- Diageo has withdrawn its medium-term guidance of 5%-7% organic net sales growth due to macroeconomic and geopolitical uncertainties.
- The company’s organic net sales increased by 1%, surpassing the estimate of 0.46% growth.
- Adjusted operating profit was $3.37 billion, a 3.9% decline year-over-year, but above the estimated $3.3 billion.
- North America’s operating profit before exceptional items was $1.63 billion, a 5.4% decrease year-over-year, meeting expectations.
- Europe’s operating profit before exceptional items was unchanged at $797 million, slightly above the estimated $788.6 million.
- Asia Pacific saw a 6.4% year-over-year decline in operating profit, reaching $645 million, which was below the estimated $671.9 million.
- Adjusted earnings per share (EPS) were 97.4 cents, lower than the previous year’s $1.078 and the estimated 98.8 cents.
- Net sales amounted to $10.90 billion, a slight decrease of 0.6% year-over-year, topping the estimated $10.7 billion.
- North America net sales increased by 0.3% year-over-year to $4.10 billion, surpassing the estimated $4.02 billion.
- Europe reported a 2.6% year-over-year net sales growth, totaling $2.63 billion, ahead of the estimated $2.56 billion.
- Asia Pacific net sales declined 4.4% to $2.11 billion, which was below the expected $2.19 billion.
- Africa’s net sales were down by 3.2% year-over-year to $944 million, though above the estimate of $917 million.
- Latin America and the Caribbean had a 1.8% drop in net sales, amounting to $1.05 billion, exceeding the estimated $987.9 million.
- The company’s overall operating profit fell by 4.9% year-over-year to $3.16 billion, missing the estimated $3.31 billion.
- Africa’s operating profit surged by 28% year-over-year to $166 million, significantly higher than the $101 million estimate.
- Latin America and the Caribbean saw a 5.7% growth in operating profit to $334 million, beating the estimated $285.6 million.
- The interim dividend per share remained stable at 40.50 cents, matching last year’s figure but below the estimated 40.88 cents.
- Diageo anticipates the impact of US tariffs could disrupt their business momentum and is taking actions to mitigate potential disruptions.
Diageo Plc on Smartkarma
Analysts on Smartkarma, like Steven Holden, are closely following Diageo Plc as UK fund managers continue to decrease their holdings in the company. The trend of reducing investments in Diageo by UK funds has been evident since late 2021, with the percentage of funds allocated to the company declining. This shift in investor sentiment is reflected in the rotation within the Consumer Staples sector, where Diageo is being swapped out for companies like BATS and Reckitt’s. Noteworthy exits from funds like Axa Framlington and abrdn have contributed to the decrease in overall fund exposure to Diageo, marking the lowest point since 2017.
A look at Diageo Plc Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 3 | |
| Growth | 3 | |
| Resilience | 2 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 2.8 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Diageo Plc, a leading alcoholic beverages producer, presents a mixed long-term outlook based on the Smartkarma Smart Scores. With a solid score in Momentum at 4, the company is showing strong performance and upward trends in the market. This bodes well for its future growth potential and investor interest. However, Diageo scores lower in Value and Resilience, suggesting that the company may face challenges in terms of undervaluation and overall stability. On the bright side, the company’s Dividend and Growth scores both stand at 3, indicating a moderate but steady performance in these areas. Overall, Diageo’s outlook reflects a combination of positive momentum alongside some underlying concerns.
Diageo Plc, known for its diverse range of branded alcoholic beverages, is positioned with a balance of strengths and weaknesses according to the Smartkarma Smart Scores. While the company enjoys a strong momentum in the market, it also grapples with lower scores in areas like value and resilience. The moderate scores in Dividend and Growth suggest a stable trajectory for the company in the long run. As Diageo continues to navigate the competitive landscape of the beverage industry, its performance in various aspects will play a crucial role in shaping its future prospects. Investors will closely monitor how the company leverages its strengths and addresses its weaknesses to drive sustained growth and value creation.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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