Diageo weighs London job cuts to boost profits

Billy Bambrough
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US presidential hopeful Hillary Clinton responsibly enjoys a pint of Guinness
US presidential hopeful Hillary Clinton responsibly enjoys a pint of Guinness (Source: Getty)

Drinks giant Diageo – owner of Guinness and Smirnoff brands – is finalising plans to slash jobs at its London headquarters.

A review of staffing at offices in Park Royal, northwest London, is expected to significantly reduce the 1,500 headcount, though the axe is expected to fall across Diageo’s operations around the world.

A productivity programme in July 2015 is targetting is £500m of savings over a three year period. It’s understood proposals have not yet been finalised and any changes will be consulted on.

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“We announced last year that we would deliver a productivity programme over the three years ending fiscal 2019,” a Diageo spokesperson said. “This covers all aspects of how we run our business, as we continue to become more efficient and invest behind growth. As you would expect our employees will be the first to hear about any proposed changes to our structure.”

Diageo has benefited from the plunge in the pound since the UK’s vote to quit the European Union as it makes 90 per cent of its revenue outside of the UK. Shares have risen 20 per cent since the referendum June, giving it a market value of £53bn.

In July, Diageo reported net sales growth in its full-year results and said it is on track to deliver on its 2017 growth plans.

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Net sales grew 2.8 per cent at the alcohol drinks giant, in line with expectations, though reported net sales declined three per cent as organic growth and acquisitions were offset by adverse foreign exchange rates and disposals.

Over the year, Diageo acquired the remaining 50 per cent shareholdings in Don Julio and United National Breweries, while it disposed of Bushmills and Gleneagles, as well as other wine and beer assets.