Diageo cuts sales outlook and dividend as CEO Dave Lewis targets turnaround 

IRELAND – Diageo, the maker of Guinness stout and Smirnoff vodka, has lowered its full-year sales outlook and reduced shareholder payouts as its new chief executive moves to revive performance in key markets. 

The British drinks group said it expects full-year net sales to decline between 2% and 3% in its fiscal year ending June 30, citing continued weakness in the United States and China.  

The company reported a 42.3% slump in sales in China, where local spirit baijiu has been affected by government restrictions. In the United States, Diageo’s largest market, organic sales fell 6.8% due to weaker consumer spending. 

Net sales dropped 4% to US$10.5 billion in the six months to December compared with the previous year, the company said. Despite the revenue decline, net profit rose 3.1% to nearly US$2 billion during the first half. 

Chief executive Dave Lewis, who took the helm in January following the departure of Debra Crew, said he sees opportunities to strengthen the business. “Only several weeks in, I can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness,” Lewis said. 

During an earnings presentation, Lewis described pressure on customer wallets as “by far and away” the biggest economic challenge facing the company. The group said it is encountering mounting competition from cheaper brands in the United States, particularly in tequila, as consumers grapple with cost-of-living pressures. 

Lewis added that the board had taken the “difficult decision” to cut the dividend to preserve financial flexibility. The company reduced its dividend from 103.5 cents per share for the 2025 financial year to a minimum of 50 cents annually going forward. 

Diageo has also been working to reduce its debt levels amid challenging trading conditions and after warning in May of a financial impact from tariffs introduced under US President Donald Trump. Late last year, the company issued a profit warning, citing weaker consumer demand in both China and the United States. 

Commenting on the results, Dan Coatsworth, head of markets at AJ Bell, said: “The business is not doing as well in the once lucrative North American market and China is not lining its pockets with riches either.” 

“There is no point trying to dress up the six-month figures. These are awful results, and the repair job is massive,” he added. 

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