the leverage target range of 2.5-3.0x net
debt/EBITDA no later than fiscal 28 providing us with a lot more
flexibility. This will be delivered through a combination of
organic growth and positive operating leverage, combined with
tighter capital discipline, and appropriate and selective disposals
over the coming years.
We will
share more details at our fiscal 25 results on 5 August
2025.
Q3 review
Organic
net sales in Q3 grew 5.9% with a strong contribution from organic
volume growth, up 2.8% and positive price/mix of 3.1%. Overall,
organic net sales growth was supported by significant phasing
benefits estimated to have contributed around 4% of organic net
sales growth, with about two-thirds from NAM and most of the
remainder from LAC. We expect most of this benefit to unwind in the
fourth quarter, most significantly in NAM where a pull-forward of
imported shipments in anticipation of tariffs favourably impacted
results. NAM performance was also supported by continued tequila
restocking given strong Don Julio consumer sales performance. In
LAC, strong double-digit organic net sales growth was driven by
lapping a particularly soft comparative period of significant
destocking. To a lesser extent, Asia Pacific was also lapping an
easier Q3 comparative period.
Net sales for Q3 and 9 months ended 31 March 2025
|
|
Q3 ended 31 March 2025
|
|
9 months to 31 March 2025
|
||||||
|
Net sales
|
Reported F25
|
Reported F24
|
Reported growth
|
Organic growth
|
|
Reported F25
|
Reported F24
|
Reported growth
|
Organic growth
|
|
|
$m
|
$m
|
YoY %
|
YoY %
|
|
$m
|
$m
|
YoY %
|
YoY %
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
1,903
|
1,796
|
5.9
|
6.2
|
|
5,998
|
5,880
|
2.0
|
2.0
|
|
Europe
|
898
|
910
|
(1.3)
|
(0.4)
|
|
3,530
|
3,475
|
1.6
|
0.4
|
|
Asia Pacific
|
803
|
805
|
(0.2)
|
1.6
|
|
2,913
|
3,011
|
(3.3)
|
(1.4)
|
|
LAC
|
378
|
335
|
12.8
|
28.5
|
|
1,428
|
1,404
|
1.7
|
10.6
|
|
Africa
|
369
|
385
|
(4.1)
|
10.1
|
|
1,313
|
1,360
|
(3.5)
|
9.3
|
|
Corporate
|
25
|
22
|
n/a
|
n/a
|
|
95
|
85
|
n/a
|
n/a
|
|
Diageo Total
|
4,376
|
4,253
|
2.9
|
5.9
|
|
15,277
|
15,215
|
0.4
|
2.4
|
Q3 Regional performance
North America
●
Organic net sales
grew 6% driven by strong shipment growth in US Spirits despite
softer US Spirits industry consumption in Q3 compared to the first
half of fiscal 25.
●
Price/mix grew 2%
driven primarily by strong mix in US Spirits.
●
US Spirits organic
net sales were up 7%, ahead of depletions growth by c.5%, driven by
a pull-forward of imports to distributors in anticipation of
tariffs which we expect will reverse in Q4, and also tequila
restocking given continued strong consumer sales
performance.
●
US Spirits
depletions growth was ahead of consumption growth due to favourable
comparatives, including lapping significant retailer destocking in
Q3 fiscal 24.
Europe
●
Organic net sales
were broadly flat with performance overall supported by continued
strong momentum in Guinness, offset by further softness in spirits
across key markets.
●
Price/mix grew 7%
driven by continued strong Guinness performance and pricing in
Turkey.
●
Guinness organic
net sales were up double digit in the quarter with continued
momentum from both Guinness Draught and Guinness 0.0. Spirits
organic net sales declined overall but our continued focus on
tequila delivered growth from both Don Julio and
Casamigos.
Asia Pacific
●
Organic net sales
grew 2% benefiting from favourable comparatives in this quarter
with inventory reductions in South East Asia and Greater China in
the prior year, and with continued growth in India. This growth was
partially offset by ongoing retailer inventory destocking in Travel
Retail Asia and the transition to the Guinness license brewing
model in Australia and New Zealand which is expected to negatively
impact net sales through calendar 2025.
●
Price/mix declined
3% driven by continued downtrading and unfavourable market
mix.
