Diageo Lowers Full-Year Guidance Amid Challenging Markets
Diageo PLC reduced its full-year outlook due to sluggish sales caused by weak performance in North America and China. The London-based company, known for brands like Smirnoff, Johnnie Walker, and Guinness, reported a 2.2% decline in sales to USD 4.88 billion in the first quarter of its financial year, down from USD 4.97 billion the previous year.
Sales Performance Details
On an organic basis, sales remained flat, outperforming the market consensus which predicted a 1.3% decline. Diageo recorded organic volume growth of 2.9%, but this was offset by a negative price and mix effect of 2.8%. The adverse price/mix was largely due to weaker results in Chinese white spirits within the Asia Pacific region. Without this factor, the price/mix would have remained mostly stable.
Regional Insights
- Organic net sales growth in Europe, Latin America & Caribbean, and Africa
- Weakness in Chinese white spirits negatively impacted Asia Pacific results
- Soft demand in North America driven by weak consumer confidence
Diageo estimates that the weakness in Chinese white spirits decreased group net sales by about 2.5% during the quarter. In North America, challenging comparisons were noted due to last year’s strong tequila restocking, especially with Don Julio.
Revised Financial Outlook
Diageo lowered its financial 2026 expectations for organic net sales growth to "flat to slightly down" from the previous forecast of "to be at a similar level to fiscal 25."
In fiscal 2025, Diageo’s sales totaled USD 20.25 billion.
Author's Summary
Diageo cut its full-year forecast after mixed regional performances and declining sales, especially affected by challenges in North America and Chinese white spirits.