[Strategic Report: Our Business](index=2&type=section&id=Strategic%20report%3A%20Our%20business) This section outlines Diageo's global operations, brand portfolio, and strategic priorities, detailing its market position and growth initiatives [Diageo at a Glance](index=2&type=section&id=Diageo%20at%20a%20glance) This section provides an overview of Diageo's global operations, brand portfolio, and strategic focus, highlighting its market leadership and extensive reach FY2025 Overview | Metric | Value | | :----- | :---- | | FY2025 Reported Net Sales | **20.2 billion USD** | | Number of Billion-Dollar Brands | **13** | | International Spirits Ranking (by retail sales) | **1** | | Global Business Coverage | **~180 countries and regions** | | Number of Employees | **29,000+** | | Number of Production Sites | **110+** | - Diageo holds leading positions across categories including whisky, tequila, vodka, gin, and liqueurs[5](index=5&type=chunk) - The company's product portfolio spans multiple price tiers: Value Standard (**8%**), Premium (**30%**), Super Premium (**37%**), Ultra-Premium (**16%**), Luxury (**5%**), and Non-alcoholic Spirits (**4%**)[5](index=5&type=chunk) [Chair's Statement](index=3&type=section&id=Chair%27s%20statement) Sir John Manzoni reviews his first six months, highlighting Diageo's **1.7% organic net sales growth** and maintained **103.48 cents per share dividend** in FY2025 despite macroeconomic challenges, driven by strong brands and global presence - Sir John Manzoni was appointed Chair in February 2025[9](index=9&type=chunk) FY2025 Performance Highlights | Metric | FY2025 Performance | | :----- | :------------- | | Organic Net Sales Growth | **1.7%** | | Organic Volume Growth | **0.9%** | | Price/Mix | **0.8%** | | Full-Year Dividend | **103.48 cents per share** (flat) | - Diageo is the world's largest producer of non-alcoholic spirits, expanding its portfolio through acquisitions like Ritual Beverage Company LLC and products such as Captain Morgan 0.0[22](index=22&type=chunk) - Over the past decade, premium and above international spirits have grown from **26% to nearly 35%** of category value, with ultra-premium growing **over 50% faster** than other price tiers[23](index=23&type=chunk) - Debra Crew resigned as CEO in July 2025, with Nik Jhangiani appointed interim CEO and Deirdre Mahlan as interim CFO[25](index=25&type=chunk)[26](index=26&type=chunk) [Chief Executive's Statement](index=4&type=section&id=Chief%20Executive%27s%20statement) Interim CEO Nik Jhangiani reports **1.7% organic net sales growth** and a **1.0% organic operating profit decline** (excluding Cîroc) in FY2025, aligning with guidance, driven by strong tequila and Guinness performance and strategic divestitures FY2025 Performance Summary | Metric | FY2025 Performance | | :----- | :------------- | | Organic Net Sales Growth | **1.7%** (1.5% excluding Cîroc) | | Organic Operating Profit Decline | **0.7%** (1.0% excluding Cîroc) | | Net Cash Flow from Operating Activities | **4.3 billion USD** (up 0.2 billion USD) | | Free Cash Flow | **2.7 billion USD** (up 0.1 billion USD) | - Tequila organic net sales grew by **18%**, with Don Julio gaining global market share[51](index=51&type=chunk) - Guinness sustained strong growth, expanding to **88 markets**, with its non-alcoholic version, Guinness 0.0, becoming the UK's number one non-alcoholic beer[53](index=53&type=chunk)[58](index=58&type=chunk) - The "Accelerate" program aims for sustained **~3.0 billion USD** free cash flow annually from FY2026 and **~625 million USD** in cost savings over the next three years[59](index=59&type=chunk)[73](index=73&type=chunk) - The company executed several strategic divestitures, including the Pampero, Safari, and Cacique brands, and equity stakes in Guinness Nigeria, Guinness Ghana, and Seychelles Breweries[53](index=53&type=chunk) [Performance Highlights](index=5&type=section&id=Performance%20highlights) This section summarizes Diageo's FY2025 financial and non-financial performance, noting growth in organic net sales and free cash flow, alongside progress in positive drinking education, water efficiency, and diversity FY2025 Financial Performance | Metric | Value (FY2025) | Reported Change (%) | Organic Change (%) | | :-------------------------- | :------------------ | :-------------------- | :------------------- | | Volume (equivalent units) | **230.1 million units** | -% | **1%** ▲ | | Reported Net Sales | **20.245 billion USD** | -% | **2%** ▲ | | Reported Operating Profit | **4.335 billion USD** | **(28)%** ▼ | **(1)%** ▼ | | Net Cash Flow from Operating Activities | **4.297 billion USD** | -% | - | | Free Cash Flow | **2.748 billion USD** | - | - | | Earnings Per Share (EPS) | **105.9 cents** | **(39)%** ▼ | - | | EPS before exceptional items | - | **(9)%** ▼ | - | FY2025 Non-Financial Performance | Metric | Value (FY2025) | Change from FY2024 | | :------------------------------------------------ | :---------------- | :------------------- | | People educated on underage drinking harms | **2.0 million people** | **(0.2 million people)** ▼ | | Global Female Leaders | **43%** | **(1)%** ▼ | | Global Minority Ethnic Leaders | **46%** | **0%** | | Water Efficiency (vs. FY2020 baseline) | **(15.8)%** | **(2.9)%** ▼ | | GHG Emissions (Scope 1 & 2, vs. FY2022 baseline) | **(18.8)%** | **(4.4)%** ▼ | - The "Accelerate" program targets include achieving **~3.0 billion USD** in free cash flow annually from FY2026, **~625 million USD** in cost savings over the next three years, and maintaining a net debt to adjusted EBITDA ratio between **2.5x and 3.0x** by FY2028[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Market Dynamics](index=6&type=section&id=Market%20dynamics) This section explores the spirits industry's attractive fundamentals, including premiumization and growth opportunities, while addressing potential headwinds like consumer spending, cannabis, and GLP-1s - Long-term value growth in spirits is driven by premiumization; over the past decade, premium and above spirits have grown from **26% to nearly 35%** of category value[101](index=101&type=chunk) - Diageo holds a **4.5% share** of the global Total Beverage Alcohol (TBA) market, with significant growth opportunities in key markets including the US[102](index=102&type=chunk) - Positive drinking is a key opportunity for Diageo, with spirits' inherent versatility making it more accessible and appealing; the company leads in non-alcoholic innovation[118](index=118&type=chunk) - Gen Z's penetration in the US spirits market is increasing, driven by spirits-based Ready-to-Drink (RTD) products and tequila, with participation rates higher than the total drinking population average[119](index=119&type=chunk) [Our Strategy](index=7&type=section&id=Our%20strategy) Diageo's strategy focuses on leveraging its brand portfolio, leading consumer trends like premiumization and positive drinking, and achieving operational excellence through initiatives like the "Accelerate" program - Strategic priorities include maintaining leadership in whisky and tequila, accelerating Johnnie Walker recruitment through innovation, and promoting local brands like Buchanan's Pineapple[125](index=125&type=chunk)[126](index=126&type=chunk) - Guinness is a key strategic growth focus, consistently delivering **double-digit net sales growth** and expanding its consumer base with innovations like Guinness 0.0[127](index=127&type=chunk) - Shaping consumer trends involves developing cocktail culture with premium portfolios, leading positive drinking in non-alcoholic and low-alcohol products, expanding RTD portfolios for convenience, and accelerating growth in the luxury segment[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) - Operational excellence is achieved by optimizing A&P (advertising and promotion) efficiency, strengthening commercial execution (e.g., digital innovation), and enhancing productivity (e.g., revenue growth management, supply chain excellence)[135](index=135&type=chunk) - The "Accelerate" program targets include achieving **~3.0 billion USD** in free cash flow annually from FY2026, **~625 million USD** in cost savings over the next three years, and maintaining a net debt to adjusted EBITDA ratio between **2.5x and 3.0x** by FY2028[136](index=136&type=chunk) [Strategic Report: Our Performance](index=9&type=section&id=Strategic%20report%3A%20Our%20performance) This section details Diageo's financial and non-financial performance, outlining its business model, key performance indicators, and progress across various strategic and ESG initiatives [Our Business Model](index=9&type=section&id=Our%20business%20model) Diageo's business model creates value through seven key stages, from sourcing to consumer celebration, with recent operational excellence in US spirits transformation, supply chain digitalization, and luxury brand building - The business model encompasses sourcing, innovation, manufacturing, shipping, selling to customers, marketing to consumers, and helping consumers celebrate[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) - The US spirits business underwent a significant transformation, enhancing route-to-market and commercial execution by increasing brand building and sales roles for whisky and tequila[163](index=163&type=chunk)[164](index=164&type=chunk) - Supply chain digitalization was achieved through the deployment of the Scotch Whisky Intelligent Platform (SIP), optimizing pre-bottling allocation, increasing maturation output, and synchronizing liquid logistics[167](index=167&type=chunk)[177](index=177&type=chunk) - The Diageo Luxury Private Client Group was established to accelerate growth in the ultra-premium (100 USD and above) spirits segment and lead luxury experiences[172](index=172&type=chunk)[173](index=173&type=chunk) [Monitoring Performance and Progress](index=10&type=section&id=Monitoring%20performance%20and%20progress) This section details Diageo's financial and non-financial KPIs, including reported and non-GAAP metrics, defining them and presenting FY2025 performance against prior years Reported Financial Metrics | Metric | 2025 | 2024 | 2023 | 2022 | 2021 | | :---------------------- | :----- | :----- | :----- | :----- | :----- | | Net Sales Growth (%) | **(0.1)** | **(1.4)** | **0.2** | **19.3** | **16.1** | | Operating Profit Growth (%) | **(27.8)** | **8.2** | **(5.9)** | **17.1** | **84.9** | | Basic EPS (cents) | **105.9** | **173.2** | **196.3** | **184.6** | **153.8** | | Net Cash Flow from Operating Activities (million USD) | **4,297** | **4,105** | **3,636** | **5,213** | **4,932** | | Return on Net Assets at Period End (%) | **19.3** | **34.5** | **38.3** | **38.3** | **32.3** | Non-GAAP Financial Metrics | Metric | 2025 | 2024 | 2023 | 2022 | 2021 | | :------------------------------------ | :----- | :----- | :----- | :----- | :----- | | Organic Net Sales Growth (%) | **1.7** | **(0.6)** | **6.5** | **21.4** | **16.0** | | Organic Operating Profit Growth (%) | **(0.7)** | **(4.8)** | **7.0** | **26.3** | **17.7** | | EPS before exceptional items (cents) | **164.2** | **179.6** | **196.5** | **201.9** | **158.8** | | Free Cash Flow (million USD) | **2,748** | **2,609** | **2,235** | **3,779** | **4,106** | | Average Return on Invested Capital (%) | **13.7** | **15.8** | **18.4** | **19.8** | **16.1** | | Total Shareholder Return (%) | **(24)** | **(24)** | **(2)** | **4** | **32** | - Reported net sales decreased by **0.1%**, primarily due to unfavorable exchange rates and acquisition/disposal adjustments; organic net sales grew by **1.7%** (1.5% excluding Cîroc)[178](index=178&type=chunk) - Reported operating profit decreased by **27.8%**, mainly due to exceptional impairment and restructuring costs; organic operating profit decreased by **0.7%** (1.0% excluding Cîroc)[178](index=178&type=chunk) [Non-Financial Performance](index=11&type=section&id=Non-financial%20performance) This section details Diageo's FY2025 non-financial performance across key ESG areas, including positive drinking, employee engagement, diversity, water efficiency, and GHG emissions FY2025 Non-Financial Performance Highlights | Metric | FY2025 Performance | FY2024 Performance | 2030 Target | | :------------------------------------------------ | :--------------- | :--------------- | :------------- | | People educated on underage drinking harms (millions) | **2.0 million** | **2.2 million** | **10.0 million** | | Employee Engagement Index (%) | **83%** | **81%** | - | | Global Female Leaders (%) | **43%** | **44%** | **50%** | | Global Minority Ethnic Leaders (%) | **46%** | **46%** | **45%** | | Water Efficiency (vs. FY2020 baseline) (%) | **(15.8)%** | **(12.9)%** | **30% reduction** | | Scope 1 & 2 GHG Emissions (vs. FY2022 baseline) (%) | **(18.8)%** | **(14.4)%** | **50% reduction** | - Employee engagement remained high at **83%**, with **90%** of employees proud to work for Diageo[187](index=187&type=chunk) - Water efficiency improved by **15.8%** since the FY2020 baseline, driven by initiatives in East Africa, Scotland, Runcorn, and St. James's Gate[187](index=187&type=chunk) - Scope 1 and 2 GHG emissions decreased by **18.8%** from the FY2022 baseline, primarily due to increased use of liquid biofuels and improved energy efficiency[187](index=187&type=chunk)[190](index=190&type=chunk) [Summary Financial Review](index=12&type=section&id=Summary%20financial%20review) This section briefly reviews Diageo's FY2025 financial performance, detailing reported and organic changes in net sales, operating profit, and key metrics, highlighting impacts from exchange rates, acquisitions, and exceptional items FY2025 Key Financial Metrics (Reported vs. Organic) | Metric | Reported | Organic | | :-------------------------- | :------- | :------ | | Net Sales Growth | **(0.1)%** | **1.7%** | | Operating Profit Growth | **(27.8)%** | **(0.7)%** | | Operating Profit Margin | **21.4%** | **28.0%** | | Net Cash Flow from Operating Activities | **4.297 billion USD** | - | | Free Cash Flow | **2.748 billion USD** | - | | Return on Net Assets at Period End | **19.3%** | - | | Average Return on Invested Capital | **13.7%** | - | | Basic EPS | **105.9 cents** | - | | EPS before exceptional items | **164.2 cents** | - | - Reported net sales were **20.245 billion USD**, a **0.1% decrease**, primarily impacted by unfavorable exchange rates (**-0.6%**) and acquisition/disposal adjustments (**-1.1%**), partially offset by hyperinflation adjustments[195](index=195&type=chunk) - Organic net sales grew by **1.7%**, driven by **0.9%** volume growth and **0.8%** positive price/mix, with strong performance from Don Julio, Guinness, and Crown Royal[196](index=196&type=chunk) - Exceptional operating items increased to **1.369 billion USD**, mainly due to impairment charges (**458 million USD** for Distill Ventures, **231 million USD** for Aviation American Gin) and "Accelerate" program restructuring costs (**225 million USD**)[200](index=200&type=chunk) - Basic EPS before exceptional items decreased by **8.6% to 164.2 cents**, primarily due to a significant decline in Moët Hennessy associate income and unfavorable exchange rate impacts[207](index=207&type=chunk) [Business Review](index=14&type=section&id=Business%20review) This section provides a comprehensive overview of Diageo's business performance, segmented by region, category, and brand, highlighting key drivers and strategic initiatives [Regional Performance](index=14&type=section&id=Regional%20performance) This section disaggregates Diageo's performance by region, presenting reported net sales, operating profit, and key highlights for North America, Europe, APAC, Latin America and Caribbean, and Africa FY2025 Regional Performance (Reported Net Sales and Operating Profit) | Region | Reported Net Sales (million USD) | Reported Operating Profit (million USD) | | :-------------------------- | :----------------------------- | :---------------------------------- | | North America | **7,973** | **2,222** | | Europe | **4,821** | **823** | | APAC | **3,635** | **890** | | Latin America and Caribbean | **1,847** | **509** | | Africa | **1,834** | **283** | - North America (**40%** of net sales) growth was primarily driven by tequila (Don Julio) and Guinness, with a focus on enhancing marketing effectiveness and route-to-market transformation[91](index=91&type=chunk)[246](index=246&type=chunk)[249](index=249&type=chunk) - Europe (**24%** of net sales) achieved positive net sales growth and market share expansion, with **double-digit growth** in Guinness as a key driver[94](index=94&type=chunk)[258](index=258&type=chunk)[261](index=261&type=chunk) - APAC (**18%** of net sales) faced challenges but successfully launched strategic innovations (Johnnie Walker Gold Label, Black Label Ruby, Cîroc Crush RTD) and implemented structural interventions[96](index=96&type=chunk)[267](index=267&type=chunk) - Latin America and Caribbean (**9%** of net sales) accelerated growth in the second half, focusing on operational excellence and market share gains, especially in Brazil (Johnnie Walker, Old Parr, Cîroc RTD)[86](index=86&type=chunk)[274](index=274&type=chunk)[277](index=277&type=chunk)[279](index=279&type=chunk) - Africa (**9%** of net sales) reported net sales growth, with **double-digit growth** in Ghana, South Africa, and Tanzania, leveraging investments in the portfolio[88](index=88&type=chunk)[285](index=285&type=chunk) [Category and Brand Review](index=18&type=section&id=Category%20and%20brand%20review) This section provides a detailed review of Diageo's FY2025 performance across major categories and brands, highlighting strong organic net sales growth in tequila and beer, while Scotch and vodka declined FY2025 Major Category Performance (Organic Net Sales Change) | Category | Organic Net Sales Change (%) | Reported Net Sales Share (%) | | :------------------ | :----------------------------- | :--------------------------------- | | Spirits | **0** | **76** | | Scotch | **(4)** | **22** | | Tequila | **18** | **13** | | Vodka | **(5)** | **8** | | Canadian Whisky | **3** | **7** | | Rum | **(5)** | **5** | | Liqueurs | **(4)** | **5** | | Gin | **(4)** | **4** | | Indian-Made Foreign Liquor Whisky | **10** | **4** | | Chinese White Spirits | **(8)** | **3** | | American Whiskey | **(9)** | **2** | | Beer | **10** | **18** | | Ready to Drink | **2** | **4** | FY2025 Major Brand Performance (Organic Net Sales Change) | Brand | Organic Net Sales Change (%) | | :-------------- | :----------------------------- | | Johnnie Walker | **(5)** | | Don Julio | **38** | | Guinness | **13** | | Crown Royal | **3** | | Cîroc | **(5)** | | Baileys | **(4)** | | Captain Morgan | **(6)** | | Casamigos | **(16)** | | Shui Jing Fang | **(8)** | | McDowell's | **7** | - Tequila organic net sales grew by **18%**, with Don Julio growing by **38%**; beer organic net sales grew by **10%**, primarily driven by Guinness, which grew by **13%**[290](index=290&type=chunk)[291](index=291&type=chunk) - Scotch organic net sales decreased by **4%**, with Johnnie Walker down **5%**; vodka and rum organic net sales both decreased by **5%**[290](index=290&type=chunk)[291](index=291&type=chunk) [Group Financial Review](index=18&type=section&id=Group%20financial%20review) This section provides a detailed analysis of Diageo's FY2025 group financial performance, covering net sales, operating profit, and exceptional items, explaining impacts from exchange rates, acquisitions, and hyperinflation Group Financial Performance (FY2025 vs. FY2024) | Metric | FY2025 (million USD) | FY2024 (million USD) | Organic Change (million USD) | | :------------------------------------------ | :--------------- | :--------------- | :--------------------------- | | Net Sales | **20,245** | **20,269** | **338** | | Gross Profit | **12,173** | **12,198** | **224** | | Marketing Spend | **(3,662)** | **(3,691)** | **(2)** | | Other Operating Items | **(4,176)** | **(2,506)** | **(260)** | | Operating Profit | **4,335** | **6,001** | **(38)** | | Non-Operating Items | **(220)** | **(70)** | - | | Net Finance Charges | **(771)** | **(885)** | - | | Share of Post-Tax Profit of Associates and Joint Ventures | **193** | **414** | - | | Profit Before Taxation | **3,537** | **5,460** | - | | Taxation | **(999)** | **(1,294)** | - | - Exceptional operating items were a **1.369 billion USD** charge (compared to a **56 million USD** gain in FY2024), primarily driven by investment impairments (**910 million USD**), "Accelerate" program restructuring (**225 million USD**), and a change in French distribution model (**145 million USD**)[301](index=301&type=chunk) - Net cash flow from operating activities increased by **192 million USD to 4.297 billion USD**, and free cash flow increased by **139 million USD to 2.748 billion USD**[210](index=210&type=chunk) - Average Return on Invested Capital (ROIC) decreased to **13.7%** (from **15.8%** in FY2024), mainly due to lower Moët Hennessy associate income and unfavorable exchange rate impacts[213](index=213&type=chunk) - Net debt increased to **21.854 billion USD** (from **21.017 billion USD** in FY2024), primarily due to exchange rate movements on non-USD denominated debt[214](index=214&type=chunk) [Spirit of Progress](index=20&type=section&id=Spirit%20of%20Progress) "Spirit of Progress" is Diageo's ESG action plan, focusing on business integrity, positive drinking, grain-to-glass sustainability, and inclusion and diversity, regularly reviewed against stakeholder feedback and evolving regulations - "Spirit