Diageo Cuts Profit Guidance Amid Weak US and Chinese Sales
Drinks giant Diageo, owner of Guinness, Smirnoff, and Captain Morgan, has once again lowered its sales and profit forecasts due to falling demand in China and the US. The FTSE 100 company now expects operating profit growth for the year ending June 2026 to be in the low to mid single-digit range, down from prior guidance of mid single digits.
Sales are also expected to shrink compared to 2025, reversing earlier expectations of stable sales. Diageo's shares dropped 3.76%, or 67.50p, closing at 1,730.00p on Thursday, continuing a nearly 25% decline over the past year.
Leadership Challenges and Market Pressure
The group faces increasing pressure amid a leadership gap, following the death of former CEO Ivan Menezes in 2023. Interim CEO Nik Jhangiani expressed the board’s dissatisfaction with current performance.
“The group's board of directors was 'not satisfied' with the company's performance.”
Quarterly Financial Results
- Net sales between July and September totaled £3.75 billion, down 2.2% from £3.83 billion the previous year.
- Average product prices in Europe rose by 5.3%.
- Sales in North America declined 3.5%.
- Asia Pacific sales dropped 9.7% year-on-year.
- European sales increased by approximately 5%.
Summary
Diageo's reduced forecasts and falling sales in key markets highlight ongoing challenges as the company adapts to shifting global demand under new leadership.