Diageo has said it will cut $1bn in costs over the next three years as its new chief executive Sir Dave Lewis lays out a plan to turn around the performance of the maker of Guinness and Johnnie Walker.

The savings will come from redesigning the operating model and overhauling the supply chain, the company said on Thursday. "There is hard work ahead, particularly in North America," Lewis said. "But we are confident we can deliver without taking a step back in operating profit."

The restructuring plan goes beyond the target Diageo set last year of saving $625mn. Diageo reported revenues of $19. 6bn for the year ending June 30, a 2 per cent decline on an organic basis. Operating profits dropped 27 per cent to $3.2bn due to $900mn of restructuring charges and a $1.5bn impairment largely related to hyperinflationary accounting and pricing changes in Turkey.

Diageo shares jumped 7 per cent in London trading following the announcement, while investors worried that Lewis would cut profit targets.