Diageo Revises Full-Year Sales and Profit Forecast
Drinks manufacturer Diageo lowered its full-year sales and profit outlook due to sluggish demand for Chinese white spirits and a slowdown in North America. The company now anticipates that its 2026 organic net sales will be flat or slightly lower.
Factors Affecting Forecast
- Negative impact from Chinese white spirits market
- Weaker-than-expected consumer demand in the US
Organic operating profit growth is projected to be in the low to mid-single digit range.
First Quarter Performance
Diageo reported flat organic net sales for Q1, with organic volume growing by 2.9% but offset by a negative price/mix impact of 2.8%. This was mainly due to adverse effects in the Asia Pacific region stemming from weaker results in Chinese white spirits.
Excluding the Chinese white spirits segment, the price/mix effect would have remained relatively stable.
Interim CEO Comments
"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."
Author's summary: Diageo has cut its 2026 sales and profit forecast due to challenges in Chinese white spirits and the US market, while focusing on accelerating strategy and operational efficiency to restore growth.