of Progress" priorities include embedding integrity, upholding human rights, building culture, protecting people (health and safety), promoting positive drinking, preserving natural resources (sustainability), and championing inclusion and diversity[326](index=326&type=chunk)[327](index=327&type=chunk) - Governance of "Spirit of Progress" is overseen by both the Board and the Executive Committee, with the CEO accountable for performance[331](index=331&type=chunk) - Diageo is monitoring and preparing to comply with the EU's Corporate Sustainability Reporting Directive (CSRD) and UK Sustainability Reporting Standards (aligned with ISSB) by FY2028[333](index=333&type=chunk) - Updated Science Based Targets initiative (SBTi) emissions reduction targets were approved in FY2025[329](index=329&type=chunk) [Business Integrity and Human Rights](index=21&type=section&id=Business%20integrity%20and%20human%20rights) Diageo is committed to business integrity and human rights, implementing annual training, a confidential SpeakUp service, and a KYBP program for third-party risk management, focusing on prominent human rights risks - All employees are required to complete annual Code of Business Conduct training and certification[346](index=346&type=chunk)[347](index=347&type=chunk) - SpeakUp is a global, confidential grievance and whistleblowing service, available in **20 languages**, for reporting potential misconduct[349](index=349&type=chunk) - The Know Your Business Partner (KYBP) program aims to identify potential risks with third parties and strengthened its governance process in FY2025[350](index=350&type=chunk) - Identified salient human rights risks include health and safety, wages and benefits, working hours, harassment and bullying, discrimination, freedom of association and collective bargaining, child labor, forced labor, water sanitation, and land rights[356](index=356&type=chunk) - Supplier compliance targets for high-risk suppliers increased from **65% to 85%**, requiring independent ethical audits[360](index=360&type=chunk) [Our People and Culture](index=22&type=section&id=Our%20people%20and%20culture) Diageo fosters a highly engaged and diverse workforce with **83% employee engagement**, prioritizing talent development through internal promotions and programs like "Horizons" and "Impact," while promoting well-being and agile culture Employee Engagement and Diversity | Metric | FY2025 | FY2024 | External Benchmark | | :-------------------------------- | :-------- | :-------- | :----------------- | | Overall Engagement Score (%) | **83%** | **81%** | **76%** | | Proud to work for Diageo (%) | **90%** | - | **78%** | | Global Female Leaders (%) | **39%** | **39%** | - | - In FY2025, **79%** of leadership appointments were internal talent, with **21%** being international moves and **16%** cross-functional moves[373](index=373&type=chunk) - The "Impact" development program for people managers and "Horizons" program for emerging general managers were launched to foster team growth and high performance[374](index=374&type=chunk)[375](index=375&type=chunk) - The "Celebrate" global recognition platform received over **140 thousand nominations**, reinforcing "Accelerate behaviors" for speed and agility[378](index=378&type=chunk) - The "One World" global employee share plan was launched, awarding **500 GBP** in free shares to **17 thousand** eligible employees, adding **15 thousand** new Diageo employee shareholders[387](index=387&type=chunk) [Health and Safety](index=23&type=section&id=Health%20and%20safety) Diageo prioritizes employee health and safety through a culture of collective responsibility, global policies, and the "Working Safer Together" strategy, resulting in a reduced Lost Time Accident Frequency Rate (LTAFR) in FY2025 Lost Time Accident Frequency Rate (LTAFR) | Year | LTAFR (per thousand full-time employees) | | :--- | :--------------------- | | **2025** | **0.82** | | **2024** | **1.06** | | **2023** | **0.91** | - In FY2025, the company invested over **40 million USD** in shuttle warehousing to enhance safety and productivity[403](index=403&type=chunk) - A governance baseline culture survey was launched for the first time across the global supply chain organization, revealing high levels of health and safety maturity (**86%** at manufacturing sites, **84%** at technical centers)[410](index=410&type=chunk) - Behavioral standards workshops have been implemented at **19 standalone sites** and expanded to Mexico, Turkey, and Australia to enhance safety culture[411](index=411&type=chunk) [Promote Positive Drinking](index=24&type=section&id=Promote%20positive%20drinking) Diageo is dedicated to improving drinking habits through education, promoting moderation, and responsible marketing, with initiatives like SMASHED, WSOTR, and DRINKiQ, alongside expanding its non-alcoholic portfolio Positive Drinking Targets and Performance | Target Area | 2030 Target | 2025 Cumulative Progress | 2025 Performance | | :-------------------------- | :------------- | :----------------------- | :--------------- | | Underage Drinking (SMASHED) | **10 million people educated** | **8.2 million people** | **2.0 million people educated** | | Drink Driving (WSOTR) | **5 million educational experiences** | **3.8 million experiences** | **1.6 million experiences** | - Employees are confident discussing positive drinking, with **93%** feeling confident in both professional and personal settings[425](index=425&type=chunk) - A comprehensive "Take a Minute. Make a Plan. Never Drink and Drive" campaign was launched in the US, reaching over **100 million people** and redeeming over **1 million Uber ride discounts**[431](index=431&type=chunk) - The non-alcoholic portfolio expanded from **3 products in FY2020 to 20 in FY2025**, launched across **15 markets**[434](index=434&type=chunk) - An AI-based assistant was deployed to support human review of Diageo Marketing Code (DMC), reducing content review time while maintaining high compliance standards[439](index=439&type=chunk) [Pioneering Grain to Glass Sustainability](index=25&type=section&id=Pioneering%20grain%20to%20glass%20sustainability) Diageo's sustainability strategy addresses climate change and natural resource depletion, particularly water and agriculture, through revised decarbonization and packaging targets, water efficiency investments, and regenerative agriculture initiatives - Climate risks are intensifying, with water stress identified as the greatest physical risk impacting operations, agricultural raw materials, and license to operate[446](index=446&type=chunk)[469](index=469&type=chunk) - Revised decarbonization targets, approved by SBTi, align with the Paris 1.5°C pathway, including near-term (2030) and long-term (2040/2050 net zero) goals for direct operations and value chain emissions[450](index=450&type=chunk)[526](index=526&type=chunk) - Packaging targets were reformulated to focus on increasing recycled content in packaging (**50% by 2030**) and reporting lightweighting case studies, rather than specific weight reduction targets[490](index=490&type=chunk)[549](index=549&type=chunk) - **358 million USD** has been invested to date (with a planned **1.2 billion USD** by 2030) to accelerate water stewardship and GHG emissions reduction[492](index=492&type=chunk) - Natural risk assessments identified agave, broken rice, sugarcane, sorghum, and barley as agricultural raw materials with the highest relative natural impact, primarily due to water scarcity[486](index=486&type=chunk) [Champion Inclusion and Diversity](index=31&type=section&id=Champion%20inclusion%20and%20diversity) Diageo champions inclusion and diversity to drive performance, targeting **50% female leaders by 2030** and exceeding its minority ethnic leader goal, supported by expanded parental leave, talent development, and inclusive marketing Leadership Diversity Targets and Performance | Metric | 2030 Target | 2025 Performance | | :-------------------------------- | :------------ | :--------------- | | Female Leaders (%) | **50%** | **43%** | | Minority Ethnic Leaders (%) | **45%** | **46%** | - The "Parental Leave" policy has expanded to **30 countries**, and "Fertility Support Guidelines" have extended to Australia, Central America and Caribbean (CCA), and Middle East and North Africa (MENA) markets[570](index=570&type=chunk)[571](index=571&type=chunk) - The "Learning for Life" (L4L) program has reached **35 thousand people** in **34 countries**, with over **50% women**, providing business and hospitality skills training[579](index=579&type=chunk) - A diverse supplier base has been established in **28 countries**, partnering with over **930 diverse suppliers**, of which over **60% are women-owned**[584](index=584&type=chunk) - Inclusive marketing campaigns, such as Johnnie Walker's "Pass the Mic" and Guinness's partnership with IDA Sports, aim to reflect all consumers and promote diversity in media and sports[586](index=586&type=chunk) [Our ESG Reporting Approach](index=32&type=section&id=Our%20ESG%20reporting%20approach) Diageo's ESG reporting emphasizes transparency and continuous improvement, aligning with GRI and SASB frameworks while preparing for CSRD and ISSB, providing comprehensive disclosures through its reporting suite - The ESG reporting suite includes the Annual Report, ESG Reporting Index, and Non-Financial Reporting Boundaries and Methodology[597](index=597&type=chunk) - Reporting is voluntarily conducted in accordance with the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) frameworks[332](index=332&type=chunk) - The company is monitoring and planning to apply the EU's Corporate Sustainability Reporting Directive (CSRD) and UK Sustainability Reporting Standards (aligned with ISSB) as required[333](index=333&type=chunk) [Our Principal Risks and Risk Management](index=33&type=section&id=Our%20principal%20risks%20and%20risk%20management) Diageo employs a robust risk management approach, integrating internal controls and business integrity to identify, assess, and mitigate significant risks over a three-to-five-year horizon, overseen by the Audit Committee - Effective risk management is comprehensive and integrated, focusing on significant risks that could impact performance or reputation[601](index=601&type=chunk) - Principal risks are assessed over a **three-to-five-year horizon**, considering risk velocity (the speed at which a risk materializes)[607](index=607&type=chunk) - Principal risks include: climate change and sustainability, regulation, trade barriers and indirect taxes, geopolitical volatility and business disruption, macroeconomic and financial volatility, tax compliance and management, supply chain disruption, cyber and IT resilience, business ethics and integrity, consumer demand