Diageo Lowers Sales and Profit Forecasts Amid Weak Demand
Drinks giant Diageo, owner of Guinness, Smirnoff vodka, and Captain Morgan rum, has further reduced its sales and profit guidance due to declining demand in China and the US. The FTSE 100 company now expects operating profit growth to be in the low to mid single-digit range for the year ending June 2026, down from its previous forecast of mid single digits.
Diageo also anticipates sales to fall compared to 2025, revising earlier expectations of flat sales. The company's shares dropped 3.76% to 1,730.00p on Thursday, having lost nearly 25% of their value over the past year.
Leadership Challenges and Performance Concerns
The group has faced growing pressure to address a leadership gap following the death of former CEO Ivan Menezes in 2023. Nik Jhangiani, interim CEO, stated the board is “not satisfied” with the company’s current performance.
“The board of directors was not satisfied with the company's performance.” – Nik Jhangiani, interim CEO
Recent Financial Performance
- Net sales for July to September declined 2.2% to £3.75 billion from £3.83 billion the previous year.
- Product prices in Europe increased by 5.3% on average.
- North American sales fell by 3.5%.
- Asia Pacific sales dropped sharply by 9.7%, offsetting a roughly 5% growth in Europe.
Summary
Diageo faces tightening profit and sales forecasts due to weak demand in key markets amid leadership challenges, signaling a need for strategic adjustments.