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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Diageo    DGE   GB0002374006

DIAGEO

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Diageo : unions demand 5% pay rise as they prepare for strikes

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09/12/2019 | 05:26pm EDT
FILE PHOTO: The museum room is seen at the Diageo Cardhu distillery in Scotland, Britain

(Reuters) - Unions at Diageo are demanding a 5% pay rise for workers due to go on strike in Scotland later this month and believe the stoppages will cost the drinks company 1 million pounds ($1.2 million) a day, a source familiar with the matter said.

A Diageo spokeswoman said that the unions had initially demanded 5% pay hikes when talks started in May, but had since come down to 3.5%.

The source said that the unions "never" agreed to settle at 3.5% and that their previous demand still stood.

Members of Scotland's Unite and GMB unions, who make up half of Diageo's 3,000 Scottish workforce, are set to go on rolling strikes at the company's Cameronbridge, Leven and Shieldhall sites in Scotland between Sept. 17 and 27, after talks with Diageo collapsed last month.

The unions on Aug. 30 again rejected Diageo's offer to increase wages by 2.8%, after rejecting a prior offer of 2.5%. Last year, workers received a 3.2% hike.

Bob MacGregor, regional industrial officer of Scottish union Unite, has said previously that production would come to a standstill if the strikes go ahead.

"We are willing to listen to any offer from the company above what they offered last year... but what our members won't accept is a pay cut," MacGregor told Reuters.

The Diageo spokeswoman said the union's estimate that the strikes would cause losses of 1 million pounds a day did not have "any ground in reality" and that the company was unable to verify the number.

The unions have said their demands should be taken in the context of the world's largest spirits maker's annual profits, which were 4.2 billion pounds ($5.19 billion) last year.

The unions have also voiced frustrations over Diageo's plan to build a 150 million pound Johnnie Walker visitor attraction in Edinburgh, as part of an investment in Scottish whisky tourism.

Diageo has 29 distilleries in Scotland and exports 80% of the whiskey it produces there to 180 countries in the world. The company is the single biggest exporter of whiskey from Scotland and produces for brands including Johnnie Walker, Lagavulin and Talisker at the three sites.

Diageo's pay offers year-over-year take into account the Consumer Price Index (CPI) – regarded as the UK's rate of inflation - and the Retail Price Index (RPI), the spokeswoman said.

UK CPI stood at 2.1%, while RPI was 2.8%, in July.

"We want our employees in Scotland to continue to be well paid for the great job they do and receive a rise above the cost of living," a Diageo spokesperson said. "Everyone receives a broad range of strong benefits, which this month included free shares worth 8.56% of salaries for every employee."

The company said it had contingency plans in place for a strike, but wanted to reach a deal via "meaningful talks."

The unions and Diageo are due to meet again on Monday.

(Reporting by Siddharth Cavale in Bengaluru; additional reporting by Aakriti Bhalla; editing by Susan Fenton and Rosalba O'Brien)

By Siddharth Cavale

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EBIT 2020 4 474 M
Net income 2020 3 351 M
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Yield 2020 2,26%
P/E ratio 2020 22,9x
P/E ratio 2021 21,2x
EV / Sales2020 6,34x
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