Diageo 1H Sales $10.5B, Organic Sales Down 2.8% and EPS Drops 2.5%
Diageo's EPS for 1H fiscal 2026 fell 2.5% to $0.95, with net sales of $10.5B down 4% and organic net sales off 2.8%. The company generated $1.5B free cash flow and agreed to divest its East African Breweries stake for $2.3B at a 17x EBITDA multiple.
1. H1 Fiscal 2026 Financial Results
Diageo reported pre-exceptional EPS of $0.95 for the first half of fiscal 2026, down 2.5% year over year. Net sales reached $10.5 billion, a 4% decline, with organic net sales falling 2.8% due to a 0.9% volume drop and a 1.9% negative price/mix impact.
2. Regional and Category Performance
Europe, Latin America & Caribbean and Africa delivered robust organic growth, offset by weakness in North America—pressured by US Spirits—and challenges in Asia Pacific from Chinese white spirits. Ready-to-drink portfolio grew double digits, beer sales rose high-single-digits driven by Guinness, and Scotch brands returned to growth through targeted price and promotional strategies.
3. Cash Flow, Debt and Divestment
Operating activities generated $2.1 billion in cash, with free cash flow of $1.5 billion. Net debt stood at $21.7 billion as of December 31, 2025. The company secured an agreement to sell its 65% East African Breweries stake for $2.3 billion at a 17x EBITDA multiple, expected to close in H2 fiscal 2026.
4. Dividend Policy and Cost Savings
An interim dividend of $0.20 per share was declared, with a commitment to a 30–50% payout ratio and a minimum annual dividend floor of $0.50. The cost savings program, focusing on supply-chain agility, marketing efficiency and overhead reductions, is progressing ahead of schedule.