Diageo beats forecast despite continued subdued North America trading

Diageo PLC on Thursday reiterated full-year guidance as it reported a stronger-than-expected quarter as a decline in sales in North America proved less than feared.

The London-based brewer and distiller, which owns brands including Guinness stout and Johnnie Walker whisky, said net sales grew 1.2% to USD4.93 billion in the quarter ended September 30 from USD4.88 billion the year prior.

Organic sales growth was 1.4% but this was partly offset by unfavourable foreign exchange and the impact of disposals.

Revenue beat Visible Alpha consensus of USD4.84 billion and organic growth confounded expectations for a 0.4% decline.

Shares in the FTSE 100 listing were up 2.5% at 1,859.00 pence each in London on Thursday morning.

By region, organic sales fell 3.6% in North America, beating expectations for a 6.7% drop, but rose elsewhere.

Organic sales rose 2.4% in Europe, Middle East & Africa, by 4.1% in Asia Pacific, 4.8% in Latin America & Caribbean and 3.4% in India.

EMEA was below 5.0% consensus, Asia Pacific was ahead of 0.8% forecast, Latin America & Caribbean above 4.2% projections, and India shy of 6.4% expectations.

Diageo said the market in North America remains soft, with a double-digit decline in Don Julio, Casamigos and Crown Royal partly offset by growth, mainly in Johnnie Walker.

Chief Executive Dave Lewis said that overall the quarter was in line with expectations.

"We were pleased with the growth across LAC, EMEA, APAC and India. In North America, we continue to focus on making our offer more competitive, and whilst this remains our biggest challenge, clear actions are underway. Whilst the market remains challenging, and volatility continues given the geopolitical uncertainty and impact of the ongoing conflict in the Middle East on energy, supply and distribution, results in the first quarter represent a small step in the right direction."

Diageo reiterated financial 2027 guidance.

It continues to expect broadly flat organic net sales growth and low-to mid-single-digit organic operating profit growth.

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