Diageo has lowered its operating profit guidance for the full-year in its H1 update, as a result of weaker sales in the US.

The beverages firm, which owns brands including Guinness, Smirnoff and Captain Morgan, saw its net sales drop by 4% year-on-year in the six months to 31 December to $10.4bn, due to a 0.9% decline in organic volume and a 1.9% negative price/mix.

While Diageo reported sales growth in Europe, Latin America and Caribbean (LAC), and Africa, this was "more than offset" by its softer performance in North America and the adverse impact of Chinese white spirits in Asia Pacific.

Meanwhile, its operating profit fell by 1.2% to $3.11bn, as a result of a decline in operating profit decline and lower exceptional operating charges.

However, in this period, its net profit increased by 1.7% year-on-year to $2.11bn.

Chief executive officer at Diageo, Sir Dave Lewis, described the firm’s results as "mixed".

He stated: "Strong performance in Europe, LAC and Africa, was offset by a weakening performance in NAM and continued weakness in Chinese white spirits in APAC. US Spirits performance reflected pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet.

"Only several weeks in I can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering leading to higher growth. As we refine our new strategy to deliver stronger shareholder value, the immediate priorities for the team are clear."

As part of this new strategy, the firm said it is looking to build competitive category strategies, focus on the customer and redesign its operating framework to drive sustainable returns.

The strategy runs alongside Diageo’s cost savings programme, which is set to results in around 50% Accelerate savings in the 2026 fiscal year, driven by supply chain agility and related cost savings.

However, due to further weakness in the US market, it has reduced its organic net sales for the full year to between 2% and 3%, while its operating profit growth is expected to be flat up to low-single digit.

Following the results, shares in Diageo fell by over 13%. In the past year, shares in the firm have dropped by over 25%.

Lewis concluded: "We are confident that this is the right action which will ensure that Diageo can reinforce its position as the leading international spirits business and drive stronger shareholder value over the coming years.

"I am encouraged by the depth of the passion and pride that our people have for our brands across the business. This will be invaluable given the significant work ahead."

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