Diageo said on Thursday that organic net sales rose 1.4% in the quarter to 30 September, or 0.6% excluding EABL, against flat a year earlier, and it held full-year guidance.
Organic figures strip out currency moves, disposals and acquisitions. EABL is the group’s beer business in Kenya, Uganda and Tanzania, which Diageo is selling to Asahi, and it added 0.8% to group organic growth.
Reported net sales rose 1.2% to $4.931bn from $4.875bn, with currency and disposals offsetting part of the organic gain, the company said.
Group organic volume rose 1.1% and price/mix (the effect of changes in prices and product mix) rose 0.3%. Excluding EABL, volume fell 0.1% and price/mix rose 0.7%.
North America, 36% of net sales, was the weak spot. Organic net sales there fell 3.6%, with volume down 3.7% and price/mix up 0.1%, according to the regulatory announcement. Diageo attributed the decline to continued market softness.
Sir Dave Lewis, chief executive, called North America the group’s biggest challenge. “In North America, we continue to focus on making our offer more competitive, and whilst this remains our biggest challenge, clear actions are underway,” he said.
Elsewhere, Latin America and Caribbean and Asia Pacific grew by a mid-single-digit rate. India rose 3.4% and Europe, Middle East and Africa rose 2.4%.
In Europe, Middle East and Africa, beer grew by a low-single-digit rate overall. Double-digit growth for Guinness in Africa and DACH (Germany, Austria and Switzerland) offset a low-single-digit decline in Great Britain and Ireland, which Diageo put down to unusually hotter weather and competitive pressure.
Lewis described the quarter as “a small step in the right direction”, citing market volatility and the conflict in the Middle East and its effect on energy, supply and distribution.
Diageo expects broadly flat organic net sales growth for the year to 30 June 2027 and organic operating profit growth of low to mid-single digits.
For North America it expects a mid-single-digit decline in organic net sales, assuming the market is down about 3% and that Diageo’s share performance improves on fiscal 2026.
Free cash flow is guided at about $2bn, against $3.2bn in fiscal 2026, after about $850m of exceptional costs tied to the operating framework changes and the supply chain savings programme.
In the same quarter a year earlier, organic net sales were flat, with volume growth of 2.9% offset by negative price/mix of 2.8%, and North America fell 2.7%.
For the whole of fiscal 2026, organic net sales declined 2.0%, with volume down 0.4% and price/mix down 1.6%, the annual report showed.
Diageo expects to end fiscal 2027 around the mid-point of its 2.5 to 3.0 times net debt to adjusted EBITDA target range, assuming the EABL sale and the Royal Challengers Bengaluru transaction both complete.
The EABL sale is on track to complete in the second half of calendar 2026.
On currency, Diageo said that spot rates at 31 October, including $1=£0.74 and $1=€0.89, would mean a hit of about $100m to fiscal 2027 net sales and about $25m to operating profit.
