DEO · Diageo plc

Diageo plc's Fiscal 26 Q3 trading statement revealed mixed regional performance with organic net sales growth of just 0.3% driven by volume gains of 0.4% offset by slight price/mix contraction. Reported net sales rose 2.3% to $4,477 million, boosted by hyperinflation adjustments despite FX headwinds and disposals. North America, representing 38% of net sales, saw a sharp 9.4% organic decline due to soft market conditions, uncompetitive offerings, and US Spirits weakness (down 15.4%), though price/mix edged up 0.5% from a one-off Canada item. In contrast, Europe delivered 8.8% organic growth led by Guinness and spirits in MENA, Central/Eastern Europe, and Türkiye; LAC achieved 16.2% growth across most markets with FIFA World Cup advance sales; Africa posted 17.1% driven by double-digit gains in East and SWC regions. Asia Pacific dipped 0.8% due to double-digit Chinese white spirits declines from policy impacts, partially offset by international premium spirits. For the nine-month period, organic net sales fell 1.9%, reflecting ongoing pressures. CEO Sir Dave Lewis highlighted North America challenges and ongoing strategy redesign for competitiveness, with a full update planned alongside FY26 results on 6 August 2026. The Accelerate programme remains on track for ~$300m savings, supporting guidance. Key disposals include USL's RCB business sale on 24 March 2026 and anticipated EABL stake divestiture in H2 2026 to enhance leverage and flexibility. Fiscal 26 guidance is reiterated with organic net sales down 2-3%, operating profit flat to low-single-digit growth incorporating savings and tariff impacts, tax rate ~25%, capex at the lower end of $1.2-1.3bn, and free cash flow of $3bn excluding a one-off ERP-related inventory build.