6 August 2026
If you are covering the latest financial results from Diageo, please find below a comment from Chris Beckett, consumer staples analyst at Quilter Cheviot:
"This was a highly anticipated set of results for Diageo as more detail is added to its turnaround strategy. While there are still a lot of moving parts for a business that is in transition, the overall results were better than expected - a nice to have when investors were perhaps worried about what today would bring.
"Operating profit is higher than the market expected as a result of greater cost savings. Much of this has been driven by activities undertaken by the CFO prior to Dave Lewis' arrival as chief executive, putting the business in a good shape to absorb greater cost savings going forward. Indeed, 'Drastic Dave' is perhaps living up to his reputation with subsequently deeper cuts that will last longer than many expected. The company has identified $1bn in cost savings, driven primarily by job losses and efficiencies, while restructuring costs have come in at $1.2bn, highting that this isn't a one-year exercise, but a multi-year programme aimed at righting the Diageo ship.
"The good news for the company is it has not had to throw the kitchen sink at this turnaround, however. The narrative is more of a de-rating story rather than earnings collapsing. The issues in North America and Asia are well known and being addressed, and while exceptional items and impairments make the results look rather terrifying, there is important context that this is a business doing better than feared. Indeed, the capital markets day today will be crucial to convince investors that medium term targets can be met. Diageo is looking to arrest its decline in the US and if it can do that then it is a company that is worth a lot more than it is today, and that explains the positive reaction in the share price.
"Ultimately this is going to be a slow turnaround, but Diageo has a good management team with a track record of deliver at the helm. These results, and the backdrop for the capital markets day, could have been so much worse. If it can hit its three-year targets, however, then the pain of this restructuring will be considered worth it and investors should see greater returns once again."
