Diageo H1 Sales Drop 4% to $10.46bn, Sells EABL Stake for $2.3bn
Diageo’s fiscal 2026 first-half net sales declined 4.0% to $10.46 billion with organic sales down 2.8%, leading operating profit to slip 1.2% to $3.12 billion while basic EPS rose 3.0% to $0.897. The company generated $1.53 billion in free cash flow and trimmed net debt to $21.7 billion through a $2.3 billion sale of East African Breweries stakes.
1. Fiscal H1 Financial Results
Diageo reported fiscal 2026 first-half net sales of $10.46 billion, down 4.0% from the prior year, with organic net sales falling 2.8%. Operating profit slipped 1.2% to $3.12 billion as tariffs and unfavorable mix weighed on margins, while basic EPS rose 3.0% to $0.897 and EPS before exceptional items dipped 2.5% to $0.953.
2. Cash Flow, Asset Sales and Debt
The business generated $2.12 billion in operating cash flow and $1.53 billion in free cash flow, both down year over year. Net debt stood at $21.7 billion after Diageo agreed to divest its East African Breweries and Kenyan spirits division to Asahi, securing $2.3 billion in net proceeds to bolster its balance sheet.
3. Analyst Guidance and Ratings
Analysts at HSBC lowered their rating on Diageo to Hold with a 1,800 GBp target, citing uncertainty around U.S. volume recovery, while JPMorgan trimmed its price target from 2,000 GBp to 1,800 GBp and maintained a Neutral stance. Both firms pointed to softer consumer demand in China and challenges in the spirits category, offset by Diageo’s diverse brand portfolio and geographic reach.