Why invest in Diageo?

We are positive on the outlook for spirits including RTDs, and we see long term growth potential. We firmly believe that we can grow both volume and value share. This will be supported by leveraging the strength of our brands and recruiting LPA+ consumers through a more focused RTD strategy. Our global footprint will ensure that we benefit from both developed and emerging market growth; with growth in the earlier years expected to offset performance in North America.

In premium beer, we continue to see significant growth potential for Guinness. We are investing in Guinness to help sustain its double-digit growth. We have clear plans to both add capacity over the coming years and extend brand reach through a combination of business models; to support and capture Guinness and Guinness 0.0 growth potential.

While the business will continue to focus on premiumisation, a key growth driver over the last decade, we are being more active across our broader portfolio. Implementation of a category strategy across the business will allow us to serve more consumers across more occasions. While some of this will involve price repositioning across the portfolio, it will also include additional formats such as smaller packs and RTD expressions. Results to date have demonstrated that this can increase both gross profit dollars and market share.

Successful execution of this strategy will also enable us to better serve our customers, particularly in the off-trade, strengthening Diageo’s ability to become a category champion across categories and ultimately growing revenue for both our customers and our business.

The category strategy work will take longer in North America, where a significant turnaround is required and where the three-tier system adds complexity. However, early success in Latin America and Caribbean already demonstrates the potential of this approach to drive outperformance.

We have made significant progress redesigning our operating framework to become more competitive. We are investing $1.2 billion in a 2-year restructuring plan - $1.1 billion in the new operating framework and $100 million in the supply chain. $752 million of this has been charged in fiscal 26, but the cash will flow out in fiscal 27 (the balance will be committed and spent in fiscal 27).

By 1 September 2026, we will have implemented 90% of planned restructuring changes. More consistent organisational structures across five regions and 23 markets, a significant reduction in duplication at the centre, and implementation of end-to-end supply chain management will create a more focused business. This will enable us to be more agile as the market evolves and more focused on drivers of value creation and returns; with clear accountability across the business on each division's contribution to this.

This plan will save c.$1 billion, with $850 million coming from the operating framework and c.$150 million from the supply chain. We will invest these savings back to advance innovation, selectively improve competitiveness and to protect underlying profitability.

We have shared clear financial plans for the next 3 years, as the turnaround progresses and with detail on planned assumptions for the North America business, our largest market, where the need for a turnaround is pronounced. Our commitment to a low-single-digit CAGR in net sales from fiscal 27 to fiscal 29 is expected to be accompanied by a CAGR of mid-single-digit organic operating profit growth. Excluding North America, the rest of our business is expected to deliver net sales growth of 3-5%. Eps is expected to grow ahead of operating profit growth over this period. Our North America assumptions are clear with improved share trends across the period with share stabilisation from the second year and a return to share growth in fiscal 29.

Cash remains a critical focus and our commitment to deliver remains key and well on track. We now expect to be at the mid-point of our target leverage range (2.5-3x net debt(1)/ EBITDA) in fiscal 27, and to be at c.2x by the end of fiscal 29 absent any actions that the Board may decide to take. This assumes completion of the EABL and RCB disposals as expected as well as the higher capex spend as we invest in Guinness. Delivery on our financial guidance will result in significantly increased financial flexibility from fiscal 28. Our capital allocation priorities are clear and unchanged, with the priority for the coming years an organic turnaround.

(1) Leverage ratio is calculated using adjusted net debt which is the equivalent to adjusted net borrowings (net borrowings plus postemployment benefit liabilities before tax).