REG - Diageo PLC - Diageo issues fiscal 26 Q3 trading statement

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RNS Number : 1264D  Diageo PLC  06 May 2026

 
 Fiscal 26 Q3 trading statement

6 May 2026

 
Strong growth in Europe, LAC and Africa, all up at least high-single-digit, offset by weakness in North America. Fiscal 26 guidance reiterated.
 
 
            Q3 ended 31 March 2026                              9 months ended 31 March 2026
            Reported  Reported  Reported growth  Organic        Reported  Reported  Reported growth  Organic
            F26       F25       YoY %             growth        F26       F25       YoY %             growth
            $m        $m                         YoY %          $m        $m                         YoY %
 Net sales  4,477     4,376     2.3              0.3            14,937    15,277    (2.2)            (1.9)
 Volume                                          0.4                                                 (0.5)
 Price/mix  -         -         -                (0.1)          -         -         -                 (1.4)

·      Q3 reported net sales increased 2.3% to $4.5bn, reflecting a
positive hyperinflation adjustment, partially offset by the impact of
disposals and limited impact from foreign exchange.

·      Organic net sales grew 0.3% in the quarter; volume +0.4% and
price/mix -0.1%.

·      Strong organic net sales growth was delivered in Europe, LAC and
Africa with some benefit from Easter timing and advance sales ahead of the
upcoming FIFA World Cup. 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 (CWS)
offsetting low-single-digit growth in international premium spirits, and with
the latter benefiting from later timing of Chinese New Year (CNY).

·      Accelerate programme on track to deliver c.$300m savings by end
of fiscal 26.

·      USL announced the sale of its RCB business on 24 March 2026 and
the disposal of our shareholding in EABL is expected to complete in calendar
H2 2026.(1) These transactions will support reducing leverage and increasing
financial flexibility.

·      Fiscal 26 guidance unchanged from fiscal 26 H1 results.

 

Sir Dave Lewis, Chief Executive Officer, commented:

"We are pleased with the strong growth across Europe, LAC 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.

Progress on the re-design of our new strategy and the shaping of a more
competitive operating framework is well underway. We are on track to share a
Strategy Update with shareholders alongside our fiscal 26 full-year results on
6 August 2026.

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."

 

1. United Spirits Limited (USL), Royal Challengers Bengaluru (RCB) & East
African Breweries plc (EABL).

Quarterly financials are unaudited. See pages 5-6 for an explanation and
reconciliation of non-GAAP measures. Unrounded financials - due to rounding,
the numbers in this and other tables in this release may not always cast or
calculate. Unless otherwise noted, commentary throughout this release refers
to organic net sales movement for third quarter ended 31 March 2026 compared
to the third quarter ended 31 March 2025.

 

 

Fiscal 26 full-year outlook unchanged from fiscal 26 H1 results:
Organic net sales - down 2-3%.
Organic operating profit growth - flat to up low-single-digit including c.$300m savings from Accelerate and the impact of tariffs shared previously.
Taxation - tax rate before exceptional items c.25% (fiscal 25: 24.9%).
Effective interest rate - effective interest rate c.4.0% (fiscal 25: 4.1%).
Capital expenditure - at the lower end of the range of $1.2-1.3 billion (fiscal 25: $1.5 billion).
Free cash flow - $3 billion (fiscal 25: $2.7 billion), including exceptional items related to Accelerate but excluding c.$100 million one-off impact for inventory build at year end to cover implementation of the SAP S/4 HANA ERP system in early fiscal 27.
 
Live presentation and Q&A conference call

Sir Dave Lewis, Chief Executive Officer and Nik Jhangiani, Chief Financial
Officer will host a short presentation followed by Q&A at 9.30am UKT
(10.30am CET) on Wednesday 6 May 2026, which can be accessed at:
https://www.investis-live.com/diageo/69c268d9dc51410011ba8af8/mqlzw
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fdiageo%2F69c268d9dc51410011ba8af8%2Fmqlzw&data=05%7C02%7Cflorence.mayo%40diageo.com%7C6a9362e066b84b2ca90208de8a66fbf4%7C88ed286b88d84faf918f883d693321ae%7C0%7C0%7C639100372156753720%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=6JCzbhcH03mMI0SoLdoeg28od77ZCA5s1fgQlMYGbCw%3D&reserved=0)

 

For analysts and investors wishing to ask questions, please use the dial-in
details below which will have a Q&A facility. Please dial in 15 minutes
ahead of the scheduled start time to register before the call begins.

