Diageo PLC

F:GUI

Sales Decline: Organic net sales and organic operating profit both declined by 2.8% in the first half, mainly due to weakness in U.S. spirits and Chinese white spirits.

North America Pressure: U.S. spirits sales fell sharply, especially tequila (down about 23%), driven by Don Julio and Casamigos, with category down trading and negative media impacting performance.

EPS Drop: EPS pre-exceptionals fell 2.5% to $0.953, impacted by lower profit and recent business disposals.

Dividend Policy Change: Diageo moved to a new dividend payout range of 30% to 50%, declaring a $0.20 per share dividend, reflecting a need for balance sheet strength and investment flexibility.

Free Cash Flow: Free cash flow for the half was just over $1.5 billion, down $164 million year-on-year, mostly due to working capital movements, but full-year guidance remains at $3 billion.

Guidance Lowered: Organic net sales growth guidance for FY26 was lowered to down 2% to 3% (from flat to slightly down), and operating profit guidance reduced to flat to up low single digits.

Cost Savings: Around half of the $625 million targeted savings from the Accelerate program are expected to be delivered in fiscal 2026, with a focus so far on supply chain and marketing efficiency.

Turnaround Focus: New CEO outlined immediate priorities: sharpening category strategies, improving customer relationships and service, and redesigning the operating framework to drive competitiveness.