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Diageo’s chief financial officer has stepped down after a turbulent three years in the role marked by a profit warning and poor share price performance at the spirits giant.
Lavanya Chandrashekar, who joined the Guinness and Johnnie Walker maker as finance chief of its North America business in 2018, will be replaced by Nik Jhangiani, CFO at Coca-Cola’s largest bottler Coca-Cola Europacific Partners (CCEP).
“Diageo’s weak share price performance has, in part, reflected questions around financial communication and some perceived mis-steps from senior management, so we think this will be moderately well received,” said RBC Capital analyst James Edwardes Jones. Diageo declined to comment on those points.
Shares rose by 1.4 per cent in early trading on Friday, having fallen by 25 per cent over the past year.
The drinks group issued a profit warning last year due to a projected 20 per cent sales slump in Latin America, which accounts for more than a tenth of Diageo’s sales value. The news sent the company’s shares down 12 per cent.
During a capital markets day several days later, chief executive Debra Crew, who took up the role last June, struggled to convince investors that the company’s problems were confined to the Latin American market.
Weaker demand for spirits, particularly in its crucial US market, has weighed on Diageo. In the six months to December, sales of single malts slumped 27 per cent, while sales of George Clooney-founded Casamigos tequila fell 14 per cent.
Jefferies analyst Edward Mundy said investors were likely to pull two ways in reaction to the news. “On the one hand Nik is an experienced CFO with a strong communication style, focus on cash, returns, growth which has driven compounding at CCEP,” he said.
“On the other hand, there is a risk that with a new CFO coming in, the company walks away from [its] 5-7 per cent organic sales target . . . as credibility is rebuilt,” he added.
Diageo established the ambitious target during the Covid pandemic spirits super cycle, when drinkers knocked back more high-end booze during lockdowns and the reopening, thanks to the savings they had built up.
Some analysts have feared now that the boom has come to an end, Diageo’s target may be overly ambitious.
Jhangiani will begin in the role in June this year. He had been CFO at CCEP, which made revenues of more than €18bn last year, since 2016 and previously held the same role at predecessor company Coca-Cola Enterprises.
“I am delighted that Nik will be joining us,” said Crew. “He is a highly experienced CFO with a proven global track record of generating growth across multiple consumer businesses and industries.”