 

 From the UK:               +44 (0)20 3936 2999
 From the UK (free call):   0808 189 0158
 From the USA:              +1 646 233 4753
 From the USA (free call):  +1 855 979 6654
 Access code:               662719

Transcript and audio recording

Following the presentation and Q&A conference call, a transcript and audio
recording can be accessed at:

https://www.diageo.com/en/investors/results-reports-and-events/results
(https://www.diageo.com/en/investors/results-reports-and-events/results)

 
Presentation slides and transcript

Following the presentation, slides and a transcript will be made available.

For further information, please contact:

 Investor relations:
 Sonya Ghobrial                                                           +44 (0) 7392 784 784
 Andy Ryan                                                                +44 (0) 7803 854 842
 Grace Murphy                                                             +44 (0) 7514 726 167
 investor.relations@diageo.com (mailto:investor.relations@diageo.com)

 Media relations:
 Rebecca Perry                                                            +44 (0) 7590 809 101
 Clare Cavana                                                             +44 (0) 7751 742 072
 press@diageo.com (mailto:press@diageo.com)

 

Q3 review
Net sales, volume and price/mix for Q3 and 9 months ended 31 March 2026
                Q3 ended 31 March 2026                                           Volume          Price/mix
                Reported F26  Reported F25  Reported growth  Organic growth      Organic growth  Organic

                                                                                                  Growth
  Net sales     $m            $m            YoY %            YoY %               YoY %           YoY %

 North America  1,712         1,903         (10.0)           (9.4)               (9.9)           0.5
 Europe         1,049         898           16.8             8.8                 6.3             2.6
 Asia Pacific   797           803           (0.7)            (0.8)               (4.6)           3.8
 LAC            513           378           35.7             16.2                10.5            5.6
 Africa         374           369           1.4              17.1                20.2            (3.1)
 Corporate      32            25            n/a              n/a                 n/a             n/a
 Diageo total   4,477         4,376         2.3              0.3                 0.4             (0.1)
                9 months ended 31 March 2026                                     Volume          Price/mix
                Reported F26  Reported F25  Reported growth  Organic growth      Organic growth  Organic

                                                                                                  Growth
  Net sales     $m            $m            YoY %            YoY %               YoY %           YoY %

 North America  5,502         5,998         (8.3)            (7.6)               (5.8)           (1.8)
 Europe         3,809         3,530         7.9              4.3                 0.2             4.1
 Asia Pacific   2,632         2,913         (9.6)            (8.2)               (2.3)           (5.8)
 LAC            1,629         1,428         14.1             7.7                 1.6             6.0
 Africa         1,247         1,313         (5.0)            12.7                11.3            1.4
 Corporate      118           95            n/a              n/a                 n/a             n/a
 Diageo total   14,937        15,277        (2.2)            (1.9)               (0.5)           (1.4)

Quarterly financials are unaudited. Unrounded financials - due to rounding, the numbers in this table may not always cast or calculate.
Q3 Regional performance

North America (38% net sales)

·    Organic net sales declined 9.4% as a result of soft market conditions
and the need for a more competitive offer.

·    Price/mix increased 0.5%, driven by a one-off item in Canada relating
to a favourable resolution of commercial terms. Underlying NAM price/mix was
negative, largely due to adverse US Spirits mix.

·    US Spirits organic net sales declined 15.4%, weaker than depletions
decline by c.5%. Overall net sales were impacted by lapping tough comparatives
last year due to the pre tariff pull-forward of imports to distributors and
tequila restocking. Q3 shipments benefitted from distributor buy-in ahead of
the FIFA World Cup. Tequila declined double-digit overall driven by tough
prior year comparatives, competitive pressure and category softness.

·    Diageo Beer Company USA net sales grew 9.1% led by Smirnoff RTD and
Guinness.

Europe (23% net sales)

·    Organic net sales grew 8.8%, led by Guinness in Great Britain and
Ireland. Spirits growth led by MENA, Central and Eastern Europe and Türkiye.

·    Price/mix grew 2.6% driven by continued strong Guinness performance
with net sales up double-digit.

·    Spirits organic net sales grew high-single-digit, driven by strong
growth in scotch led by Johnnie Walker in MENA and Türkiye.

