Diageo: CMD Preview: A Test of Diageo‘s Fighting Spirit

研报英文原文证据摘录

Diageo: CMD Preview: A Test of Diageo‘s Fighting Spirit

opportunities for a rerating. Olivia Petronilho - Specialist Sales -

European Consumer

• Articulating top line turnaround, with upside in Beer & RTD, US risks in (44-20)olivia.b.petronilho@jpmorgan.com3493-3709

focus. Amid the challenging spirits market demand backdrop, the market is

highly anticipating CEO Dave Lewis’ recipe to reconnect with growth. We see Style Exposure

the growth algorithm likely to revolve around the ability to grow in spirits

whilst also accelerating growth avenues within beer (Guinness) and RTDs,

16% and 5% of sales respectively, which can both sustain double-digit growth.

We see consensus organic growth of 1.6% in FY27 (vs. JPME 0.8%) at risk of

a disappointment in the US with volume decline likely to linger vs expectations

of broad-based price cuts and volume recovery. FY28 consensus implies US

spirits to get back to flat which may look premature. While investors are

worried about a widening of price cuts in the US, we rather see the strategy to

rebalance the portfolio across price points over the next 1-2 years.

• Balancing growth requirements with substantial cost savings. Recent news

reports have pointed to substantial cost savings being implemented. We believe

Diageo has vast opportunities to improve its cost structure while also finding

efficiencies in its A&P ratio, which could amount to above USD1bn. While we

remain prudent on cost savings numbers – between what is gross and what will

actually fall through to the bottom line – we expect the discussion on costs to

underpin strategic reinvestments and to what extent savings can counter gross-

margin-dilutive topline initiatives, such as price repositioning in spirits, a