Diageo Reports Lower Sales Amid Weak Demand
Diageo announced net sales of $4.9bn for the quarter ending in September, marking a 2.2% decrease compared to last year. Shares of the FTSE 100 beverage company dropped following weaker demand in China and the US, affecting sales and profit forecasts.
Profit Growth and Sales Forecast Downgraded
The company now expects operating profit growth to be in the low to mid single-digit percentage range for the fiscal year ending June 2026, a downgrade from its prior mid-single-digit projection. Additionally, Diageo forecasted a contraction in sales compared to 2025, revising previous hopes of stable sales.
Reasons for Decline
Diageo, known for brands like Guinness and Johnnie Walker, attributed the decline to [translate:«the adverse impact from Chinese white spirits and a weaker US consumer environment than planned for»]. The company also anticipates a $200 million (£153 million) loss due to US tariffs imposed by President Donald Trump.
“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,” said interim CEO Nik Jhangiani.
Market Reaction and Analyst Comments
Shares fell 2.8% to 1747p early Thursday. Adam Vettese, market analyst at eToro, stated:
“Diageo’s latest update reveals a somewhat concerning outlook with some signs of resilience but also significant headwinds, and a cut in forecast being the main talking point. While there was a steady performance in Europe, the slowdown in the US and China poses a real challenge.”
Author’s Summary: Diageo faces tough market conditions in China and the US, leading to lowered profit and sales forecasts and causing a notable drop in share prices.