25th Feb 2026 08:44
(Alliance News) - Diageo PLC on Wednesday lowered full-year sales guidance and slashed its dividend amid what new Chief Executive Dave Lewis called a "mixed" first half performance.
The FTSE 100-listed brewer and distiller said pretax profit edged up 0.7% to USD2.79 billion in the six months to December 31 from USD2.77 billion a year prior.
Operating profit before exceptional items ebbed 3.4% to USD3.26 billion from USD3.37 billion a year ago, but beat Visible Alpha consensus of USD3.21 billion.
Basic earnings per share improved to 89.7 US cents from 87.1 cents.
Net sales fell 4.0% on-year to USD10.46 billion, from USD10.90 billion, below VA consensus of USD10.57 billion.
Sales declined 2.8% on an organic basis, compared to VA consensus for a 2.0% drop, with organic volumes down 0.9% and a negative price/mix of 1.9%.
"Trading conditions remained challenging in the first half of the year. We believe this was largely due to further macroeconomic and geopolitical uncertainty, and weak consumer confidence in key markets," the company said in a statement.
In response, shares in Diageo fell 6.4% to 1,754.00 pence each in London on Wednesday. It was the biggest faller on the FTSE 100 which was up 0.7%.
The Guinness stout and Johnnie Walker whisky maker said strong organic net sales growth in Europe, Latin America & Caribbean, and Africa was more than offset by softer performance in North America given pressure on disposable income impacting US Spirits, and the adverse impact of Chinese white spirits in Asia Pacific.
The negative price/mix was primarily as a result of adverse mix due to US Spirits performance and weaker results in CWS.
"Our performance in the first half of fiscal 26 was mixed," Chief Executive Officer Dave Lewis said.
Lewis, formerly of Tesco, joined Diageo at the start of 2026, and said he "can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering leading to higher growth."
Lewis said Diageo needs to "create more financial flexibility" to "deliver on these opportunities."
As a result, Diageo reduced the half-year dividend "to a more appropriate level which will accelerate the strengthening of our balance sheet."
The firm halved its first-half payout to 20 cents per share from 40.50 cents a year prior.
Lewis said he is "confident that this is the right action" to "drive stronger shareholder value over the
coming years."
For the financial year, Diageo now expects a full-year organic net sales decline of 2% to 3%, "given further weakness in the US". It had previously predicted an outcome between "flat to slightly down".
Organic operating profit outcome is now expected to be between flat to growth low-single digits, lowered from the prior view of growth in the "low to mid-single-digit" range.
Diageo said its cost savings programme is progressing well with around 50% 'Accelerate' savings now expected in the current financial year.
Diageo said it has noted the recent US Supreme Court ruling on tariffs, as well as announcements since by President Donald Trump's administration since, but has not updated its tariff guidance at this time.
"Assuming that a 10% tariff remains on UK and 15% on European imports into the US, that Mexican and Canadian spirits imports into the US remain exempt under the US - Mexico - Canada agreement, and that there are no other changes to tariffs, the unmitigated impact of these tariffs is estimated to remain [around] USD200 million on an annualised basis," the firm added.
"Given the actions to date to mitigate the impact and before any pricing, we continue to expect to mitigate around half of this impact on operating profit on an ongoing basis."
By Jeremy Cutler, Alliance News reporter
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