Half Year 2026 Diageo PLC Earnings Call Transcript
Key Points
- Diageo PLC (DEO) delivered strong growth in Europe and Latin Africa, with notable performance in Turkey and South Africa.
- The company achieved over $1.5 billion in free cash flow for the half year, demonstrating strong cash delivery.
- Guinness showed positive growth across almost all markets, particularly in Great Britain and Ireland.
- Diageo PLC (DEO) made significant progress with its Accelerate program, expecting to deliver around 50% of the $625 million in total savings in fiscal '26.
- The company maintained a stable spirits market share, with a focus on premiumization driving growth in key brands like Johnnie Walker and Ketel One.
- Diageo PLC (DEO) faced a 2.8% decline in both organic net sales and organic operating profit, impacted by challenges in US spirits and Chinese white spirits.
- The North American market saw a circa 7% organic sales decline, driven by a 23% drop in tequila sales, particularly affecting brands like Casamigos and Don Julio.
- The company experienced a 2.5% decline in EPS pre-exceptionals due to profit decline and the impact of business disposals in Ghana and Nigeria.
- Diageo PLC (DEO) faced adverse impacts from weaker Chinese white spirits consumption, leading to an 11% organic sales decline in APAC.
- The company announced a change in dividend payout policy to 30% to 50%, reflecting the need to invest in business turnaround and strengthen the balance sheet.
Good morning and welcome to the Diageo interim results presentation. As you know it's my first results session for Diageo. In fact, this is my seventh week, and I'll share a few initial impressions and immediate priorities with you later.
But first I'd like to hand over to Nik to share with you the results of the first half of 2026. Nik?
Thank you, Dave, and welcome to Diageo. In the context of a continued challenging macroenvironment and industry backdrop in many of our markets, but in particular, US spirits and Chinese white spirits, both organic net sales and organic operating profit declined 2.8%. Notably, excluding the impact from Chinese white spirits, we would have reported organic net sales down approximately 0.5% and approximately 1.5% growth in organic operating profit.
Europe, Latin Africa delivered strong growth, but this was more than offset by NAM and APAC. Our focus on cost savings benefited organic
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