Core Insights - Diageo plc reported a decline in pre-exceptional earnings per share by 8.6% year over year to 164.2 cents, primarily due to lower contributions from Moët Hennessy and adverse currency effects [1][8] - Net sales decreased by 0.1% year over year to $20.2 billion, impacted by unfavorable currency effects and adjustments from acquisitions and disposals, despite improved organic sales [2][8] Financial Performance - Organic net sales increased by 1.7% year over year, supported by a 0.9% growth in organic volume and a 0.8% improvement in price/mix [3] - The reported operating profit fell by 27.8% year over year to $4.3 billion, influenced by exceptional impairment and restructuring charges, unfavorable currency movements, and a contraction in organic operating margin [9] - Organic operating profit decreased by 0.7% year over year, with a reported operating margin contraction of 819 basis points [10] Regional Performance - Volume declined in North America and Europe due to a cautious consumer environment, while volume gains were observed in the Asia Pacific, Africa, and Latin America [4] - North America experienced positive price/mix contributions driven by tequila, particularly aged variants, while Europe saw growth from Guinness [5] Future Outlook - Diageo anticipates organic net sales for fiscal 2026 to be broadly in line with fiscal 2025, with growth expected to be weighted towards the second half of the fiscal year [13] - The company forecasts mid-single-digit growth in organic operating profit for fiscal 2026, primarily driven by cost savings under its Accelerate Program [14] - Capital expenditures are projected to be between $1.2 billion and $1.3 billion, with free cash flow expected to reach $3 billion [15]

Financial Performance - Organic net sales increased by 1.7%[9], but excluding the Cîroc transaction, the increase was 1.5%[9] - Organic operating profit decreased by 0.7%[10], attributed to overheads, primarily staff costs and strategic investments[10] - Pre-exceptional EPS decreased by 8.6% to 164.2 cents[10], mainly due to a lower Moët Hennessy contribution and unfavorable FX at 103.48c[10] - Free cash flow increased by $0.1 billion to $2.7 billion[9], driven by strong working capital management[10] Strategic Initiatives - The company is implementing the "Accelerate" program to deliver approximately $625 million in cost savings over 3 years[22], with about 50% reinvested for future growth and 50% dropping through to the bottom line[29] - Capital expenditure for fiscal year 26 is guided to be in the range of $1.2-$1.3 billion[47], moving to mid-single-digit % net sales (fiscal 25: 7.7%) over 3 years[47] - The company aims to be well within the leverage target range of 2.5-3.0x net debt/EBITDA no later than fiscal year 28[23] Market Dynamics - Developed markets accounted for 62% of organic net sales, while emerging markets accounted for 38%[67] - The company gained or held share in 65% of measured markets[65] - Non-alcoholic beverages experienced approximately 40% organic net sales growth[88] Regional Performance - North America: Organic sales growth with share gains in TBA led by Don Julio and Crown Royal[69] - Asia Pacific: Weaker performance in China and Travel Retail offset India growth[65] - Latin America and Caribbean: Return to growth[65], with organic sales growth of 9.2%[68]