LONDON (dpa-AFX) - Alcoholic beverage maker Diageo plc (DEO, DGE.L) reported Wednesday slightly higher pre-tax profit in its first half of fiscal 2026, despite weak net sales. Further, the firm decided to reduce its dividend, and also trimmed fiscal 2026 organic outlook.
In the overnight trading, the shares were losing around 2.2 percent, trading at $99.85.
In the first half, profit before taxation edged up to $2.79 billion from last year's $2.77 billion.
Profit attributable to equity shareholders of the parent company grew 3.1 percent to $2 billion from $1.94 billion a year ago. Basic earnings per share improved 3 percent to 89.7 cents from 87.1 cents last year.
Adjusted basic earnings per share were 95.3 cents, compared to 97.7 cents a year ago.
Net sales for the half year were down 4 percent to $10.46 billion from prior year's $10.90 billion, due to the decline in organic net sales of 2.8 percent and the negative impact of acquisitions and disposals of 1.8 percent.
Strong growth in Europe, LAC and Africa was more than offset by softer performance in North America, the company noted.
Further, Diageo said its Board has decided to reduce the dividend to a more appropriate level to accelerate the strengthening of the balance sheet and create more financial flexibility. The Board has also set a minimum floor for the dividend of 50 cents per annum.
The interim dividend of 20 cents per share, compared to prior year's 40.50 cents per share, will be paid to holders of ordinary shares and US ADRs on register as of April 17. The interim dividend will be paid on June 4.
Looking ahead for fiscal 2026, the company now projects organic net sales to be down 2 percent to 3 percent given further weakness in the US, and including the impact of Chinese white spirits. The company previously expected organic net sales growth to be flat to slightly down.
Further, organic operating profit growth is now expected to be flat to up low-single-digit, compared to previous view of growth in low to mid-single digit.
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