Diageo cuts its sales forecast again and slashes dividend

Diageo has slashed its dividend and cut its annual sales and profit forecast for the second time in four months, as the maker of Guinness warned of capacity constraints affecting drinkers of "the black stuff" in London pubs.

- Joanna Partridge

The world’s largest spirits maker - which owns brands including Smirnoff vodka, Johnnie Walker whisky and Don Julio tequila - lost more than £5bn of its market value yesterday as it reported weak demand in the US and China in the first results released under the new chief executive, Sir Dave Lewis.

The former Tesco chief executive, who earned the nickname “Drastic Dave” as a result of his cost-cutting during almost three decades at the conglomerate Unilever, took the reins at Diageo in January and wasted no time in cutting the company’s shareholder dividend in his attempt to turn around the drinks maker.

Describing his first seven weeks as “pretty intense”, Lewis said in a results webcast that it had not been a simple choice to reduce the dividend, halving it to 20 cents a share, down from 40.5 cents a year ago.