Diageo’s results were never going to make for good reading, and they weren’t. They confirmed that key markets of China the US are still facing pressures, and there are few reasons to be optimistic.
If one were to take the glass half full approach, one could point to reasonably stable sales growth in Europe, LATAM, and Africa, but this was more than offset by weakness in the US and China.
US net sales fell 7.4% and struggles in China culminated in net sales in Asia Pacific sliding 13%.
Overall, net sales were down 4% and operating profit fell 1.2%. The poor performance led to the drinks giant revising its fiscal 2026 sales growth guidance to negative 2-3%.
The reduction in alcohol consumption in the developed world is well documented, but that appears to have done nothing to soften the blow of today’s results, which sent shares down 6% at the time of writing.
Most punishingly for investors, Diageo’s challenging environment has led the group to slash its dividend by more than half.
“Dave Lewis is going to need a stiff drink after presenting his first set of results as the new Diageo boss,” said Dan Coatsworth, head of markets at AJ Bell.
“The business is not doing as well in the once lucrative North American market and China is not lining its pockets with riches either. Most of the key metrics in the results are in negative territory, with sales, operating profit and cash flow all in decline.
“Shareholders have also been delivered the sucker punch of a big cut to the dividend. That might come as a surprise to many investors who thought they would be paid to wait for the business recovery.”
The new CEO has a job on his hands.