Latin America and Caribbean
●
Organic net sales
grew 29%, benefitting from lapping significant inventory destocking
in Q3 fiscal 24, as well as continued stabilisation in the consumer
environment.
●
Price/mix grew 9%
driven by lapping heavy promotional activity and consumer
downtrading in the prior year.
●
Brazil continued to
deliver double-digit organic net sales growth in a more stable
consumer environment, with some benefit from pricing. In Mexico,
although the spirits industry remains challenged, it continues to
show early signs of stabilisation.
Africa
●
Organic net sales
grew 10% driven by strong growth in both East Africa and South,
West and Central Africa (SWC).
●
Price/mix grew 11%
driven by pricing across the region.
●
In East Africa, all
markets were in organic net sales growth with strong double-digit
growth from Tanzania and Uganda. SWC growth was driven by
double-digit organic volume and net sales growth in
Ghana.
Live presentation and Q&A conference call
Debra
Crew, Chief Executive and Nik Jhangiani, Chief Financial Officer
will host a short presentation followed by Q&A at 9.30am UK
(10.30am CET) on Monday 19 May 2025, which can be accessed
at:
https://www.investis-live.com/diageo/67d1537b0a60c30015472054/atbw
For
analysts and investors wishing to ask questions, please use the
dial-in details below which will have a Q&A facility. Please
dial in 15 minutes ahead of the scheduled start time to register
before the call begins.
|
From
the UK:
|
+44
(0)20 3936 2999
|
|
From
the UK (free call):
|
0800
358 1035
|
|
From
the USA:
|
+1 646
233 4753
|
|
From
the USA (free call):
|
+1 855
979 6654
|
|
Access
code:
|
315266
|
|
|
|
Transcript and audio recording
Following
the presentation and Q&A conference call, a transcript and
audio recording can be accessed at:
https://www.diageo.com/en/investors/results-reports-and-events/results
Guinness event reminder:
On
Tuesday 20 May 2025, Diageo is hosting a Guinness Investor and
Analyst Event at the Guinness Storehouse in Dublin. From 13:00 (UK
time), we will be hosting presentations and Q&A sessions from
members of our Executive Committee and other leaders. The
presentations and Q&A sessions will be available on a live
webcast, which can be accessed at:
https://www.investis-live.com/diageo/67d1526d6c02e70016b5f241/oshtr
Presentation slides, recordings and transcripts
Following
the presentations, slides, recordings and transcripts will be made
available.
For
further information, please contact:
Investor relations:
|
Sonya
Ghobrial
|
+44 (0)
7392 784 784
|
|
Andy
Ryan
|
+44 (0)
7803 854 842
|
|
Brian
Shipman
|
+1 (0)
917 710 3007
|
|
Grace
Murphy
|
+44 (0)
7514 726 167
|
Media relations:
|
Brendan
O'Grady
|
+44 (0)
7812 183 750
|
|
Clare
Cavana
|
+44 (0)
7751 742 072
|
|
Isabel
Batchelor
|
+44 (0)
7731 988 857
|
About Diageo
Diageo
is a global leader in beverage alcohol with an outstanding
collection of brands across spirits and beer categories. These
brands include Johnnie Walker, Crown Royal, J&B and Buchanan's
whiskies, Smirnoff and Ketel One vodkas, Captain Morgan,
Baileys, Don Julio, Tanqueray and Guinness.
Diageo
is a global company, and our products are sold in nearly 180
countries around the world. The company is listed on both the
London Stock Exchange (DGE) and the New York Stock Exchange (DEO).
For more information about Diageo, our people, our brands, and
performance, visit us at www.diageo.com. Visit Diageo's global
responsible drinking resource, www.DRINKiQ.com for information,
initiatives, and ways to share best practice.
Celebrating
life, every day, everywhere.
Appendix
Foreign exchange
We are
not providing specific guidance in relation to foreign exchange for
fiscal 25. However, using the hedged rates already in place and for
other exposures the spot exchange rates at 31 March 2025, including
$1=£0.77 and $1=€0.92, for fiscal 25, would result in a
negative impact on net sales of approximately $250 million and a
negative impact of approximately $200 million on operating profit.
The above spot rates, currency hedges and assumptions reflect a
point in time, and may change.
