Diageo Delivers Q3 With $4.4B In Sales, 5.9% Organic Growth Driven By Volume And Price/Mix; Reaffirms Full-Year Guidance Despite FX And Disposals

Strong Q3 organic net sales growth. On track for full year with sequential improvement in H2

• Reported net sales for the third quarter increased by 2.9% to $4.4bn, with positive organic growth partially offset by unfavourable foreign exchange and disposals.
• Organic net sales were up 5.9% in the quarter, with organic volume up 2.8% and positive price/mix of 3.1%.
• Performance in the quarter was supported by favourable phasing which we estimate contributed c.4% of Q3 group organic net sales growth, mainly from North America and to a lesser extent Latin America and Caribbean, and is expected to reverse in Q4.
• All regions delivered positive price/mix except Asia Pacific where continued consumer downtrading and adverse market mix impacted net sales.
• Full year fiscal 25 guidance for organic net sales and operating profit reiterated.
• Launching first phase of Accelerate programme to create a more agile operating model. We expect to sustainably deliver c. $3bn free cash flow per annum from fiscal 26, increasing as performance improves. This is supported by a c.$500m cost savings programme, which will enable both reinvestment in future growth and improved operating leverage. We expect to return to well within our target leverage ratio range of 2.5 – 3.0x no later than fiscal 28 providing us with a lot more flexibility, and which will also be supported by appropriate and selective disposals over the coming years.