disruption, product quality, food safety and counterfeiting, and transformation[612](index=612&type=chunk) - Artificial Intelligence (AI) is identified as an emerging risk area within existing principal risks, with the company embedding an AI governance approach[616](index=616&type=chunk) [Viability Statement](index=38&type=section&id=Viability%20statement) The Board assessed Diageo's long-term viability over a three-year period, confirming its financial capacity and resilience against severe but plausible downside scenarios, concluding strong liquidity and continued operations - The viability assessment period is **three years**, aligned with the Group's strategic plan[651](index=651&type=chunk) - Modeled severe but plausible risks include: global economic recession, increased geopolitical tensions, changes in consumer choice and regulatory impact, and climate change and natural disasters[653](index=653&type=chunk) - Even under severe scenarios, the Group's liquidity is expected to remain strong, with mitigating actions including reducing discretionary spend and temporarily suspending/reducing dividends[657](index=657&type=chunk) - The Board has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the **three-year** assessment period[658](index=658&type=chunk) [Governance Report](index=39&type=section&id=Governance%20report) This section details Diageo's corporate governance framework, including the Board's role, committee structures, and compliance with governance codes, ensuring effective oversight and long-term success [Chair's Introduction to Governance](index=39&type=section&id=Chair%27s%20introduction%20to%20Governance) Sir John Manzoni introduces the governance report, emphasizing the Board's role in leadership, strategic direction, and ensuring long-term sustainable success, highlighting adjustments to processes and stakeholder engagement - The Board is responsible for the health of the company, providing leadership and strategic direction to achieve long-term sustainable success[675](index=675&type=chunk) - Key highlights for FY2025 included deep dives into the Africa business, engagement with sell-side analysts, welcoming new directors Nik Jhangiani and Julie Brown, and Sir John Manzoni's assumption of the Chair role[672](index=672&type=chunk) - Board actions included adjusting ways of working, reshaping strategic focus, active portfolio management, improving investor engagement, and continued focus on talent pipeline[679](index=679&type=chunk) [Corporate Governance Structure and Division of Responsibilities](index=40&type=section&id=Corporate%20Governance%20Structure%20and%20Division%20of%20Responsibilities) This section details Diageo's corporate governance framework, including the Board, its committees, and management committees, clarifying the clear separation of responsibilities among key leadership roles to ensure effective oversight - The governance framework includes the Board, Audit Committee, Nomination Committee, Remuneration Committee, Executive Committee, Finance Committee, Audit & Risk Committee, and Filings Assurance Committee[682](index=682&type=chunk)[683](index=683&type=chunk) - There is a clear separation of responsibilities between the Chair, Senior Independent Director, and Chief Executive Officer, approved by the Board[731](index=731&type=chunk) - Diageo fully applied the principles and complied with the provisions of the 2018 UK Corporate Governance Code in FY2025[686](index=686&type=chunk) [Board of Directors](index=41&type=section&id=Board%20of%20Directors) This section provides biographies of Board members, highlighting their diverse skills and experience, details the Board's composition, diversity, responsibilities, and compliance with corporate governance requirements - The Board comprises a Non-Executive Chair, one Executive Director, a Senior Independent Director, and **six** independent Non-Executive Directors[724](index=724&type=chunk) - The Board's diversity policy aims for at least **40% female directors** (currently **75%**) and at least one minority ethnic director (currently **four** directors voluntarily disclose as minority ethnic)[725](index=725&type=chunk) - The Board manages company affairs according to a formal schedule of matters reserved for its decision, considering stakeholder interests and "Spirit of Progress" objectives in its decisions[727](index=727&type=chunk) - All Non-Executive Directors are deemed independent, with their external interests and potential conflicts regularly reviewed[736](index=736&type=chunk) [Executive Committee](index=42&type=section&id=Executive%20Committee) This section lists Diageo's Executive Committee members, detailing their roles and experience, and outlines the committee's function in supporting the CEO to execute strategy and achieve financial and non-financial targets - Executive Committee members include: President, Global Supply & Procurement and Chief Sustainability Officer (Ewan Andrew), President, North America (Sally Grimes), President, Latin America & Caribbean (Alvaro Cardenas), General Counsel & Company Secretary (Randall Ingber), Chief Marketing Officer (Cristina Diezhandino), Global Corporate Relations Director (Daniel Mobley), President, Africa (Hina Nagarajan), Chief Human Resources Officer (Louise Prashad), President, Europe & Chief Commercial Officer (Dayalan Nayager), Managing Director & CEO, Diageo India (Praveen Someshwar), and President, APAC, Global Travel & India (John O'Keeffe)[709](index=709&type=chunk)[710](index=710&type=chunk)[711](index=711&type=chunk)[712](index=712&type=chunk)[714](index=714&type=chunk)[715](index=715&type=chunk)[716](index=716&type=chunk)[717](index=717&type=chunk)[719](index=719&type=chunk)[720](index=720&type=chunk)[721](index=721&type=chunk)[722](index=722&type=chunk)[723](index=723&type=chunk) - The Executive Committee aligns its agenda with growth ambitions and focuses on delivering financial and non-financial performance objectives[806](index=806&type=chunk) [Corporate Governance Report](index=43&type=section&id=Corporate%20governance%20report) This section details Diageo's compliance with UK and US corporate governance rules, outlining the Board's composition, diversity, independence, responsibilities, and activities, emphasizing robust internal controls and risk management - Diageo fully complied with the 2018 UK Corporate Governance Code and relevant Financial Conduct Authority (FCA) Listing Rules[729](index=729&type=chunk) - The Board's diversity policy aims for at least **40% female directors** and at least one minority ethnic director, both of which are currently met[725](index=725&type=chunk) - An internal evaluation of Board effectiveness was conducted, assessing its composition, agenda, support, and committee performance[807](index=807&type=chunk)[808](index=808&type=chunk) - The Board monitors company culture through site visits, employee surveys (Your Voice), the SpeakUp whistleblowing mechanism, and employee engagement programs[822](index=822&type=chunk)[823](index=823&type=chunk)[824](index=824&type=chunk)[826](index=826&type=chunk) - The Board confirmed a robust assessment of principal and emerging risks and reviewed the effectiveness of internal control and risk management systems[835](index=835&type=chunk)[836](index=836&type=chunk) [Audit Committee Report](index=50&type=section&id=Audit%20Committee%20report) The FY2025 Audit Committee report outlines its oversight of financial information integrity, external reporting, internal controls, and risk management, detailing its review of financial statements, compliance, and external auditor supervision - The Audit Committee oversees the integrity of financial information, external reporting, internal controls, and risk management, including internal audit, controls, business integrity, and compliance[848](index=848&type=chunk) - The Committee reviewed quarterly trading updates, interim/annual results, and Form 20-F, focusing on key judgments, significant accounting policies, and disclosures[859](index=859&type=chunk) - Julie Brown was identified as an independent Audit Committee financial expert with relevant financial experience[890](index=890&type=chunk) - Significant issues considered included the nature and scale of one-off items, carrying value of assets (goodwill, brands, investments in associates and joint ventures), uncertain tax positions for Brazilian indirect taxes, valuation of retirement benefit obligations, and material legal matters[892](index=892&type=chunk)[893](index=893&type=chunk) - Cybersecurity risk management is a key focus area, with practices aligned to industry standards and regularly benchmarked by independent experts[894](index=894&type=chunk)[897](index=897&type=chunk)[900](index=900&type=chunk) [Nomination Committee Report](index=54&type=section&id=Nomination%20Committee%20report) The FY2025 Nomination Committee report details its role in Board and Executive Committee succession planning, talent strategy, and diversity, highlighting CEO selection oversight and new appointments - The Committee oversees succession planning for the Board and Executive Committee, ensuring a pipeline of high-caliber, diverse candidates[908](index=908&type=chunk)[921](index=921&type=chunk)[923](index=923&type=chunk) - The comprehensive formal search process for Debra Crew's successor as CEO was overseen; Nik Jhangiani was appointed interim CEO[911](index=911&type=chunk) - Nik Jhangiani was welcomed as CFO, and Julie Brown as Non-Executive Director and Chair of the Audit Committee[912](index=912&type=chunk) - Changes to the Board Committee composition were overseen, moving to a more traditional committee structure with fewer Non-Executive Directors from July 1, 2025[916](index=916&type=chunk)[929](index=929&type=chunk) - The Board's diversity policy sets specific targets of at least **40% female directors** and at least one minority ethnic director, both currently met[934](index=934&type=chunk) [Directors' Remuneration Report](index=56&type=section&id=Directors%27%20Remuneration%20report) The Directors' Remuneration Report outlines FY2025 policy and implementation, aligning executive pay with strategy and shareholder interests, detailing incentive outcomes, executive changes, and planned FY2026 incentive adjustments - The financial component of the FY2025 Annual Incentive Plan (AIP) paid out at **40%** of the maximum, with overall payouts for Debra Crew, Nik Jhangiani, and Lavanya Chandrashekar at **42.0%**, **44.4%**, and **42.0%**, respectively[956](index=956&type=chunk)[957](index=957&type=chunk) - For the Diageo Long Term Incentive Plan (DLTIP) ending June 30, 2025, financial metrics did not meet the minimum performance level, but ESG metrics achieved **62.5%** of the maximum (equivalent to **12.5%** of