Diageo faces $150M profit drop due to Trump tariffs
- Diageo forecasts a $150 million annual profit decline due to a 10% tariff on UK and EU imports into the U.S.
- The company previously revised its estimated annual hit down from $200 million following the resolution of potential tariffs on Mexican tequila and Canadian whisky.
- Despite tariff impacts, Diageo reported strong sales growth and aims to save $500 million by 2028 to strengthen its financial position.
Diageo, the world's largest spirits manufacturer headquartered in the United Kingdom, reported an anticipated annual profit decline of $150 million due to the impact of tariffs imposed by President Donald Trump on imports from the U.K. and Europe. This forecast was shared in their trading statement for the third quarter of fiscal year 2025. The company had previously estimated a higher potential loss of about $200 million before the situation regarding additional tariffs on Mexican tequila and Canadian whisky stabilized. Diageo's CEO, Debra Crew, highlighted that despite this setback, the company experienced strong organic net sales growth during the third quarter and is on track to achieve its financial guidance by the end of the fiscal year. Furthermore, Diageo aims to implement cost-saving measures totaling $500 million by 2028, following a period of declining sales, in order to generate approximately $3 billion in free cash flow annually starting fiscal 2026 while also working to reduce overall debt. The spirits industry has faced significant challenges lately—notably a marked drop in sales amid high inflation and interest rates—which were exacerbated by Trump's extensive tariff plans. Diageo generates about 45% of its sales from products produced in either Mexico or Canada, making the company particularly sensitive to tariffs affecting these countries.