Diageo PLC (LSE:DGE) shares bubbled up 4.5% to 1,541p on Wednesday morning after the maker of Guinness, Smirnoff and Captain Morgan reported positive sales growth for the past quarter, despite continued weakness in North America.
Net sales came in at $4.5 billion for its third quarter to 31 March, up 2.3% from a year ago, with organic growth of 0.3%.
This was a turnaround from the 4% decline in net sales in the first half, when organic sales were down 2.8%, and beat analyst expectations for a fall of 2-3%.
Sales volumes grew 0.4%, while price and mix declined slightly.
Performance was driven by organic growth of a high single-digit percentage in Europe, Latin America and Africa, helped in part by Easter timing and demand linked to the upcoming FIFA World Cup.
North America remained weak, with organic sales down by a high single-digit, as US spirits demand continued to soften.
Asia Pacific sales were slightly lower, with declines in Chinese white spirits offset by growth in premium international brands.
For the nine months of the financial year so far, net sales were down 2.2% to $14.9 billion, with organic sales down 1.9%.
Chief executive Sir Dave Lewis said an existing cost-saving programme remains on track to deliver around $300 million of savings by the end of the 2026 financial year.
"North America remains our biggest challenge," he said, "where market conditions are soft and our offer needs to be more competitive. Actions are already underway to address this."
Lewis said he would share his new strategy, including a "more competitive operating framework", with investors alongside full-year results on 6 August.
He added the company is reiterating its full-year guidance, including an expected 2-3% decline in organic net sales.
Analysts at Jefferies said the organic revenue growth in Europe, Latin America and Africa was better than consensus forecasts, while the decline in North America of 9.4% was slightly better than the 10% fall expected. Asia Pacific's smaller drop was in line.
"We would expect shares to be gently better today...The strategy update on 6 August will provide both an earnings floor and a plan to reset the trajectory from here," they added.
** UPDATE: Adds share price and broker comment **