Diageo faces profit drop as CEO resigns during tough times

Diageo, a prominent drinks company based in the UK, is expected to reveal disappointing financial results shortly, including a significant drop in profits for the past year ending June. Analysts project an operating profit of 5.65 billion US dollars, down from 6 billion dollars the previous year. This downturn comes amid tougher trading conditions characterized by tariffs and cautious consumer demand, impacting various sectors within the drinks industry. Moreover, Diageo's share price has seen a notable decline of 28% since the beginning of 2025. The situation at Diageo has been further complicated by the recent resignation of its chief executive, Debra Crew, who stepped down by mutual agreement. This change comes in the wake of falling stock prices and is an alarming signal about the company's future. While Crew's departure does not inspire confidence in upcoming financial results, the firm intends to stick to its prior guidance for 2025 and 2026. The interim chief executive and chief financial officer, Nik Jhangiani, will present these financial results amid heightened scrutiny from investors and analysts. Despite these challenges, Diageo has benefited from strong sales of its Guinness brand, particularly in the UK and Europe, which has somewhat mitigated losses in other spirits categories, notably vodka. The firm reported a 2.9% growth in net sales to 4.37 billion dollars for the three months ending March 31, driven by increased activity in North America prior to the activation of import tariffs. The overall increase in demand for Guinness has been a crucial factor for the company during this turbulent period. As Diageo moves forward, there will be a strong focus on how the company plans to manage increased tariff costs, which are estimated to add 150 million dollars annually. The company aims to absorb about half these costs through operational efficiencies, while the remainder may necessitate price increases to consumers. These moves are critical for Diageo to stabilize its financial performance and regain investor confidence as it navigates through ongoing challenges. Overall, the upcoming financial results will be pivotal in shaping the future direction of Diageo amidst a landscape of shifting consumer patterns and economic pressures.