Diageo Shares Plunge 13.6% on H1 Sales Miss, Dividend Halved, Guidance Cut
Diageo reported H1 FY26 net sales of $10.5B, missing the $11.11B estimate, and adjusted EPS of $0.95 slipped $0.01, triggering a 13.6% stock plunge. It halved its dividend and cut FY26 organic net sales growth forecast to a 2%–3% decline while reaffirming a $3B free cash flow target.
1. H1 FY26 Performance and Share Slide
Diageo posted H1 net sales of $10.5 billion, below the $11.11 billion projection, and adjusted EPS of $0.95 missed by $0.01, prompting a 13.6% share slump as organic volume fell 0.9% and price/mix declined 1.9%.
2. Dividend Reduction and Liquidity
The company slashed its interim dividend by over 50% to bolster liquidity and strengthen its balance sheet amid pressured consumer spending, particularly in the U.S. spirits segment.
3. Updated Full-Year Outlook
For FY26, organic net sales are now expected to decline 2%–3%, versus a prior flat projection, and organic operating profit growth is trimmed to flat or low single digits, while free cash flow guidance remains at $3 billion.
4. Cash Flow, Debt Position and Cost Savings
Operating cash flow reached $2.1 billion and free cash flow $1.5 billion for the half, with net debt at $21.7 billion; a cost savings program is on track to deliver approximately 50% of accelerated savings by year-end to support margins.