Acquisitions and disposals
On 7
April 2025 Diageo announced the formation of a strategic joint
venture with Main Street Advisors bringing together two great brand
builders to grow Cîroc Ultra-premium Vodka in North America
and Lobos 1707 Tequila around the world. Diageo has agreed to
exchange majority ownership of Cîroc Ultra-premium Vodka in
North America for global majority ownership of Lobos 1707. We
continue to review our portfolio of brands in the region to ensure
that we are well positioned to capture consumer opportunities in a
focused way.
In the
first half of fiscal 25, Diageo completed the sale of its majority
shareholding in Guinness Nigeria PLC. On 28 January 2025, Diageo
announced its agreement to sell its shareholding in Guinness Ghana
Breweries PLC and then on 2 April 2025, Diageo announced its
agreement to sell its shareholding in Seychelles Breweries Limited.
As previously announced, the Africa region is now managed through
two strategic markets, East Africa and South, West and Central
Africa (SWC) which was previously managed as separate markets,
being Nigeria, Africa Regional Markets and South
Africa.
In the
first half of fiscal 25, Diageo completed the sale of Safari, a
fruit flavoured liqueur brand, and the sale of Pampero
rum.
On 23
January 2025, Diageo completed the sale of Cacique
rum.
On 24
September 2024, Diageo acquired the remaining share capital of
Ritual Beverage Company LLC (owner of Ritual Zero Proof
non-alcoholic spirits brand) that it did not already
own.
For the
purposes of organic growth figures the disposals of Guinness
Nigeria, Safari, Pampero and Cacique are completed and therefore
excluded. The other disposals are included in organic growth for
this Q3 trading statement.
The
ongoing restructuring of Diageo’s investment in Distill
Ventures has no impact on organic performance as these investments
have been accounted for as associates.
Effective tax rate reporting change for full-year fiscal
25
To
date, Diageo has included profits from associates, which are
reported on an after-tax basis, within its Effective Tax Rate (ETR)
calculation. This can lead to volatility in the ETR driven by
non-tax related factors, specifically movements in share of
associates income. As such, going forward, Diageo will calculate
and report ETR on a more transparent basis, excluding the after-tax
share of income from associates and joint ventures from profit
before tax. A table is provided below to illustrate the impact on
historically reported ETRs using the revised method of
calculation.
Previously reported tax rates including after-tax profit from share of associates and
joint ventures
|
|
|
F22
|
F23
|
F24
|
F25 H1
|
|
Tax rate including exceptional items
|
|
24.1%
|
20.6%
|
23.7%
|
25.2%
|
|
Tax rate before exceptional items
|
|
22.6%
|
23.0%
|
23.2%
|
24.0%
|
Restated historical tax rates excluding after-tax profit from share of associates and
joint ventures
|
|
|
F22
|
F23
|
F24
|
F25 H1
|
|
Tax rate including exceptional items
|
|
26.6%
|
22.4%
|
25.6%
|
26.3%
|
|
Tax rate before exceptional items
|
|
24.7%
|
24.8%
|
25.1%
|
24.9%
|
Explanatory notes
Comparisons
are to the three months ended 31 March 2024 unless otherwise
stated. Unless otherwise stated, percentage movements given
throughout this document for volume and net sales are organic
movements after retranslating current period reported numbers at
prior period exchange rates and after adjusting for the effect of
exceptional operating items and acquisitions and disposals,
excluding fair value remeasurements.
This
document includes names of Diageo’s products which constitute
trademarks or trade names which Diageo owns or which others own and
license to Diageo for use.
Definitions and reconciliation of non-GAAP measures to GAAP
measures
Diageo’s
strategic planning process is based on certain non-GAAP measures,
including organic movements. These non-GAAP measures are chosen for
planning and reporting, and some of them are used for incentive
purposes. The group’s management believes that these measures
provide valuable additional information for users of the financial
statements in understanding the group’s performance. These
non-GAAP measures should be viewed as complementary to, and not
replacements for, the comparable GAAP measures and reported
movements therein.
It is
not possible to reconcile the forecast tax rate before exceptional
items, forecast organic net sales growth and forecast organic
operating profit growth to the most comparable GAAP measure as it
is not possible to predict, without unreasonable effort, with
reasonable certainty, the future impact of changes in exchange
rates, acquisitions and disposals and potential exceptional
items.
