Diageo PLC has no doubt left investors with questions after interim results saw uncertainty around US tariffs flagged and medium-term guidance scrapped, according to analysts.
Despite organic sales and earnings growth beating consensus estimates over the first half to December, Barclays analysts noted it was “hard to make a firm conclusion” from the results.
“On the positive side, four out of five divisions are in growth, with strong momentum in some key brands,” Barclays continued.
“On the flip side, the guidance has been withdrawn and consensus is being downgraded, which could either be interpreted as increased market uncertainty coupled with structurally weaker consumers or simply an attempt to underpromise.”
Diageo had said a “sequential improvement in organic net sales growth” on the first half’s 1% increase to US$10.9 billion was expected, before the impact of tariffs.
A “slight” year-on-year decline in profit over the second half was also signalled, which UBS highlighted was against market expectations for growth of 3.6%.
UBS added that tariffs had indeed distorted Diageo’s outlook, but further clarity was also needed on the likes of its European and Asia-Pacific operations.
Revenue in the latter fell 2.6%, compared to forecasts for 0.2%, while growth in European sales of 0.7% came as Guinness more than offset weaker spirits trends, UBS pointed out.
Shares fell 1.4% to 2,332.5p on Tuesday.