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While Guinness sales have been booming in the UK and Ireland, Diageo has struggled with weak spirits sales in North America.<\/p>\n
Diageo said that despite growth in Europe \u2013 where demand for its flagship black stout has been booming \u2013 and Africa, weaker trading in North America and Asia Pacific dragged sales down. Volume sales were down 4 per cent over the year.<\/p>\n
The business said its final dividend would be 30 cents per share, compared to 62.98 cents per share last year. This brings the full year dividend, which will be proposed to investors at its annual meeting in November, to 50 cents per share.<\/p>\n
Lewis, the former Tesco chief executive known as \u2018drastic Dave\u2019,\u00a0refused to reveal how many jobs will be cut on Thursday afternoon.\u00a0<\/p>\n
\u2018I don\u2019t want to talk about a number,\u2019 he said, but described it as \u2018a significant change\u2019 that \u2018changes the cost profile of the business.\u2019<\/p>\n
He was asked whether the culture of the company could survive heavy cuts and said: \u2018Whilst the impacts are big, nobody’s saying to me this is the wrong thing to do.\u2019<\/p>\n
\u2018The culture that Diageo wants is a winning culture. You need to get back to being proud and winning.\u2019<\/p>\n
A lot of the changes to the group\u2019s operating structure will focus on core finance, technology and HR teams, Lewis said, rather than \u2018brands and marketing.\u2019<\/p>\n
This includes fewer ‘duplicative’ roles across countries as Lewis said \u2018massive amounts of complexity and bespoke-ness, country by country\u2019 had become \u2018a route to failure.’<\/p>\n
His strategy will focus on making Diageo’s portfolio more competitive. This includes more investment into the growing category of \u2018ready to drink\u2019 canned products.\u00a0<\/p>\n
The group said on Thursday that this section \u2018remains robust, with long-term growth potential, and we have a clear strategy to drive market outperformance.\u2019\u00a0<\/p>\n
But Lewis dismissed speculation that the company could acquire another brand to meet its new RTD ambitions. \u2018We’re not thinking about M&A, and I want people to be really clear about that. We have what we need to turn our business around, so we’re not talking about anything in the M&A space.\u2019<\/p>\n
Lewis promised further updates on the group\u2019s RTD \u2018expression\u2019 of its core spirit brands, saying there was a huge opportunity to reel consumers with \u2018absolutely stunning\u2019 pre-made cocktail solutions. Diageo\u2019s spirits-based RTDs grew 15pc last year, even without a major strategic emphasis on them, he said.<\/p>\n
And he said he was keen to \u2018expand and accelerate\u2019 the growth of Guinness, with Dublin, Ireland – its home – to be the biggest recipient of investment.<\/p>\n
Brands Crown Royal, Smirnoff, Captain Morgan are still \u2018very big, very important\u2019 for the company, but Lewis said the business had ‘not done a great job’ with them recently.<\/p>\n
The strategy is also thought to include a refresh of prices to appeal to cash-conscious consumers.<\/p>\n
For the current financial year, Diageo said it expects \u2018broadly flat organic net sales growth, with North America organic net sales down mid-single-digit.\u2019<\/p>\n
And it said it expects \u2018low-to mid-single-digit\u2019 profit growth, thanks to a bulk of its cost savings taking place in the year ahead, as well as supply chain savings.<\/p>\n
Chris Beauchamp, chief market analyst at investing and trading platform IG, said: \u2018Desperate times call for desperate measures, which is why Diageo hired Desperate Dave in the first place.<\/p>\n
\u2018The slashing of the dividend is the kind of thing only incoming CEOs with a mandate to save the business are allowed to do without cratering the share price – the market was prepared for it anyway after the half year was given similar treatment to today’s full-year figure. Now comes the hard part, convincing and then showing investors that the turnaround plan is going to pay off.’<\/p>\n
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