Drinks giant Diageo, the company behind Guinness and Johnnie Walker, has once again downgraded its financial outlook and significantly cut its shareholder dividend payout.
The move comes as its new boss, Sir Dave Lewis, stated the group needed to “act more decisively” to address its “flagging performance”.
Sir Dave, who previously led Tesco and took the helm at the start of the year, acknowledged there was “significant work ahead” to turn the company around.
His comments followed a 2.8 per cent drop in underlying operating profits, which fell to $3.26 billion (£2.4 billion) for the six months ending 31 December. Underlying sales also saw a 2.8 per cent decline.
This marks the second time in three months that the firm has lowered its full-year guidance.
Sales are now projected to fall by 2 to 3 per cent, primarily due to ongoing struggles in the US market, with earnings expected to be flat or see only a low-single-digit rise.
In a blow to investors, the interim dividend has been more than halved. Diageo is accelerating its cost-saving initiatives, anticipating approximately 50 per cent of its planned cuts to be realised in the current financial year.
Sir Dave is currently developing an updated strategy for the group, which is slated for unveiling later in the summer.
He said: “Only several weeks in I can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering leading to higher growth.
“To deliver on these opportunities, we need to create more financial flexibility.
“Accordingly, the board has taken the difficult decision to reduce the dividend to a more appropriate level which will accelerate the strengthening of our balance sheet.
“We are confident that this is the right action which will ensure that Diageo can reinforce its position as the leading international spirits business and drive stronger shareholder value over the coming years.”