 

Asia Pacific (18% net sales)

·    Organic net sales declined 0.8%, driven by weakness in Greater China.
Continued weakness in CWS, which declined double-digit, more than offset
low-single-digit growth in international premium spirits in the region. The
later timing of CNY supported performance.

·    Price/mix grew 3.8% reflecting favourable market mix which more than
offset weakness from CWS.

·    In Greater China, CWS declined double-digit, reflecting reduced
consumption primarily due to market policy, impacting the region's net sales
by c.3% and group net sales by c.0.6%. India was impacted by the Maharashtra
excise tax increase, excluding Maharashtra India grew high-single-digit.

·    Guinness organic net sales increased double-digit, with the
transition of our beer route-to-market to a licence brewing model driving
strong organic growth in the quarter.

Latin America and Caribbean (11% net sales)

·    Organic net sales grew 16.2%, with growth across most key markets and
some benefit in the quarter from buy-in ahead of the FIFA World Cup and Easter
timing.

·    Price/mix was up 5.6%, with all markets contributing positively to
this except Mexico.

·    Brazil delivered double-digit organic net sales growth driven by
double-digit volume growth and positive price/mix. Mexico net sales declined
high-single-digit as the business further implemented its broader portfolio
participation strategy.

·    Spirits grew double-digit led by double-digit scotch growth driven by
multiple markets. RTDs also grew very strongly led by Smirnoff Ice in Brazil.

Africa (8% net sales)

·    Organic net sales grew 17.1% driven by double-digit growth in both
East Africa and South, West and Central Africa (SWC).

·    Price/mix declined 3.1% due to market mix.

·    In East Africa, Tanzania and Uganda saw strong double-digit growth.
Growth in SWC reflected double-digit organic volume and net sales growth in
South Africa.

·    Double-digit growth in spirits was led by Kenya Cane. Strong beer
growth was driven by Serengeti, and strong growth in RTDs was driven by
Smirnoff Ice in South Africa.

 

Appendix

Foreign exchange

We are not providing specific guidance in relation to foreign exchange for
fiscal 26. However, using the hedged rates already in place and for other
exposures the spot exchange rates at 30 April 2026, including $1=£0.74 and
$1=€0.86, for fiscal 26, would result in a positive impact on net sales of
approximately $70 million and a positive impact of approximately $50 million
on operating profit. The above spot rates, currency hedges and assumptions
reflect a point in time, and may change.

Volume reporting change

As part of the move to an asset-light beer operating model, calculation of
volume for Guinness flavour extract and other concentrate sales has been
amended to represent the equivalent finished goods volume. Comparatives for
prior periods have been restated.

 

 Explanatory notes

 Comparisons are to the three and nine months ended 31 March 2026 unless
 otherwise stated. Unless otherwise stated, percentage movements given
 throughout this document for volume and net sales are organic movements after
 retranslating current period reported numbers at prior period exchange rates
 and after adjusting for the effect of exceptional operating items and
 acquisitions and disposals, excluding fair value remeasurements.

 This document includes names of Diageo's products which constitute trademarks
 or trade names which Diageo owns or which others own and license to Diageo for
 use.

 Definitions and reconciliation of non-GAAP measures to GAAP measures

 Diageo's strategic planning process is based on certain non-GAAP measures,
 including organic movements. These non-GAAP measures are chosen for planning
 and reporting, and some of them are used for incentive purposes. The group's
 management believes that these measures provide valuable additional
 information for users of the financial statements in understanding the group's
 performance. These non-GAAP measures should be viewed as complementary to, and
 not replacements for, the comparable GAAP measures and reported movements
 therein.

 It is not possible to reconcile the forecast tax rate before exceptional
 items, forecast organic net sales growth and forecast organic operating profit
 growth to the most comparable GAAP measure as it is not possible to predict,
 without unreasonable effort, with reasonable certainty, the future impact of
 changes in exchange rates, acquisitions and disposals and potential
 exceptional items.

