Diageo drops after cutting dividend, with US sales weaker than expected
Last updated: 04:13 25 Feb 2026 EST, First published: 03:40 25 Feb 2026 EST
Diageo PLC shares fell over 6% to lead the biggest FTSE 100 fallers on Wednesday morning after the Guinness and Smirnoff maker halved its dividend and reported weaker half-year sales.
The dividend cut, to 20 cents and alongside a reset dividend policy to 30-50% of earnings, was expected by some analysts and investors, though the City consensus forecast was still for 43c versus the prior year at 40.5c.
UBS analyst Sanjeet Aujla said the dividend cut "was not widely expected".
First-half organic revenues, down 2.8%, were worse than expected but EBIT was not as bad as feared.
As well as the dividend, the key negative in the results was "the scale of the topline downgrade", said Aujla, with a "big miss" in North America.
Although cost savings are being pulled forward, and A&P cuts are protecting the operating de-leverage such that consensus EPS revisions are likely flat to -LSD%, the implied increased investment from the divi cut could have implications for the outer year org EBIT growth.
Jefferies analyst Ed Mundy said he would not expect full-year profits and EPS forecasts to move materially following these results but "there could be some modest shaving to F27 given the weaker topline dynamic".
Commentary from new CEO Sir Dave Lewis "points to an appropriate level of impatience and plenty of opportunities to drive stronger top and bottom line," Mundy said.
A wholesale strategic reset had not been predicted so soon after Lewis started in January, but the analyst said the market "will question whether a further earnings reset could come at a later stage" to be carried out in the next financial year.
Lewis's commentary pointed to three key priorities, in particular changes to the drinks portfolio, better customer relationships in on- and off-trade, and rewiring the operating model to be more competitive.
"We believe that there is a cost component within this but the company is not yet in a position to provide more details on it," said Mundy.
** UPDATE: Adds further broker comment **
