Diageo, purveyor of Johnnie Walker and Guinness, has announced a third quarter trading update with organic net sales (excluding the effect of acquisitions and currency moves) grew by 5.9% with volumes up 2.8%.
The result was flattered by North American customers purchasing ahead of tariffs.Full-year guidance for organic net sales and operating profit reiterated.
Productivity programme launched, targeting $3bn of free cash flow in FY26 and $500m of cost savings over three years.
Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, who owns shares in Diageo, said,ย โDiageo’s strong performance in the third quarter was significantly flattered by a number of one-offs, most notably a pull-forward of purchasing in anticipationย of tariffs in North America.
“These impacts are estimated to have boosted sales by 4% in the third quarter and are expected to largely reverse in the fourth quarter.
Even so, there are some positives for investors to take away from this statement.
Despite the challengingย market backdrop, Diageo has reiterated its full-year guidance. The impact of tariffs appears manageable, for now at least. In addition, Diageo has launched a productivityย programme,ย aimed at boosting cash flow and margins. This should help get profit moving in the right direction, even if tough trading conditions persist.
With pressure mounting on CEO, Debra Crew, restoring investor confidence is paramount. Theย increased focus on margins and cash is a step in the right direction and buys her a bit more time in what remains a challenging market backdrop.”
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