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Drinks maker Diageo has scrapped its medium-term sales guidance, blaming the uncertainty over US tariffs and weak demand in key markets, as the company comes under pressure from investors to improve performance.
The London-listed maker of Don Julio tequila, Guinness and Johnnie Walker whisky said sales in the six months to the end of December fell 0.6 per cent to $10.9bn. Organic operating profit declined less than expected by 1.2 per cent to $42mn.
The volume of drinks it sold during the period dropped 0.2 per cent as consumers cut back.
Diageo’s share price has fallen about a fifth in the past 12 months as investors have grown weary of the company’s poor performance.
Some shareholders have lost confidence in management since chief executive Debra Crew issued a shock profit warning in late 2023 following a sales slump in Latin America.
The industry’s long-term growth prospects have also faced scepticism. Demand for spirits in the category’s US market has faltered, prompting concerns that a trend for moderation among health-conscious consumers and the proliferation of weight-loss drugs and cannabis will dent demand.
US President Donald Trump’s threat of 25 per cent tariffs on US imports from Mexico and Canada presents another challenge. Diageo is the spirits group most exposed if the US goes ahead with the levies.
Diageo said the prospect of tariffs “adds further complexity in our ability to provide updated forward guidance given this is a new and dynamic situation”.
