Diageo launched a Diageo cost savings plan worth $1 billion on 6 August 2025, sending shares in the FTSE 100 drinks group up as much as 8% as chief executive Dave Lewis presented the company’s full-year results and a blueprint for turning around its fortunes.
The London-listed owner of Guinness, Johnnie Walker and Tanqueray reported a 3% fall in net sales to $19.6 billion in the year to end June, with reported profit falling by more than a fifth to just under $2 billion. Lewis cut the dividend from 63 cents to 30 cents per share and took a $1.5 billion impairment charge, largely from a writedown of the company’s business in Turkey.
Inside the Diageo Cost Savings Plan
The $1 billion programme splits into two streams, according to Yahoo Finance. Some $850 million will come from a redesign of the company’s operating framework, with roughly 40% of that sum expected in fiscal 2027 and the balance in fiscal 2028. A further $150 million is targeted from supply-chain initiatives, approximately a quarter of which is earmarked for the new financial year.
The programme replaces a predecessor plan, announced a year earlier, that had targeted around $625 million in savings over three years. Lewis is moving faster and deeper.
The restructuring carries a heavy upfront cost. Diageo’s 6-K filing, summarised by StockTitan, shows $908 million in restructuring charges booked as exceptionals in fiscal 2026: approximately $752 million relating to the operating framework redesign and $156 million covering supply-chain and the ‘Accelerate’ programme. Yahoo Finance also cited those figures from the company’s own statement.
Underlying Performance and Balance Sheet
Beneath the reported decline, Diageo’s 6-K filing showed organic operating profit rose 2.0% and organic operating margin expanded by 116 basis points. Free cash flow rose $463 million to $3.2 billion for the fiscal year. Net debt to adjusted EBITDA stood at 3.1x.
Regionally, Europe delivered sales growth of 5.7% and Latin America 16.9%, but both were outweighed by an 8.3% slide in Asia and a 9.1% plunge in North America.
Lewis, who joined Diageo at the start of the year and built a reputation for tough turnarounds at Tesco, said the company would broaden beyond its premium-only strategy after consumers traded down to cheaper spirits. ‘We remain a business with a very strong premiumisation agenda, but by activating our wider portfolio, we will be able to serve more consumers, across a variety of occasions,’ he said.
On North America, where the decline was steepest, Lewis was direct: ‘There is hard work ahead, particularly in North America, where improving performance is a clear priority, but we are confident we can deliver without taking a step back in operating profit.’
Chris Beauchamp, chief market analyst at trading platform IG, said the dividend cut was the kind of move only a new chief executive with a mandate to save the business could make without destroying the share price. ‘The market was prepared for it anyway after the half year was given similar treatment to today’s full-year figure,’ Beauchamp said. ‘Now comes the hard part, convincing and then showing investors that the turnaround plan is going to pay off.’
The Diageo cost savings plan will be scrutinised against a clear timetable: the company said it expected to stem the sales decline in the coming year, with the bulk of the $850 million operating-framework savings landing in fiscal 2028. Progress on North American volumes in the first half of fiscal 2027 will be the earliest hard test of whether the plan is working.
