Key Takeaways

Alcoholic beverage giant Diageo ( DEO ) said in its fiscal third-quarter report Monday that it expects a $150 million annualized impact from tariffs.

The British parent of Guinness, Smirnoff, and Johnnie Walker also said it would look to cut costs by $500 million over the next three years as it navigates the additional import duties.

"We expect that given the actions that we have in place already, before any pricing, we will be able to mitigate around half of this impact on operating profit on an ongoing basis," Diageo said. "Looking ahead, we will continue to work on measures to mitigate this impact further. Our long track record of managing international tariffs gives us confidence in our ability to navigate this successfully."

Diageo said it sold $4.38 billion of its beverages in the third quarter, up about 3% year-over-year. Sales grew in North America and Latin America, while posting small declines in Europe, Africa, and the Asia Pacific regions.

Diageo Affirms Fiscal 2025 Organic Net Sales, Operating Profit Projections

Diageo said it continues to expect organic net sales to increase in the second half of fiscal 2025 compared with the first half, and continues to see "a slight decline" in organic operating profit, "broadly in line with the decline in the first half." It also continues to expect operating profit and organic net sales to grow in fiscal 2026, "based on what we know at this time" about tariffs.

Diageo's U.S.-listed shares, which entered Monday down almost 10% since the start of the year, slipped 1.2% less than an hour before the opening bell.

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