Diageo has scrapped its medium-term sales guidance, blaming macroeconomic and geopolitical uncertainty surrounding President Donald Trump’s tariff threats.
Shares in the Smirnoff and Guinness owner fell as much as 4% in London on Tuesday, bringing the decline over the past 12 months to almost 23%.
The dip came despite a return to growth for organic sales, which rose 1% to $10.9 billion in the six months to December 31. Four years ago Diageo set a target for organic net sales growth of 5% to 7% annually.
CEO Debra Crew said Trump’s threat of 25% tariffs on imports from Canada and Mexico over the weekend — which have since been paused for a month — could impact Diageo’s momentum in North America. That growth has been driven by Canadian whisky brand Crown Royal and Mexican premium tequila Don Julio.
“We are taking a number of actions to mitigate the impact and disruption to our business that tariffs may cause, and we will also continue to engage with the US administration on the broader impact that this will have on everyone supporting the US hospitality industry, including consumers, employees, distributors, restaurants, bars and other retail outlets,” Crew said.
Analysts at UBS wrote in a note that better-than-expected growth in tequila was more than offset by weakness elsewhere, and also highlighted the potential negative impact of tariffs on sales.
Operating profit was $3.15 billion, lower than the $3.31 billion for the first half of 2024.
Guinness delivered double-digit growth of 17% for an eighth consecutive half-year, and Diageo said it had doubled investment in Guinness 0.0 to expand capacity to meet rising demand.
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