Diageo Reports Decline in Sales and Profit Forecast
Diageo reported net sales of $4.9 billion for the three months ending September, marking a 2.2% decrease compared to last year. Following this announcement, shares of the FTSE 100 beverages giant declined.
Impact of Weak Demand in Key Markets
The drop in sales and profit expectations was attributed to weak demand in China and the US. Diageo warned that sales for the year ending June 2026 are likely to contract, reversing earlier predictions of flat sales.
Revised Profit Growth Guidance
The company now expects operating profit growth in the low to mid single-digit range, reduced from its previous forecast of mid single digits.
Causes of Performance Decline
Diageo, known for brands like Guinness and Johnnie Walker, cited “the adverse impact from 中国白酒 and a weaker US consumer environment than planned for.” Additionally, it anticipates a $200 million (£153 million) loss due to President Donald Trump’s US tariffs.
“We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment,” said interim chief executive Nik Jhangiani.
Market Reaction and Expert Commentary
Shares dropped 2.8% to 1747p early Thursday. Adam Vettese, market analyst for eToro, commented:
“Diageo’s latest update reveals a somewhat concerning outlook with some signs of resilience but also significant headwinds, and a cut in forecast being the main talking point. While there was a steady performance in Europe, the slowdown in the US and China poses a real challenge.”
Author's Summary
Diageo faces shrinking sales and profit forecasts due to weaker demand in China and the US, compounded by tariffs and shifting consumer trends.