Diageo Shares Fall After Profit Warning
Diageo reported net sales of $4.9 billion for the quarter ending in September, marking a 2.2% decline compared with the same period last year. The company’s shares dropped 2.8% to 1747p amid weaker sales and profit expectations driven by reduced demand in China and the United States.
Weaker Outlook for 2026
The FTSE 100 drinks company, which produces Guinness and Johnnie Walker, stated that operating profit growth for the year to June 2026 is expected to be in the low to mid single-digit range. This represents a downgrade from its earlier forecast of mid single-digit growth. Diageo now anticipates sales will contract compared with 2025, rather than remaining flat as previously projected.
Key Challenges and Tariffs Impact
“The adverse impact from Chinese white spirits and a weaker US consumer environment than planned for,”
was cited by Diageo as the main reason for the downturn. The company also expects a $200 million (£153 million) cost from US tariffs imposed under President Donald Trump’s administration.
Leadership Remarks
“We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment,”
said interim chief executive Nik Jhangiani.
Market Reaction
“Diageo’s latest update reveals a somewhat concerning outlook with some signs of resilience but also significant headwinds, and a cut in forecast being the main talking point. While there was a steady performance in Europe, the slowdown in the US and China poses a real challenge.”
commented Adam Vettese, market analyst for eToro.
Author’s Summary
Diageo faces slower profit growth and sales decline due to weak US and Chinese markets, compounded by tariff costs under President Trump’s policy measures.