Diageo boss to step down after 13 years

By Mike Stones

- Last updated on GMT

Walsh's tenure was described as 'a game of two halves' by Investec
Walsh's tenure was described as 'a game of two halves' by Investec

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The boss of Guinness and Johnnie Walker whisky maker Diageo is to step down after 13 years at the helm, in what City analyst Investec described as “a well-flagged transition”.

Walsh – who will stay with the drinks giant until June 2014 to aid the transition process – will be replaced on July 1 by Ivan Menezes, currently chief operating officer.

Dr Franz Humer, Diageo chairman, described Walsh as “an outstanding chief executive”. ​Humer praised Walsh’s “enormous imagination and dedication”​ over the past 13 years.

‘Less sprightly’

Topping Menezes’ to-do list should be “to deliver on Diageo’s organic growth agenda, which has looked a bit less sprightly recently”,​ said Investec analyst Martin Deboo.

Deboo said the 53-year old Menezes’ key challenge would be to unlocking strategic value strategically, using the still-unleveraged balance sheet. “Exiting brewing and increasing focus on spirits continues to look compelling to us​,” he said.

Menezes, former president of Diageo's North American business, was widely expected to succeed Walsh after his appointment as chief operating officer last year.

Meanwhile, Investec described Walsh’s tenure at Diageo as “a game of two halves”. ​During his 13 years at the helm, £100 invested in Diageo had grown to £538, relative to only £148 for the FTSE 100, noted Deboo.

‘Arch-rival Pernod’

But he added: “£100 invested in arch-rival Pernod at the same point is now worth £671.This reflects sharp out-performance in the 2000-2007 period, when Pernod’s shares quadrupled in value, while Diageo’s less than doubled.

“Diageo only really got their share price outperformance mojo working from August 2011 onwards, with a much more vigorous strategy of top-line acceleration, cost reduction and bolt-on acquisitions in emerging markets.”

Walsh oversaw a range of Diageo's acquisitions including Turkey's Mey Icki and a stake in India’s largest spirit maker United Spirits.

Diageo wants to make half its turnover from emerging markets by 2015.

Investec retained its ‘hold’ recommendation on Diageo stock.

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