Diageo Cuts Annual Sales and Profit Forecast
Drinks group Diageo has lowered its full-year revenue and profit outlook, citing declining demand for Chinese white spirits and a slowdown in North America.
The company now anticipates its 2026 organic net sales to remain flat or slightly decline. This reflects the negative effects of weaker Chinese white spirits performance and a less robust US consumer market. Organic operating profit growth is projected to reach only low to mid-single digits.
First Quarter Results
In the first quarter, Diageo reported that organic net sales were unchanged, as 2.9% volume growth was offset by a 2.8% decline in price and mix. The company attributed this mainly to an unfavorable product mix in Asia-Pacific, linked to weaker Chinese white spirits results. Without this drag, the overall price and mix would have been nearly steady.
Management Commentary
“Net sales were flat organically in Q1, with growth in Europe, LAC and Africa offset by weakness in Chinese white spirits and a softer US consumer environment than planned for,” said interim chief executive Nik Jhangiani.
“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.”
“We are well advanced in sharpening our strategy, and we are developing and already implementing clear plans to drive growth across the broader portfolio, ensuring that we meet relevant consumer occasions of the future.”
Outlook
Diageo continues to refine its strategy and roll out initiatives aimed at boosting efficiency and adapting to shifting consumer trends worldwide.
Author’s Summary: Diageo revised its 2026 outlook, citing weak demand in China and the US, while promising strategic adjustments to restore growth in upcoming quarters.