the total performance share award)[958](index=958&type=chunk)[959](index=959&type=chunk)[960](index=960&type=chunk) - Debra Crew resigned as CEO; Nik Jhangiani was appointed interim CEO, with Debra's departure arrangements compliant with company policy[950](index=950&type=chunk)[1170](index=1170&type=chunk) - New incentives for FY2026 will include adjusted operating cash flow in the AIP, adjusted Return on Invested Capital (ROIC) in DLTIP performance shares, an updated TSR peer group, and ESG targets focused on positive drinking, carbon, and water measures[962](index=962&type=chunk)[1192](index=1192&type=chunk)[1193](index=1193&type=chunk) - Salaries for most Executive Committee members will be frozen for FY2026, with Nik Jhangiani receiving a **300,000 GBP** salary supplement as interim CEO[963](index=963&type=chunk)[1184](index=1184&type=chunk) [Directors' Report](index=69&type=section&id=Directors%27%20report) The Directors' Report presents the FY2025 audited consolidated financial statements, confirming company status, director information, and auditor details, and discusses significant agreements, related party transactions, and major shareholders - Diageo plc is a public limited company registered in England and Wales (registration number **23307**)[1211](index=1211&type=chunk) - All Directors will retire by rotation and seek re-election at the Annual General Meeting[1212](index=1212&type=chunk) - PricewaterhouseCoopers LLP has indicated its willingness to continue as auditor, and a resolution for its re-appointment will be proposed at the Annual General Meeting[1213](index=1213&type=chunk) - Significant agreements contain change of control provisions, notably with LVMH regarding the **34%** investment in Moët Hennessy, where LVMH may require sale of its interest or dissolution of the joint venture if a competitor gains control of Diageo[1216](index=1216&type=chunk)[1217](index=1217&type=chunk) - Major shareholders (**3%** or more) include BlackRock Investment Management (UK) Limited (**5.89%**), Capital Research and Management Company (**4.99%**), and Massachusetts Financial Services Company (**4.99%**)[1219](index=1219&type=chunk)[1220](index=1220&type=chunk) [Financial Statements](index=71&type=section&id=Financial%20statements) This section presents Diageo's consolidated financial statements, including the income statement, balance sheet, cash flow statement, and notes on accounting policies, providing a comprehensive view of its financial position and performance [Independent Auditors' Report to the Members of Diageo plc](index=72&type=section&id=Independent%20auditors%27%20report%20to%20the%20members%20of%20Diageo%20plc) PricewaterhouseCoopers LLP issued an unmodified opinion on Diageo's FY2025 consolidated and company financial statements, confirming fair presentation under IFRS and detailing key audit matters and going concern conclusions - An unmodified opinion was issued on the financial statements prepared in accordance with IFRS as adopted in the UK and IFRS as issued by the IASB[1251](index=1251&type=chunk)[1253](index=1253&type=chunk) - Key audit matters included: carrying value of goodwill, brands, and investments in associates/joint ventures (**2.949 billion USD** for goodwill, **9.381 billion USD** for brands, **5.334 billion USD** for associates/joint ventures); uncertain tax positions for Brazilian indirect taxes (**906 million USD** contingent liability); valuation of retirement benefit obligations (**7.776 billion USD** obligation); and carrying value of investments in subsidiaries (**77.297 billion USD**)[1261](index=1261&type=chunk)[1262](index=1262&type=chunk)[1272](index=1272&type=chunk)[1273](index=1273&type=chunk)[1276](index=1276&type=chunk)[1278](index=1278&type=chunk) - Group materiality was set at **250 million USD** (**5%** of profit before tax and exceptional items)[1301](index=1301&type=chunk) - No material uncertainties were identified that could cast significant doubt on the Group's ability to continue as a going concern for at least **12 months**[1305](index=1305&type=chunk) - The impact of climate change on the financial statements was considered during the audit, with no significant impact identified for the FY2025 audit[1297](index=1297&type=chunk)[1298](index=1298&type=chunk) [Consolidated Income Statement](index=76&type=section&id=Consolidated%20income%20statement) This section presents the consolidated income statement for FY2025, FY2024, and FY2023, showing a decline in FY2025 net sales, operating profit, and profit for the year, primarily due to increased exceptional items Consolidated Income Statement Highlights | Metric | FY2025 (million USD) | FY2024 (million USD) | FY2023 (million USD) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | | Sales | **27,964** | **27,891** | **28,270** | | Excise duties | **(7,719)** | **(7,622)** | **(7,715)** | | Net Sales | **20,245** | **20,269** | **20,555** | | Cost of sales | **(8,072)** | **(8,071)** | **(8,289)** | | Gross Profit | **12,173** | **12,198** | **12,266** | | Marketing spend | **(3,662)** | **(3,691)** | **(3,663)** | | Other operating items | **(4,176)** | **(2,506)** | **(3,056)** | | Operating Profit | **4,335** | **6,001** | **5,547** | | Non-operating items | **(220)** | **(70)** | **364** | | Finance income | **480** | **400** | **409** | | Finance expenses | **(1,251)** | **(1,285)** | **(1,121)** | | Share of post-tax profit of associates and joint ventures | **193** | **414** | **443** | | Profit before taxation | **3,537** | **5,460** | **5,642** | | Taxation | **(999)** | **(1,294)** | **(1,163)** | | Profit for the year | **2,538** | **4,166** | **4,479** | | Basic EPS (cents) | **105.9** | **173.2** | **196.3** | - Operating profit significantly decreased from **6.001 billion USD** in FY2024 to **4.335 billion USD** in FY2025[1338](index=1338&type=chunk) - Profit for the year decreased from **4.166 billion USD** in FY2024 to **2.538 billion USD** in FY2025[1338](index=1338&type=chunk) [Consolidated Statement of Comprehensive Income](index=76&type=section&id=Consolidated%20statement%20of%20comprehensive%20income) This section presents the consolidated statement of comprehensive income, detailing items not reclassified to profit or loss and those that may be, with total comprehensive income for the year decreasing to **3.341 billion USD** in FY2025 Consolidated Statement of Comprehensive Income Highlights | Metric | FY2025 (million USD) | FY2024 (million USD) | FY2023 (million USD) | | :------------------------------------------------ | :--------------- | :--------------- | :--------------- | | Net remeasurement of retirement benefit plans | **(2)** | **(62)** | **(567)** | | Exchange differences on translation of foreign operations | **805** | **(423)** | **85** | | Effective portion of changes in fair value of cash flow hedges | **19** | **9** | **(39)** | | Hyperinflation adjustment (net of tax) | **264** | **365** | **229** | | Other comprehensive income/(loss) for the year, net of tax | **803** | **(485)** | **(482)** | | Profit for the year | **2,538** | **4,166** | **4,479** | | Total comprehensive income for the year | **3,341** | **3,681** | **3,997** | - Total comprehensive income for the year decreased from **3.681 billion USD** in FY2024 to **3.341 billion USD** in FY2025[1339](index=1339&type=chunk) - Exchange differences on translation of foreign operations resulted in a **805 million USD** gain in FY2025, a significant improvement from a **423 million USD** loss in FY2024[1339](index=1339&type=chunk) [Consolidated Balance Sheet](index=77&type=section&id=Consolidated%20balance%20sheet) This section presents the consolidated balance sheet as of June 30, 2025, and 2024, showing total assets increased to **49.322 billion USD** in FY2025, driven by increases in property, plant, equipment, inventories, and cash Consolidated Balance Sheet Highlights | Metric | FY2025 (million USD) | FY2024 (million USD) | | :-------------------------------- | :--------------- | :--------------- | | Total Non-Current Assets | **31,825** | **30,348** | | Total Current Assets | **17,497** | **15,126** | | Total Assets | **49,322** | **45,474** | | Total Current Liabilities | **(10,712)** | **(9,868)** | | Total Non-Current Liabilities | **(25,432)** | **(23,536)** | | Total Liabilities | **(36,144)** | **(33,404)** | | Net Assets | **13,178** | **12,070** | | Total Equity | **13,178** | **12,070** | - Inventories increased from **9.720 billion USD** in FY2024 to **10.658 billion USD** in FY2025[1342](index=1342&type=chunk) - Cash and cash equivalents significantly increased from **1.130 billion USD** in FY2024 to **2.200 billion USD** in FY2025[1342](index=1342&type=chunk) - Non-current borrowings increased from **18.616 billion USD** in FY2024 to **20.820 billion USD** in FY2025[1342](index=1342&type=chunk) [Consolidated Statement of Cash Flows](index=78&type=section&id=Consolidated%20statement%20of%20cash%20flows) This section presents the consolidated cash flow statement for FY2025, FY2024, and FY2023, showing increased net cash inflow from operating activities and a net increase in cash and cash equivalents in FY2025 Consolidated Cash Flow Statement Highlights | Metric | FY2025 (million USD) | FY2024 (million USD) | FY2023 (million USD) | | :-------------------------------- | :--------------- | :--------------- | :--------------- | | Net cash inflow from operating activities | **4,297** | **4,105** | **3,636** | | Net cash outflow from investing activities | **(1,720)** | **(1,595)** | **(1,426)** | | Net cash outflow from financing activities | **(1,494)** | **(3,106)** | **(3,041)** | | Net increase/(decrease) in cash and cash equivalents | **1,083** | **(596)** | **(831)** | | Net cash and cash equivalents at end of period | **2,178** | **1,109** | **1,768** | - Cash generated from operations increased from **6.065 billion USD** in FY2024 to **6.210 billion USD** in FY2025[1347](index=1347&type=chunk) - Purchases of property, plant and equipment, and computer software increased from **1.510 billion USD** in FY2024 to **1.612 billion USD** in FY2025[1347](index=1347&type=chunk) - Proceeds from issue of bonds increased from **2.225 billion USD** in FY2024 to **3.943 billion USD** in FY2025, alongside increased repayment of bonds[1347](index=1347&type=chunk) [Accounting Information and Policies](index=78&type=section&id=Accounting%20information%20and%20policies) This section outlines the basis of preparation for consolidated financial statements, adhering to IFRS, detailing policies on going concern, consolidation, foreign currency, key accounting estimates, and hyperinflation accounting - The financial statements are prepared in accordance with IFRS as adopted in the UK and IFRS as issued by the