Diageo sales beat forecast but North America 'biggest challenge'
Diageo PLC on Wednesday backed its annual outlook and reported better-than-expected third-quarter sales, despite spirits market weakness in the US.
Diageo shares were up 3.9% to 1,532.49 pence each in London on Wednesday morning, among the best FTSE 100 performers. The index was up 1.5%.
The brewer and distiller, behind brands such as Guinness, Smirnoff and Tanqueray, said net sales rose 2.3% to $4.48 billion in the financial third quarter ended March 31 from $4.38 billion a year prior.
Diageo had been expected to report net sales of $4.27 billion for the quarter, according to company-compiled market consensus. Organic net sales edged up 0.3%, however, beating expectations of a 2.3% decline.
‘We are pleased with the strong growth across Europe, [Latin America & Caribbean] and Africa. North America remains our biggest challenge, where market conditions are soft and our offer needs to be more competitive. Actions are already underway to address this,’ Chief Executive Officer Dave Lewis said.
Diageo said it saw ‘strong organic net sales growth’ in Europe, LAC and Africa, aided by the timing of Easter and some ‘advance sales’ in the run-up to the FIFA World Cup which kicks off next month.
‘In North America, organic net sales declined high-single-digit reflecting continued US Spirits weakness. Asia Pacific net sales declined slightly with weakness in Chinese white spirits offsetting low-single-digit growth in international premium spirits, and with the latter benefiting from later timing of Chinese New Year,’ Diageo said.
Looking ahead, the company still expects an organic net sales fall between 2% and 3% for the full year, and an organic operating profit outcome that ranges between flat and low-single-digit growth.
Net sales in financial 2025 had amounted to $20.25 billion, with operating profit at $4.36 billion. Organic operating profit fell 0.7% in financial 2025, though organic net sales rose 1.7%.
Diageo said it is still on track for $300 million in savings by the end of the current financial year stemming from its ‘accelerate’ programme. Diageo set out the programme around this time last year, aiming to ‘sustainably deliver around $3 billion free cash flow per annum’ from financial 2026.
Lewis became CEO in January, with his appointment announced in November. Diageo had been without a permanent CEO for a number of months following the departure of Debra Crew in July.
Lewis was CEO at food retailer Tesco from 2014 to 2020, and, prior to this, spent nearly three decades at Marmite owner Unilever PLC.
The Diageo boss said Wednesday that ‘progress on the re-design of our new strategy and the shaping of a more competitive operating framework is well underway’.
The firm will share a strategy update with its annual results on August 6.
‘While we are mindful of continued geopolitical uncertainty, including the impact of the ongoing conflict in the Middle East on energy, supply and distribution; we are reiterating our fiscal 26 guidance,’ Lewis added.
Copyright 2026 Alliance News Ltd. All Rights Reserved.