5 August 2025
If you are covering Diageo’s latest financial results, please find below a comment from Matt Dorset, equity research analyst at Quilter Cheviot:
“Diageo’s challenging year continues as its full year results were weak on an absolute basis, although were in-line to slightly better than consensus expectations across the board. Organic sales were up just 2% for the year, driven equally by pricing and volume growth, although with lots of regional variation. Meanwhile, organic operating profit was down 1%, driven by increased overhead costs, and earnings per share were down 9%, due to the earnings decline as well as unfavourable currency moves and a weak contribution from Moet Hennessy.
“Encouragingly, and perhaps signs of green shoots of recovery beginning to emerge, Diageo is seeing organic growth in four out of its five markets. Africa and Latin America remain strong regions for the group with 10% growth, while the US grew at 1.5%. Asia Pacific, however, continues to detract and was the weakest region with 3% negative growth.
“Guinness continues to be incredibly successful and is confirming its role as Diageo’s flagship brand, with 13% sales growth, gaining share across Great Britain, Ireland and the US. Meanwhile, the Don Julio tequila brand is also performing well, with 38% growth and gaining share across 90% of markets.
“For the year ahead, Diageo is guiding to sales growth at a similar level to this year which is in-line, and expect operating profit to grow ahead of consensus which sat at 2.6%, primarily driven by an increased cost savings programme. Importantly, this includes the impact of tariffs.
“Diageo provided no update on the new CEO, but clearly given the challenges it faces the new arrival will have a large to do list. The share price valuation remains fairly depressed compared to Diageo’s history following this prolonged growth slowdown in key markets. Diageo continues to have some market leading brands and will need these to do a lot of the heavy lifting until a new CEO can set a new strategic direction.”