IASB, on a historical cost convention basis and a going concern assumption[1349](index=1349&type=chunk) - The functional currency of Diageo plc, the parent company, is the US dollar[1353](index=1353&type=chunk) - Key accounting estimates and judgments include taxation, brands/goodwill/other intangible assets/contingent consideration, retirement benefits, and contingent liabilities/legal proceedings[1358](index=1358&type=chunk) - Hyperinflation accounting was applied to operations in Turkey, Ghana, and Venezuela[1359](index=1359&type=chunk) - Climate change scenario analysis conducted in 2025 (in line with TCFD recommendations) did not identify a material financial impact on impairment assessments for the year[1366](index=1366&type=chunk) [Results for the Year](index=79&type=section&id=Results%20for%20the%20year) This section details the Group's performance, including segment information, operating costs, exceptional items, finance income/expenses, and share of associate profits, presenting a segment analysis based on management reporting - Sales include revenue from contracts with customers for goods sold, royalties, and rent receivable; net sales are sales less excise duties[1367](index=1367&type=chunk)[1368](index=1368&type=chunk) - Exceptional items are disclosed separately if they are unusual or non-recurring in nature and of a size that could distort performance[1370](index=1370&type=chunk)[1383](index=1383&type=chunk) - Segment information is presented by geographical location of third-party sales, consistent with management reporting to the Executive Committee[1372](index=1372&type=chunk)[1374](index=1374&type=chunk) Segment Operating Profit (before exceptional items, FY2025 vs. FY2024) | Region | FY2025 (million USD) | FY2024 (million USD) | | :-------------------------- | :--------------- | :--------------- | | North America | **3,053** | **3,236** | | Europe | **1,302** | **1,379** | | APAC | **930** | **1,063** | | Latin America and Caribbean | **528** | **502** | | Africa | **283** | **131** | | Corporate and other | **(392)** | **(366)** | | Total | **5,704** | **5,945** | [Operating Assets and Liabilities](index=85&type=section&id=Operating%20assets%20and%20liabilities) This section details the Group's operating assets and liabilities, including recent acquisitions, disposals, and retirement benefit plans, outlining accounting policies for business combinations, inventories, receivables, payables, and provisions - Business combinations are accounted for using the acquisition method, with identifiable assets, liabilities, and contingent liabilities measured at fair value at the acquisition date[1456](index=1456&type=chunk) - Inventories are measured at the lower of cost and net realizable value, with all maturing inventories classified as current assets[1565](index=1565&type=chunk) - Trade and other receivables are initially measured at fair value less transaction costs, and subsequently at amortized cost less any discounts and provision for doubtful debts[1566](index=1566&type=chunk) - Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount can be reliably estimated[1568](index=1568&type=chunk) Inventories (FY2025 vs. FY2024) | Category | FY2025 (million USD) | FY2024 (million USD) | | :-------------------------- | :--------------- | :--------------- | | Raw materials and consumables | **604** | **639** | | Work in progress | **131** | **118** | | Maturing inventories | **8,677** | **7,832** | | Finished goods and goods for resale | **1,246** | **1,131** | | Total Inventories | **10,658** | **9,720** | [Risk Management and Capital Structure](index=94&type=section&id=Risk%20management%20and%20capital%20structure) This section details Diageo's policies and procedures for managing its capital structure and financial risks, including currency, interest rate, and commodity price risks, aiming for capital efficiency and flexibility - The finance function conducts financial operations within a Board-approved framework of policies and guidelines, managing funding, liquidity, and foreign exchange, interest rate, and commodity price risks[1592](index=1592&type=chunk)[1593](index=1593&type=chunk) - Company policy is to hedge anticipated net foreign exchange exposures on transactional cash flows for major currency pairs for up to **36 months**, targeting **75%** net exposure cover at the operating profit level for the current financial year[1599](index=1599&type=chunk) - Company policy is to maintain fixed rate borrowings between **70% and 90%** of anticipated net borrowings to manage interest rate risk[1600](index=1600&type=chunk) - The target is to maintain a ratio of adjusted net borrowings to adjusted EBITDA between **2.5x and 3.0x**, broadly consistent with an A-grade credit rating[1653](index=1653&type=chunk) Adjusted Net Borrowings to Adjusted EBITDA | Metric | FY2025 | FY2024 | | :-------------------------------- | :--- | :--- | | Adjusted Net Borrowings (million USD) | **22,263** | **21,446** | | Adjusted EBITDA (million USD) | **6,645** | **7,037** | | Ratio | **3.4** | **3.0** | [Additional Information](index=108&type=section&id=Additional%20information) This section provides supplementary details, including unaudited financial information, cautionary statements regarding forward-looking statements, an independent assurance report on selected ESG data, and other operational specifics [Unaudited Financial Information](index=108&type=section&id=Unaudited%20financial%20information) This section defines and reconciles non-GAAP financial measures used for strategic planning, reporting, and incentive purposes, detailing the calculation of organic movements, EPS before exceptional items, and free cash flow - Non-GAAP measures (organic movements, EPS before exceptional items, free cash flow, operating cash conversion, average return on invested capital, and adjusted net borrowings to adjusted EBITDA ratio) provide additional valuable information for understanding performance[1801](index=1801&type=chunk) - Organic movements are calculated on a constant exchange rate basis and exclude the impact of exceptional items, certain fair value remeasurements, hyperinflation, and acquisitions and disposals[1804](index=1804&type=chunk) FY2025 Organic Movement Highlights | Metric | Organic Movement (%) | | :-------------------------- | :------------------- | | Volume | **1%** | | Sales | **2%** | | Net Sales | **2%** | | Marketing Spend | **0%** | | Operating Profit before exceptional items | **(1)%** | FY2025 Free Cash Flow and Operating Cash Conversion | Metric | FY2025 (million USD) | FY2024 (million USD) | | :-------------------------- | :--------------- | :--------------- | | Net cash inflow from operating activities | **4,297** | **4,105** | | Free Cash Flow | **2,748** | **2,609** | | Operating Cash Conversion (%) | **102.0%** | **99.6%** | [Cautionary Statement Concerning Forward-Looking Statements](index=113&type=section&id=Cautionary%20statement%20concerning%20forward-looking%20statements) This section provides a cautionary statement regarding forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially, especially for ESG-related outlooks - Forward-looking statements involve risks and uncertainties, relate to future events, and depend on circumstances beyond Diageo's control[1863](index=1863&type=chunk) - ESG-related forward-looking statements carry additional inherent risks and uncertainties due to evolving data, models, and methodologies, and a lack of consistent standards[1864](index=1864&type=chunk) - Factors that could cause material differences in actual results include: economic/political developments, climate change impacts, changes in consumer preferences, changes in tax environment, production cost changes, litigation, regulatory developments, cyberattacks, and supply chain disruptions[1863](index=1863&type=chunk) [Independent Limited Assurance Report to the Directors of Diageo plc on selected information](index=113&type=section&id=Independent%20Limited%20Assurance%20Report%20to%20the%20Directors%20of%20Diageo%20plc%20on%20selected%20information) PricewaterhouseCoopers LLP issued a limited assurance conclusion on selected non-financial information (ESG metrics) in Diageo's FY2025 Annual Report, finding no material misstatements based on executed procedures - PricewaterhouseCoopers provided a limited assurance conclusion on selected ESG metrics in the Annual Report[1868](index=1868&type=chunk) - No indications were found that the assured information was not prepared in all material respects in accordance with Diageo's Non-Financial Reporting Boundaries and Methodology[1868](index=1868&type=chunk) - Assured metrics included water use efficiency, GHG emissions, Lost Time Accident Frequency Rate, female/minority ethnic leaders, SMASHED program participants, and water replenishment capacity[1869](index=1869&type=chunk) - The limited assurance engagement was performed in accordance with International Standard on Assurance Engagements 3000 (Revised) and International Standard on Assurance Engagements 3410 (for GHG emissions)[1873](index=1873&type=chunk) [Other Additional Information](index=115&type=section&id=Other%20additional%20information) This section provides supplementary operational information, including spirits and beer production facilities, maturing inventories, raw material sourcing, competition, R&D, trademarks, seasonality, employees, and the regulatory environment - Diageo owns **31 Scotch whisky distilleries** in Scotland, **2 in Canada**, **5 in the US**, and **1 in China**; tequila is produced in Mexico, and Guinness's main brewery is in Dublin, Ireland[1890](index=1890&type=chunk)[1897](index=1897&type=chunk) Maturing Inventories (FY2025 vs. FY2024) | Category | FY2025 (million USD) | FY2024 (million USD) | | :-------------------------- | :--------------- | :--------------- | | Whisky | **7,232** | **6,290** | | - of which Scotch Whisky | **5,659** | **4,862** | | Other | **1,445** | **1,542** | | Total Maturing Inventories | **8,677** | **7,832** | - Over **500 million USD** has been invested in tequila

