Diageo Cuts Full-Year Sales and Profit Forecast
Drinks producer Diageo reduced its full-year sales and profit projections on Thursday, citing weaker demand for Chinese white spirits and a slowdown in North America.
The company now expects its 2026 organic net sales to range from flat to slightly lower than the previous year. This outlook reflects the negative effects of reduced consumption of Chinese white spirits and a softer-than-expected economic environment in the United States.
Organic operating profit growth is forecast to remain in the low to mid-single digits.
First-Quarter Results
For the first quarter, Diageo reported stable organic net sales. Organic volume grew by 2.9%, but this was offset by a 2.8% decline in price and product mix, largely driven by disappointing performance in Asia Pacific, particularly in China’s white spirits segment. The company noted that excluding this impact, price and mix would have remained relatively stable.
Leadership Comment
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. 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.
Summary
Diageo faces slower growth due to weak Chinese and US markets, but intends to accelerate efficiency efforts and fine-tune its portfolio strategy to regain momentum.
Author’s Summary: Diageo lowered forecasts amid soft demand in China and the US, planning swift action and strategic investments to stabilize performance.