Diageo Shares Sink as US Tequila Slump Triggers Dividend Cut and Guidance Downgrade

Key Facts

Diageo PLC shares experienced their sharpest drop in two years as the company deepened its annual guidance cut and reduced dividend payouts. The spirits giant now forecasts a 2% to 3% decline in organic net sales, a significant shift from its previous flat performance outlook. A primary driver for the dividend cut was the cratering of Tequila sales in the U.S., which contributed to a 15% plunge in North American operating profit. Despite the U.S. downturn, the European market remained a bright spot with a 10% increase in operating profit, exceeding analyst expectations. The company formalized a new dividend policy targeting a 30-50% payout ratio, establishing a minimum floor of 50 cents per share. These developments highlight the intensifying headwinds for DGE.L and DEO as overall volumes fell 0.9% amid weakening consumer demand.