Core Insights - Diageo reported a slight decline in global net sales for the fiscal year ending June 30, 2025, with a total of $20.245 billion, down 0.1% year-on-year, but organic sales grew by 1.7%, slightly above market expectations of 1.4% [3] - The company experienced a significant drop in profits, with operating profit down 27.8% to $4.335 billion and net profit down 39.1% to $2.538 billion, leading to a decrease in earnings per share (EPS) from $1.73 to $1.06 [3][5] Financial Performance - The North American market, Diageo's largest region, saw net sales of $7.973 billion, an increase of 1.5%, while Europe recorded $4.821 billion, up 0.4%, with the UK market growing by 6.7% [7] - The Asia-Pacific region, particularly Greater China, faced a decline in organic net sales by 3.2%, with Greater China experiencing a drop from 4% in the first half to 9% for the full fiscal year [7][8] Product Category Performance - Sales of Scotch whisky and vodka faced challenges, with their net sales proportion decreasing to 76% of total revenue, while tequila and beer showed strong growth, with tequila's organic net sales up 16.9% and beer sales up 6% [8][9] - Guinness beer's success was attributed to brand building, product innovation, and global market expansion, maintaining strong growth even amid supply constraints [8] Cost Management and Strategic Adjustments - Diageo announced an increase in its cost-saving target from £500 million to £625 million over the next three years, aiming to improve profit margins and reinvest in growth areas [11] - The company is adjusting its strategic focus to cater to emerging consumer trends, particularly among Gen Z, who are shifting towards non-alcoholic beverages and ready-to-drink cocktails [13] Leadership Changes - Following the sudden departure of former CEO Debra Crew, the company is in a transitional phase, with the CFO Nik Jhangiani serving as interim CEO until a new leader is appointed by the end of October [13]

Core Insights - Diageo plc reported a decline in pre-exceptional earnings per share by 8.6% year over year to 164.2 cents, primarily due to lower contributions from Moët Hennessy and adverse currency effects [1][8] - Net sales decreased by 0.1% year over year to $20.2 billion, impacted by unfavorable currency effects and adjustments from acquisitions and disposals, despite improved organic sales [2][8] Financial Performance - Organic net sales increased by 1.7% year over year, supported by a 0.9% growth in organic volume and a 0.8% improvement in price/mix [3] - The reported operating profit fell by 27.8% year over year to $4.3 billion, influenced by exceptional impairment and restructuring charges, unfavorable currency movements, and a contraction in organic operating margin [9] - Organic operating profit decreased by 0.7% year over year, with a reported operating margin contraction of 819 basis points [10] Regional Performance - Volume declined in North America and Europe due to a cautious consumer environment, while volume gains were observed in the Asia Pacific, Africa, and Latin America [4] - North America experienced positive price/mix contributions driven by tequila, particularly aged variants, while Europe saw growth from Guinness [5] Future Outlook - Diageo anticipates organic net sales for fiscal 2026 to be broadly in line with fiscal 2025, with growth expected to be weighted towards the second half of the fiscal year [13] - The company forecasts mid-single-digit growth in organic operating profit for fiscal 2026, primarily driven by cost savings under its Accelerate Program [14] - Capital expenditures are projected to be between $1.2 billion and $1.3 billion, with free cash flow expected to reach $3 billion [15]

英国烈酒制造巨头帝亚吉欧(DEO.US)盘前继续上涨2.8%。消息上，帝亚吉欧公布了截至6月的2025财年 初步业绩。该公司2025财年销售额好于市场预期，预计2026财年销售将保持增长，并宣布将进一步削减 成本。该公司预计2026财年销售额将实现与2025财年相似水平的有机增长，营业利润预计将实现中个位 数的有机增长。(格隆汇) （原标题：美股异动丨业绩超预期，帝亚吉欧盘前续涨近3%） ...

Market Overview - As of August 5, 2025, U.S. stock index futures showed mixed movements with Dow futures down 0.01%, S&P 500 futures up 0.19%, and Nasdaq futures up 0.29% [1] - European indices also saw positive performance, with Germany's DAX up 0.77%, UK's FTSE 100 up 0.54%, France's CAC40 up 0.21%, and the Euro Stoxx 50 up 0.34% [2][3] - WTI crude oil prices fell by 0.89% to $65.70 per barrel, while Brent crude oil dropped by 0.76% to $68.24 per barrel [3][4] Economic Insights - MUFG reported a significant shift in market sentiment towards interest rate cuts, with a 90% probability of a rate cut in September following disappointing non-farm payroll data [5][6] - San Francisco Fed President Mary Daly indicated a growing likelihood of multiple rate cuts this year, with the market pricing in at least two cuts by the end of the year [6] - Goldman Sachs warned of a potential slowdown in U.S. GDP growth to 1.1% in Q4 2025, citing weak consumer spending and investment due to tariff pressures [9] Company Performance - Palantir reported a record quarterly revenue exceeding $1 billion, driven by strong growth in U.S. government and commercial orders, with a 48% year-over-year increase [10] - Pfizer's Q2 revenue grew by 10% to $14.65 billion, surpassing expectations, and the company raised its full-year profit guidance [11] - BP's Q2 profit exceeded expectations at $2.35 billion, with plans for a comprehensive business review under new leadership [12] - Yum China reported a 14% increase in operating profit, reaching $304 million, with a net addition of 336 stores in Q2 [13] - Diageo's FY2025 sales slightly declined but showed organic sales growth of 1.7%, with plans for further cost reductions amid economic uncertainty [14]

Financial Data and Key Metrics Changes - The company is planning for a more cautious consumer environment in the US for fiscal 2026, indicating a focus on managing inventory levels and achieving normalized stock levels [10][11] - Organic sales guidance for fiscal 2026 is expected to be similar to fiscal 2025, with a potential acceleration in the second half of the year [15][16] - The company anticipates a $50 million reduction in starting EBIT due to disposals, with additional impacts from the sale of Ghana and Seychelles breweries [21][22] Business Line Data and Key Metrics Changes - The spirits segment in Europe has faced pressure, but the company views this as an opportunity to better control outcomes by focusing on local markets and consumer dynamics [11][12] - The company is focusing on driving growth in key brands such as Don Julio and Guinness, despite organic sales declines [19][20] Market Data and Key Metrics Changes - The US market is expected to be cautious, with a stretched consumer wallet impacting sales [28][29] - The company is optimistic about the potential for growth in the Asia Pacific region, particularly in China, despite recent challenges [30][31] Company Strategy and Development Direction - The company is reorganizing to capture growth opportunities by being more locally focused and occasion-led in various markets [12][13] - There is a clear strategy to enhance commercial execution at the point of sale, with a focus on training and upskilling resources [17][18] - The company is committed to premiumization and expanding its portfolio, particularly in the tequila segment [40][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic pressures but believes that moderation trends in consumer behavior present new opportunities [65][66] - The company remains confident in the long-term growth potential of the US spirits market despite short-term pressures [79][80] Other Important Information - The company is implementing changes to its currency hedging strategy to reduce volatility and align hedge targets with operating profit exposure [36][37] - The company plans to reinvest 50% of cost savings into better commercial execution and digitization efforts [70][71] Q&A Session Summary Question: US depletion outlook and inventory message - Management indicated that inventory levels have normalized and they are planning for a cautious consumer environment in the US for fiscal 2026 [10][11] Question: Investment in Europe and spirits portfolio - Management acknowledged the pressure on the spirits portfolio in Europe but sees it as an opportunity for better control and growth [11][12] Question: Organic sales guidance for fiscal 2026 - Management expects organic sales guidance for fiscal 2026 to be similar to fiscal 2025, with potential acceleration in the second half [15][16] Question: Impact of disposals on EBIT - Management confirmed a $50 million reduction in starting EBIT due to disposals, with additional impacts from recent sales [21][22] Question: Focus on moderation trends - Management noted that moderation trends are here to stay and the company is looking to tap into this with a broader range of products [65][66] Question: Reinvestment of cost savings - Management stated that 50% of cost savings will be reinvested into commercial execution and digitization efforts [70][71]

Financial Data and Key Metrics Changes - The company is planning for a more cautious consumer environment in the US for fiscal 2026, indicating a focus on managing inventory levels and achieving normalized stock levels [8][9] - Organic sales guidance for fiscal 2026 is expected to be similar to fiscal 2025, with a potential acceleration in the second half of the year [14][30] - The company anticipates a $50 million reduction in starting EBIT due to disposals, with additional impacts from recent sales in Ghana and Seychelles [22][30] Business Line Data and Key Metrics Changes - The spirits segment in Europe has faced pressure, but the company sees this as an opportunity to better control outcomes by focusing on local markets and consumer dynamics [9][10] - The company is focusing on driving growth in key brands such as Don Julio, Guinness, and Johnny Walker, despite organic sales declines [20][30] Market Data and Key Metrics Changes - The US market is expected to be cautious, with consumer wallets still stretched, impacting sales performance [28][30] - In Asia Pacific, particularly China, the market has been more challenged outside of the Chinese New Year, but the company is optimistic about future growth opportunities [29][30] Company Strategy and Development Direction - The company is reorganizing to capture growth opportunities by being more locally focused and occasion-led, particularly in Southern Europe [10][11] - There is a clear strategy to enhance commercial execution at the point of sale, with a focus on training and upskilling resources [18][47] - The company is committed to premiumization and expanding its portfolio, particularly in the tequila segment [40][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic pressures but believes that moderation trends in consumer behavior present new growth opportunities [62][70] - The company is focused on balancing growth across its portfolio, with an emphasis on both volume and price mix [56][59] Other Important Information - The company is actively managing its portfolio, with ongoing disposals of non-core assets while maintaining a focus on core brands [86] - There is a commitment to reinvest 50% of cost savings into better commercial execution and digitization efforts [70][71] Q&A Session Summary Question: US depletion outlook and inventory message - Management indicated that inventory levels have normalized and they are planning for a cautious consumer environment in the US for fiscal 2026 [8][9] Question: Organic sales guidance for fiscal 2026 - Management expressed confidence in achieving a similar organic sales performance to fiscal 2025, with expectations for acceleration in the second half [14][30] Question: Impact of disposals on EBIT - Management confirmed a $50 million reduction in EBIT due to disposals, with additional impacts from recent sales in Ghana and Seychelles [22][30] Question: Focus on the Astral brand in the US - Management sees significant growth potential for the Astral brand in the super premium segment and is optimistic about its scaling [40][41] Question: Changes in US route to market - Management highlighted the importance of both increasing the number of salespeople and enhancing their effectiveness through training and focused execution [46][47] Question: Structural headwinds and moderation trends - Management acknowledged the ongoing moderation trend but emphasized the company's ability to innovate and adapt to consumer preferences [62][70]