Volume
Volume
is a performance indicator that is measured on an equivalent units
basis to nine-litre cases of spirits. An equivalent unit represents
one nine-litre case of spirits, which is approximately 272
servings. A serving comprises 33ml of spirits, 165ml of wine, or
330ml of ready to drink or beer. Therefore, to convert volume of
products other than spirits to equivalent units, the following
guide has been used: beer in hectolitres, divide by 0.9; wine in
nine- litre cases, divide by five; ready to drink and certain
pre-mixed products that are classified as ready to drink in
nine-litre cases, divide by ten.
Organic movements
Organic
information is presented using US dollar amounts on a constant
currency basis excluding the impact of exceptional items, certain
fair value remeasurements, hyperinflation and acquisitions and
disposals. Organic measures enable users to focus on the
performance of the business which is common to both years and which
represents those measures that local managers are most directly
able to influence.
Detailed
calculation and reconciliation of non-GAAP measures can be found in
the latest Annual Report (available at
https://www.diageo.com/en/investors).
Organic net sales movement calculations for the 3 months ended 31
March 2025 were as follows
|
Net sales
|
North America
|
Europe
|
Asia Pacific
|
Latin America and Caribbean
|
Africa
|
Corporate
|
|
Diageo total
|
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
$m
|
|
3 months ended 31 March 2024 reported
|
1,796
|
910
|
805
|
335
|
385
|
22
|
|
4,253
|
|
Exchange
|
(1)
|
8
|
(11)
|
(9)
|
21
|
0
|
|
8
|
|
Reclassification
|
0
|
(22)
|
22
|
0
|
(17)
|
0
|
|
(17)
|
|
Disposals
|
0
|
(7)
|
(1)
|
(1)
|
(70)
|
0
|
|
(79)
|
|
3 months ended 31 March 2024 adjusted
|
1,794
|
890
|
815
|
326
|
319
|
22
|
|
4,165
|
|
Organic movement
|
110
|
(4)
|
13
|
93
|
32
|
3
|
|
248
|
|
Acquisitions & Disposals
|
5
|
0
|
0
|
2
|
7
|
0
|
|
15
|
|
Exchange
|
(6)
|
(22)
|
(25)
|
(50)
|
6
|
(1)
|
|
(98)
|
|
Hyperinflation
|
0
|
34
|
0
|
8
|
5
|
0
|
|
46
|
|
3 months ended 31 March 2025 reported
|
1,903
|
898
|
803
|
378
|
369
|
25
|
|
4,376
|
|
Organic movement %
|
6.2
|
(0.4)
|
1.6
|
28.5
|
10.1
|
|
|
5.9
|
Quarterly
financials are unaudited. Unrounded financials – due to
rounding, the numbers in this table may not always cast or
calculate.
Cautionary statement concerning forward-looking
statements
This
document contains ‘forward-looking’ statements. These
statements can be identified by the fact that they do not relate
only to historical or current facts. In particular, forward-looking
statements include all statements that express forecasts,
expectations, plans, outlook, objectives and projections with
respect to future matters, including trends in results of
operations, margins, growth rates, phasing and overall market
trends, information related to Diageo’s fiscal 25 outlook and
beyond, ambitions relating to free cash flow and improved operating
leverage, Diageo’s Accelerate programme, the impact of
changes in interest or exchange rates, anticipated cost savings or
synergies, expected investments, the completion of any strategic
transactions or restructuring programmes, anticipated tax rates,
changes in the international tax environment, potential tariffs and
Diageo’s ability to mitigate the impact of tariffs, expected
cash payments, and general economic conditions. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements, including
factors that are outside Diageo's control. Any forward-looking
statements made by or on behalf of Diageo speak only as of the date
they are made. Diageo does not undertake to update forward-looking
statements to reflect any changes in Diageo's expectations with
regard thereto or any changes in events, conditions or
circumstances on which any such statement is based.
An
explanation of non-GAAP measures, including organic movements, is
set out on pages 227-235 of Diageo’s Annual Report for the
year ended 30 June 2024.
Diageo
plc LEI: 213800ZVIELEA55JMJ32
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Diageo plc
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(Registrant)
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Date:
19 May 2025
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By:___/s/
James Edmunds
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James Edmunds
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Deputy Company Secretary
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