Diageo released its interim financial results for the six months ended 31 December 2025, showing a modest earnings performance amid regional divergences and ongoing strategic shifts.
The results reflect a backdrop of softer consumer demand in key markets, offset by stronger activity in others, as the company begins implementing priorities under its new leadership.
Financial Performance
For the first half of fiscal 2026:
- Reported net sales reached USD 10.46 billion, down 4.0% year-on-year.
- Organic net sales declined 2.8%, impacted by softer volumes and price/mix pressures.
- Operating profit decreased 1.2% to USD 3.12 billion, with an operating margin of 29.8%.
- Net profit rose slightly to USD 2.11 billion, while earnings per share increased 3.0% to 89.7 cents.
- Free cash flow remained solid at USD 1.53 billion, although below the prior year.
The figures highlight resilience in profitability despite weaker top-line performance.
Regional Performance
Results varied significantly across regions:
- Europe, Latin America & Caribbean, and Africa delivered strong growth.
- North America experienced pressure, reflecting constrained consumer spending and softer spirits demand.
- Asia Pacific was affected by ongoing weakness in Chinese white spirits.
Excluding the impact of Chinese white spirits, underlying performance showed more stability, with improving volume trends and broadly neutral price/mix effects.
Dividend Adjustment and Capital Allocation
Under CEO Sir Dave Lewis, Diageo announced a reduction in its interim dividend to 20 cents per share. The company introduced a revised payout policy targeting 30–50% of earnings, with a minimum annual floor of 50 cents per share.
The group continues to implement its “Accelerate” cost-efficiency programme, aimed at strengthening supply chain performance, marketing effectiveness, and overhead discipline.
In a notable portfolio move, Diageo agreed to sell its shareholding in East African Breweries plc to Asahi Group Holdings, Ltd., generating approximately USD 2.3 billion in net proceeds. The transaction enhances financial flexibility and supports long-term strategic priorities.
Industry Context and Outlook
The results reflect a broader moderation in global beverage alcohol demand following post-pandemic volatility. While premiumisation remains a long-term structural trend, near-term pressures include inflation-sensitive consumers and shifting consumption patterns in key markets.
Diageo reaffirmed its focus on disciplined cost management, strengthened customer partnerships, and targeted investment in core brands. The company aims to balance near-term resilience with long-term value creation as it navigates a more complex global demand environment.
Source: Diageo