Diageo Lowers Full-Year Outlook
Diageo PLC, the London-based company behind Smirnoff vodka, Johnnie Walker whisky, and Guinness, announced a reduction in its full-year guidance on Thursday. This revision comes amid sluggish sales influenced by weak performance in North America and China.
First Quarter Results
- Sales decreased by 2.2%, reaching USD 4.88 billion, down from USD 4.97 billion in the previous year’s first quarter.
- Organic sales were flat, outperforming the market consensus of a 1.3% decline.
- Organic volume growth was 2.9%, but this was nearly offset by a negative price/mix impact of 2.8%.
Diageo explained the negative price/mix was primarily due to "adverse mix in Asia Pacific due to the weaker results in Chinese white spirits."
Regional Performance
Organic net sales growth in Europe, Latin America & the Caribbean, and Africa was counterbalanced by weak sales of Chinese white spirits in Asia Pacific and softer demand in North America, which reflected low consumer confidence.
Diageo estimated that "weakness in Chinese white spirits in China negatively impacted group net sales by around 2.5% in the quarter."
In North America, tough comparisons from the previous year's tequila restocking, driven by strong Don Julio tequila growth, affected this quarter's performance.
Revised Financial Expectations
Due to the weaker Chinese white spirits market and the soft US environment, Diageo adjusted its financial outlook for 2026. The company now expects organic net sales growth to be "flat to slightly down," a change from the previous forecast of remaining "at a similar level to fiscal 25."
For the financial year 2025, Diageo reported total sales of USD 20.25 billion.
Author’s Summary
Diageo’s lowered guidance reflects challenges in China and North America, with flat organic sales offset by unfavorable regional mix and cautious consumer demand.
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