Group 1 - Diageo reported preliminary results for the fiscal year 2025, with sales of $20.245 billion, slightly down 0.1% year-on-year, but better than the market expectation of $20 billion [1] - Organic sales grew by 1.7% year-on-year, surpassing the analyst consensus of 1.4% [1] - Operating profit fell by 27.8% to $4.335 billion, with an operating margin decline of 819 basis points to 21.4% [1] Group 2 - Diageo expects organic sales growth for fiscal year 2026 to be similar to that of fiscal year 2025, with operating profit anticipated to achieve mid-single-digit organic growth [1] - The company faces economic uncertainty and consumer inflation concerns due to tariffs imposed by former President Trump, with annual tariff costs now estimated at $200 million, up from a previous estimate of $150 million [1] - Diageo's interim CEO, Nik Jhangiani, announced an increase in the cost-saving target from $500 million to $625 million over the next three years [1] Group 3 - Nik Jhangiani took over as interim CEO after the departure of Debra Crew and indicated that the board may decide on a new CEO by the end of October [2] - Despite a challenging consumer environment, including preferences for non-alcoholic beverages and ready-to-drink cocktails, consumers, including Gen Z, continue to spend [2] - Analyst Ed Mundy from Jefferies noted that Diageo's sales growth target for fiscal year 2026 is in line with market expectations, and the company has maintained or grown market share in 65% of monitored markets, including the U.S. [2]

Financial Data and Key Metrics Changes - The company delivered 1.7% organic sales growth, or 1.5% before the impact of the Syrah transaction in North America [4] - Organic profit declined by 0.7%, including the Syrah transaction impact, and declined by 1% excluding this [4] - Free cash flow was $2.7 billion, up $100 million from last year, reflecting solid working capital management [5] - EPS pre-exceptionals declined almost 9%, mainly due to a significantly lower contribution from Moire Tennessee and adverse FX [5] - Recommended full year dividend remained flat compared to last year, deemed prudent given the current backdrop [5] Business Line Data and Key Metrics Changes - Positive organic sales growth was observed in almost all regions, although operating profits were adversely impacted by increased overheads [4] - In North America, U.S. spirits net sales grew 1.6% organically with a positive price mix of 2.9% [32] - In India, growth was driven by prestige and above whiskey, with the UK-India free trade agreement expected to support future growth [30] - In Europe, Guinness was a main driver of growth, recovering from a period of consumer down trading [46] - In Africa, organic net sales growth was led by Ghana, while Brazil benefited from a more stable environment through premiumization [31] Market Data and Key Metrics Changes - Trading conditions remained challenging due to macroeconomic and geopolitical uncertainty, particularly in key markets like the U.S. and China [29] - The company held or grew market share in 65% of total net sales in measured markets, including the U.S. [29] - Consumer sentiment remains subdued, with 25% of consumers indicating saving money as a top reason for moderating their TBA consumption [24] - Gen Z household penetration of spirits increased by six percentage points to 55% in 2024 compared to 2020 [26] Company Strategy and Development Direction - The company is sharpening its strategy to leverage its portfolio and competitive strengths in an evolving TBA landscape [7] - The Accelerate program aims to deliver $625 million in cash savings over the next three years, focusing on operational excellence and cost efficiency [10] - The company is committed to delivering approximately $3 billion of free cash flow per annum from fiscal 2026 [21] - There is a focus on digital investment to leverage data for actionable insights and consistent metrics [14] Management's Comments on Operating Environment and Future Outlook - The management believes spirits remain an attractive sector long-term, supported by favorable demographics and increasing female per capita consumption [22] - Near-term pressures on the sector are viewed as largely cyclical and driven by the macroeconomic environment [24] - The company expects organic net sales growth to be slightly negative in fiscal 2026, with growth skewed to the second half [57] - Management is focused on instilling confidence in the team and leveraging the strength of the brand portfolio for future growth [62] Other Important Information - The company announced significant exceptional charges totaling $1.4 billion, including a $450 million charge related to Distill Ventures and a $230 million impairment charge for Aviation Gin [52][53] - Closing net debt was $21.9 billion, which was $800 million higher than at the start of the year due to unfavorable foreign exchange movements [54] - The leverage ratio increased to 3.4 times net debt adjusted EBITDA, above the target range of 2.5 to 3 times [54] Q&A Session Summary Question: What are the expectations for organic net sales growth in fiscal 2026? - The company expects similar rates of organic net sales growth to those seen in fiscal 2025, with a cautious outlook for the consumer environment [56][57] Question: How is the company addressing the impact of tariffs? - The company anticipates a 10% rate for UK imports and a 15% rate for European imports into the U.S., expecting to mitigate 50% of the impact in the first year [59] Question: What is the focus of the Accelerate program? - The Accelerate program is focused on delivering cash savings, improving operational efficiency, and driving better growth through a more agile operating model [10][11]

Financial Data and Key Metrics Changes - The company delivered 1.7% organic sales growth, or 1.5% before the impact of the Syrah transaction in North America, with organic profit declining 0.7% including the Syrah transaction impact and 1% excluding it [4][5] - Free cash flow was $2.7 billion, up $100 million from last year, reflecting solid working capital management [5][48] - EPS pre-exceptionals declined almost 9%, mainly due to a significantly lower contribution from Moire Tennessee and adverse foreign exchange [5][49] - Reported net sales were broadly flat at £20.2 billion, with positive organic growth offset by the net impact of acquisitions and disposals as well as unfavorable foreign exchange [42][43] Business Line Data and Key Metrics Changes - In North America, U.S. spirits net sales grew 1.6% organically with a positive price mix of 2.9%, driven by strong performance in tequila brands like Don Julio and Crown Royal [30][31] - In Europe, Guinness continued to drive growth, delivering double-digit organic net sales growth despite a challenging beer market [31][44] - In Asia Pacific, positive volume growth was particularly noted in India, while price mix declined due to consumer down trading in Southeast Asia and China [43][44] Market Data and Key Metrics Changes - The company gained market share in 65 of its total net sales in measured markets, including the U.S., despite challenging trading conditions [27] - In India, growth was driven by prestige and above whiskey, with the UK-India free trade agreement expected to support future growth potential [28] - In Africa, organic net sales growth was observed across all markets, led by Ghana [29] Company Strategy and Development Direction - The company is sharpening its strategy to leverage its portfolio and competitive strengths, focusing on commercial execution and optimizing trade investments [7][8] - The Accelerate program aims to deliver $625 million in cash savings over the next three years, with a commitment to drive better growth alongside cost-cutting measures [9][13] - The company is committed to delivering approximately $3 billion of free cash flow per annum from fiscal 2026, supported by mid-single-digit organic operating profit growth and reduced CapEx [20][54] Management's Comments on Operating Environment and Future Outlook - The management believes that the spirits sector remains attractive long-term, supported by favorable demographics and increasing female per capita consumption [21][22] - Near-term pressures on the sector are viewed as largely cyclical and driven by the macroeconomic environment, with consumer sentiment remaining subdued [23][25] - The company expects organic net sales growth to be slightly negative in fiscal 2026, with growth skewed to the second half of the year [54] Other Important Information - The company announced a flat full-year dividend, which is considered prudent given the current economic backdrop [5] - Significant exceptional charges of $1.4 billion were reported, including a $450 million charge related to Distill Ventures and a $230 million impairment charge for Aviation Gin [49][50] - The company is focused on optimizing its supply chain and has announced a new manufacturing and warehousing facility in Montgomery, Alabama [31] Q&A Session Summary Question: What are the expectations for organic net sales growth in fiscal 2026? - The company expects organic net sales growth to be slightly negative, with growth skewed to the second half of the year due to various factors [54] Question: How is the company addressing the challenges in the spirits sector? - The management is focused on leveraging its brand portfolio and optimizing commercial execution to drive growth despite the cyclical pressures [25][26] Question: What are the plans for cash flow and capital expenditures? - The company aims to deliver approximately $3 billion of free cash flow in fiscal 2026, with a reduced CapEx spend expected to trend to mid-single digits as a percentage of net sales [20][54]