Diageo to capture savings in 2015 from job cuts made this year
Diageo's ongoing restructure - aimed at cutting costs by £200 million by the end of 2017 - is likely to see a savings of £15 to £20 million based on this year's restructure in each region through staff and corporate costs.
Diageo's ongoing restructure - aimed at cutting costs by £200 million by the end of 2017 - is likely to see a savings of £15 to £20 million based on this year's restructure in each region through staff and corporate costs
The drinks company, whose annual results were released today, saw net sales down 9% to £10.2 billion, while operating profits dropped by 20% to £2.7 billion.
Earlier this year, the company announced a global efficiency programme that aimed to reduce cost by the end of 2017 by £200 million. Chief executive Ivan Menezes said: "We are transforming Diageo, creating a more agile, leaner organisation, with clearer accountability."
Chief financial officer Deirdre Mahlan said: "Of the £200 million of total savings I expect we will achieve £110 million in fiscal 15 and that about £30 million of this will be reinvested in the business. The fiscal 15 savings will be about £15 to £20 million in each region, mainly staff costs, and corporate costs will reduce by about £25 million. This year we have taken a charge of £98 million in respect of this restructuring programme."
Chief executive Ivan Menezes also indicated that for the 2015 fiscal year routes to market in emerging regions will be major focus for the organisation. He said: "Creating an advantaged route to consumer is the key intervention we can make to fully realise the growth trajectory in emerging markets and gain share in developed markets. In fiscal 14, we began this work in earnest in markets which cover £4 billion in sales. These markets have detailed plans in place for change in fiscal 15 through to fiscal 17. In addition a number of quick wins were put in place this year and have already delivered incremental sales."
Diageo also made long term strategic investments in the form of acquisitions over the last fiscal year. For example, the purchase of United Spirits and the sale of Whyte & Mackay arm of the business is on such example of foundational investments the company made which it contribute to improved performance in the next few years.
Menezes said: "In the past three years we have made seven acquisitions investing over £4bn to strengthen our emerging market footprint. We have acquired leading local players, such as United Spirits in India; Mey Icki in Turkey and Ypióca in Brazil."
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