Johnnie Walker and Guinness giant Diageo said on Monday it plans to cut costs by $500 million and make “appropriate and selective disposals” as the group prepares for US trade tariffs.

Diageo said it currently estimates the “unmitigated impact” of US tariffs will be $150 million on an annualised basis.

Diageo’s other brands include Crown Royal, J&B and Buchanan’s whiskies, Smirnoff and Ketel One vodkas, Captain Morgan, Baileys, Don Julio and Tanqueray.

The world’s biggest spirits maker reiterated its guidance for the full year and said it expects sales growth to improve in the second half.

In a fiscal Q3 trading statement Diageo said reported net sales for the third quarter increased by 2.9% to $4.4 billion “with positive organic growth partially offset by unfavourable foreign exchange and disposals.”

Diageo said: “Assuming the current 10% tariff remains on both UK and European imports into the US, that Mexican and Canadian spirits imports into the US remain exempt under USMCA, and that there are no other changes to tariffs, the unmitigated impact of these tariffs is estimated to be c.$150m on an annualised basis.

“Tariffs between the US and China do not have a material impact on our business. 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.

“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. The expected impact in fiscal 25 and fiscal 26 is included in our guidance.”

Diageo CEO Debra Crew said: “In the third quarter we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 25.

“We also reiterated our organic operating profit outlook for fiscal 25, including the impact of tariffs based on what we know at this time. We continue to believe in the attractive long-term fundamentals of our industry and in our ability to outperform the market.

“We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery.

“Consistent with our strategic priorities and our focus on what we can manage and control, we are introducing the first phase of our Accelerate programme. This sets out clear near-term cash delivery targets and a disciplined approach to operational excellence and cost efficiency.

“It will strengthen Diageo by increasing our effectiveness, agility, and resilience. It will also ensure that we are well-positioned to deliver sustainable, consistent performance while maximising shareholder returns; even if current trading conditions persist.

“We look forward to sharing more detail on Accelerate with our full year results in August.”