Diageo CEO looks to reset with $1 billion cost-cutting plan

Diageo reported a 2% drop in organic sales for the year ended June 30, in line with estimates, and forecast flat annual sales for fiscal 2027.

It expects low-single-digit organic net sales growth between fiscal 2027 and 2029. The company had previously targeted growth of 5% to 7% in the medium term before scrapping the forecast as spirits sales shrank from pandemic-era highs.

CEO Dave Lewis said in a recorded presentation launching the plan that a restructuring programme of this size has "very significant impacts" on colleagues, but did not say how many jobs would be affected.

The programme had mostly been communicated throughout the business around a month ago, Lewis, who took over at Diageo in January, said.

Spirits investors are looking to Lewis, nicknamed "Drastic Dave" for his history of cost-cutting at Tesco TSCO.L and Unilever ULVR.L, not only to turn around Diageo, but also to chart a path back to growth for an industry confronted with changes in what, where and how much people drink.

Diageo, which also makes Smirnoff vodka and Captain Morgan rum, said it would incur about $1.2 billion of restructuring costs as it works to address weakness in North America, its largest market, and optimize its supply chain.

"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," Lewis said in a statement.

Aug. 6 (Reuters) - Diageo DGE.L announced a plan to save $1 billion over three years on Thursday, an aggressive overhaul of the world's top spirits maker as it forecast low growth through 2029, sending its shares up more than 7%.