Diageo cuts forecast again, slashes dividend as US and China demand weakens

Feb 25 (Reuters) – Diageo cut its annual sales and profit forecast for the second time in four months and slashed its dividend, as its first results under new boss Dave Lewis showed weak U.S. and Chinese demand still weighing on the world’s biggest spirits maker.

“U.S. spirits performance reflected pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet,” Lewis said in Diageo’s half-year results statement.

Lewis, who took over the Johnnie Walker whisky and Guinness beer maker in January, faces the challenge of reducing debt and reviving growth amid tariff-related uncertainty in the U.S., slowing demand in China, fragile global consumer sentiment, and evolving drinking preferences among some consumers.

His appointment followed the abrupt resignation of Debra Crew, under whom Diageo suffered a profit warning in Latin America, a significant slowdown in global growth and growing unease among investors who demand both debt reduction and a credible plan to reignite sales at the struggling drinks giant.

Diageo said it now expects 2026 organic sales to fall 2%-3% and organic operating profit to be flat to up low-single-digits. It had earlier forecast flat to slightly lower sales and low to mid-single-digit profit growth.

The company’s U.S. sales declined 9.3%, with sales of tequilas such as Don Julio, which has been an important driver of growth, slipping more than 23%.

It declared an interim dividend of 20 cents per share, down from 40.5 cents a year ago, and set a minimum floor for dividend of 50 cents per annum.

(Reporting by Shashwat Awasthi and Aatrayee Chatterjee in Bengaluru, Emma Rumney in London; Editing by Mrigank Dhaniwala)