Global drinks company Diageo, owner of Johnnie Walker whisky and Guinness, has cuts its dividend after net sales fell by 4% because of falling demand in North America and China.
Over the six months ended 31 December net sales came in at $10.46 billion and organic net sales declined 2.8%. Operating profit was 1.2% lower at $3.116bn. The adjusted operating profit margin dipped to 31.1%.
The company declared an interim dividend of 20 cents and is targeting a 30-50% payout policy going forward with a minimum floor of 50 cents a year.
Diageo updated its fiscal year 2026 guidance and is now expecting organic net sales down 2-3% and organic operating profit growth flat to up low-single-digit.
Former Tesco boss Sir Dave Lewis who arrived in January as chief executive to lead a turnaround of the business, said: “Our performance in the first half of fiscal 26 was mixed.
“Only several weeks in I can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering leading to higher growth.”
Sir Dave, who faces a tough task reviving the business in face of US tariffs and weaker demand for alcohol, said the company needed to create more financial flexibility.
“Accordingly, the board has taken the difficult decision to reduce the dividend to a more appropriate level which will accelerate the strengthening of our balance sheet.
“We are confident that this is the right action which will ensure that Diageo can reinforce its position as the leading international spirits business and drive stronger shareholder value over the coming years.
“I am encouraged by the depth of the passion and pride that our people have for our brands across the business. This will be invaluable given the significant work ahead.”
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