Diageo Shares Fall on Profit Warning
Diageo reported net sales of $4.9 billion for the quarter ending September, down 2.2% compared to last year. Shares of the FTSE 100 company dropped due to weaker demand in China and the US, affecting sales and profit expectations.
Revised Profit and Sales Forecast
The group now expects operating profit growth to be in the low to mid single-digit range for the year ending June 2026, reduced from its earlier guidance of mid single digits. Sales are forecasted to decline compared to 2025, revising the previous expectation of flat sales.
Causes of the Downturn
Diageo attributes the challenges to [translate:«the adverse impact from Chinese white spirits and a weaker US consumer environment than planned for»]. Additionally, the company anticipates a $200 million (£153 million) hit 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 chief executive Nik Jhangiani.
Market Reaction and Analysis
Shares dropped 2.8% to 1747p early on Thursday. Adam Vettese, market analyst for eToro, commented:
“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.”
Diageo, known for brands like Guinness and Johnnie Walker, faces mounting pressure from international markets and tariff-related costs.
Summary: Diageo downgraded its profit and sales outlook due to weak demand in China and the US, as well as tariff impacts, prompting a share price decline and strategic focus on efficiency and adaptation.
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