 Volume

 Volume is a performance indicator that is measured on an equivalent units
 basis to nine-litre cases of spirits. An equivalent unit represents one nine-
 litre case of spirits, which is approximately 272 servings. A serving
 comprises 33ml of spirits, 165ml of wine, or 330ml of ready-to-drink or beer.
 Therefore, to convert volume of products other than spirits to equivalent
 units, the following guide has been used: beer in hectolitres, divide by 0.9;
 wine in nine-litre cases, divide by five; ready-to-drink and certain pre-mixed
 products that are classified as ready-to-drink in nine-litre cases, divide by
 ten. As part of the move to an asset-light beer operating model, calculation
 of volume for Guinness flavour extract and other concentrate sales has been
 amended to represent the equivalent finished goods volume. Comparatives for
 prior periods have been restated.

 Organic movements

 Organic information is presented using US dollar amounts on a constant
 currency basis excluding the impact of exceptional items, certain fair value
 remeasurements, hyperinflation and acquisitions and disposals. Organic
 measures enable users to focus on the performance of the business which is
 common to both years and which represents those measures that local managers
 are most directly able to influence.

 Detailed calculation and reconciliation of non-GAAP measures can be found in
 the latest Annual Report (available at https://www.diageo.com/en/investors
 (https://www.diageo.com/en/investors) ).

 Organic net sales movement calculations for the 3 months ended 31 March 2026
 were as follows:

Net sales                              North America  Europe  Asia Pacific  LAC    Africa  Corporate  Diageo total
                                        $m             $m      $m            $m     $m      $m         $m
 3months ended 31 March 2025 reported  1,903          898     803           378    369     25         4,376
 Exchange                               2              21      14            13     2       0          53
 Reclassification                       0              2       0             0      (2)     0          0
 Disposals                              (25)           (8)     (1)           (3)    (61)    0          (98)
 Hyperinflation                         0              (31)    0             (4)    (4)     0          (39)
 3months ended 31 March 2025 adjusted  1,881          882     816           385    304     24         4,292
 Organic movement                       (177)          78      (7)           62     52      5          13
 Acquisitions & Disposals               6              5       0             2      7       0          20
 Exchange                               3              45      (11)          (115)  11      2          (66)
 Hyperinflation                         0              38      0             179    0       0          217
 3months ended 31 March 2026 reported  1,712          1,049   797           513    374     32         4,477
 Organic movement %                     (9.4)          8.8     (0.8)         16.2   17.1               0.3

Quarterly financials are unaudited. Unrounded financials - due to rounding,
the numbers in this table may not always cast or calculate. The above includes
the restatement of Sheridan's which completed in Q3 fiscal 26.

 

About Diageo

Diageo is a global leader in beverage alcohol with an outstanding collection
of brands across spirits and beer categories. These brands include Johnnie
Walker, Crown Royal, J&B and Buchanan's whiskies, Smirnoff and Ketel One
vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

Diageo is a global company, and our products are sold in nearly 180 countries
around the world. The company is listed on both the London Stock Exchange
(DGE) and the New York Stock Exchange (DEO). For more information about
Diageo, our people, our brands, and performance, visit us at www.diageo.com.
Visit Diageo's global responsible drinking resource, www.DRINKiQ.com for
information, initiatives, and ways to share best practice.

Celebrating life, every day, everywhere.

 

Cautionary statement concerning forward-looking statements

This document contains 'forward-looking' statements. These statements can be
identified by the fact that they do not relate only to historical or current
facts. In particular, forward-looking statements include all statements that
express forecasts, expectations, plans, outlook, objectives and projections
with respect to future matters, including trends in results of operations,
margins, growth rates, phasing and overall market trends, information related
to Diageo's fiscal 26 outlook and beyond, ambitions relating to free cash flow
and improved operating leverage, Diageo's Accelerate programme, the impact of
changes in interest or exchange rates, anticipated cost savings or synergies,
expected investments, the completion of any strategic transactions or
restructuring programmes, anticipated tax rates, changes in the international
tax environment, potential tariffs and Diageo's ability to mitigate the impact
of tariffs, expected cash payments, and general economic conditions. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking
statements, including factors that are outside Diageo's control. Any
forward-looking statements made by or on behalf of Diageo speak only as of the
date they are made. Diageo does not undertake to update forward-looking
statements to reflect any changes in Diageo's expectations with regard thereto
or any changes in events, conditions or circumstances on which any such
statement is based.

An explanation of non-GAAP measures, including organic movements, is set out
on pages 213-221 of Diageo's Annual Report for the year ended 30 June 2025.

Diageo plc LEI: 213800ZVIELEA55JMJ32

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