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Diageo Lowers Guidance on Weaker China, US Demand as Shares Slip

Management announced a three-year $625 million cost-savings program to stabilize results in the US, China.

Overview

  • Diageo now expects full-year net sales to be flat or slightly down with operating profit growth in the low to mid-single digits.
  • Quarterly net sales for July–September were $4.9 billion, down 2.2% year on year, with North America off 3.5% and Asia Pacific down 9.7%, offset by roughly 5% growth in Europe.
  • The company cited a sharp decline in Chinese white-spirits demand and a softer US consumer environment as the main pressures.
  • A $625 million savings plan over three years will focus on efficiency gains and targeted investment to support key brands and markets.
  • Shares fell nearly 3% in morning trading after the update, even as Diageo highlighted resilience in Europe and growth in Johnnie Walker, Guinness and some ready-to-drink labels.