British beverage maker Diageo plc announced its mid-term sales forecast for fiscal year 2025, ending December 31, 2024’te, on Tuesday, and retracted its mid-term sales forecast due to rising U.S. tariff uncertainty.
The company said its profits could fall by nearly $200 million (€193.7 million) in the second half of 2025 if tariffs threatened by U.S. President Donald Trump ’ on Canada and Mexico ’ come into effect.
Diageo plc’'s share price Tuesday afternoon %It's down 1.3.
The company owns more than 200 ’ brands, including Guinness, Johnnie Walker, Bailey’s and Captain Morgan’, and sells in almost 180 countries.
Currently, Diageo exports whiskey from ’ to USA’ye Canada, one of its main markets, and tequila from Mexico’. The North American market is Diageo’'s largest net sales source, as well as the largest share of the alcoholic beverages market in terms of volume.
Therefore, any tariff that USA’ applies to Canada or Mexico’ may have far-reaching consequences for Diageo.
The 25 percent ’ tariffs on Canada and Mexico, which Trump’ is due to impose on Tuesday, have now been delayed by a month. This followed talks with Canadian prime minister Justin Trudeau and Mexican president Claudia Sheinbaum.
Previously, the company's medium-term organic sales growth target %From 5 to %It was between 7. This target was removed as fears of a global trade war increased, affecting recovery rates in many key markets.
Diageo also underlined that future developments make it difficult to provide updated guidance on this goal.
But he assured investors that he would share more regular trading updates and short-term guidance in the meantime.
Diageo reports weak results in fourth quarter
Reported net sales due to challenging foreign exchange market %It fell 0.6 percent to $10.9 billion (€10.6 billion). But organic net sales %It reached $101 million (97.8 million euros) with an increase of 1, but the drop in volumes limited gains somewhat.
Reported operating profit is also affected by adverse foreign exchange conditions %While 4.9 declined, organic operating profit also fell. %1.2 is down.
Earnings per share (EPS) exceptionally %It fell by 9.6 percent, mainly due to the poor performance of Moët Hennessy’.
Diageo faced a worldwide decline in demand for its premium brands after consumers turned to cheaper brands due to the ongoing cost-of-living crisis in various markets.
Debra Crew, CEO of Diageo plc’, said in a 25 Fiscal Year interim earnings press release on the company's website: “ Growth in four of our five regions was supported by market share gains. In particular, we have outperformed the market in North American ’ with high-quality share growth and positive organic net sales growth thanks to strong implementation and momentum in Don Julio and Crown Royal’.
“I'm also particularly proud of the performance of our iconic Guinness brand, backed by brand building expertise, innovation and growing global momentum, delivering double-digit growth in the eighth consecutive half. Although the pace of recovery is slower in several key markets, we maintain confidence in positive long-term industry fundamentals and, more importantly, in our ability to surpass the market.”
What do analysts think about Diageo’'s results?
Quilter Cheviot research head Chris Beckett said in an email note: “Diageo’'s results for today's semester are satisfactory and probably exceeded market expectations. We expected stability in performance and sales %1 increase and profit %With a reduction of 1, this was the stability we were looking for.
The “ market, %From 5 to %7 may react negatively to the removal of medium-term direction towards organic sales growth. This goal was set during the pandemic, when demand was extraordinarily high, and this does not make it realistic in the current environment. While we're not too worried about the removal of this guide, some are likely to take this goal badly.”
“We do not believe that there has been a significant decline in the demand for high-quality alcoholic beverage brands; Instead, there is a temporary soft period that will heal. - ”
Russ Mould, investment director at AJ Bell’in, said in an email note: “Diageo’ has very little good news so far at 2025’. First there was the threat of having to add cancer warnings to beverage labels, and now the company has withdrawn its medium-term guidance.
“ is one of the first companies to go beyond vaguely discussing the threat posed by U.S. tariffs and actively talk about the impact and how to try to mitigate it. Diageo imports a significant portion of U.S. sales from Mexico and Canada, so we'll be relieved to see that tax enforcement for these two countries is postponed for now.’
“If tariffs are eventually implemented, reflecting these extra costs to consumers will be a test of Diageo’'s pricing power. Although the group's income was slightly above the estimates, the financial results were not extraordinary. Dividends were kept steady as a sign of uncertain outlook and that sales of major liquor brands such as Tanqueray, Gordon’s and Smirnoff were under pressure.”
