Diageo plc Q3 FY2026 earnings call

• Upcoming Capital Markets Day on 6th August in London for strategy update and operating framework redesign. - Accelerate program on track to deliver circa $300 million of savings by end of fiscal 26. - Actions underway in North America to address soft market conditions, including work on Casamigos pricing and competitiveness. - Continued momentum in Europe, LAC, and Africa. - Work on understanding underlying competitiveness of the business across regions and categories, to be shared in August.

Organic net sales were up 0.3% driven by volume growth of 0.4%. Reported net sales were up 2.3% with impact from hyperinflation adjustment, disposals, and foreign exchange. North America organic net sales declined 9.4% due to soft market conditions. Europe organic net sales grew 8.8% due to Easter timing. Asia-Pacific organic net sales declined 0.8% driven by weakness in Greater China. Africa delivered solid 17.1% organic net sales with double-digit growth in East Africa and Southwest and Central Africa. Revenue contribution: Europe, Iraq, and Africa had strong growth; North America had decline; Asia-Pacific had slight decline; Africa had solid growth.

Fiscal 26 guidance unchanged from February half-year results: organic net sales down 2% to 3%, organic profit growth slashed to up low single digits, free cash flow of circa $3 billion after exceptionals related to Accelerate program but before approx $100 million one-off adjustment for inventory build. Geopolitical uncertainty, including Middle East conflict impact, monitored, and potential inventory buildup for resilience. Scotch and tariffs likely have minimal impact on fiscal 26.

Geopolitical uncertainty, including ongoing conflict in the Middle East impacting energy, supply, and distribution.

Q: Talk about actions taken since H1 results, especially in US on Casa Amigos.

A: Initiated work in Florida and World Cup cities with positive early results, monitoring, and looking at price tiering for Casamigos, Don Julio.

Q: Aggregate view of Q3 impact and underlying performance outside US.

A: Reiterated guidance, see strong momentum in Europe, LAC, Africa, normalization in Chinese white spirits, more on US market positioning in August.

Q: Factors for landing top or bottom of guidance range.

A: Guinness capacity, FIFA World Cup impact, accelerated savings, positive mix from LAC and NAMS.

Q: US inventory levels and shipment vs depletion gap.

A: Depletions tracking ahead, want appropriate inventory in trade, similar level baked into guidance.

Q: Deep work on business competitiveness reference.

A: Step back across regions and categories, fundamental work on consumer, organization capabilities, portfolio, to be shared in August.

Q: Mexico strategy and US mandate for John O'Keefe.

A: Mexico needs price repositioning, John O'Keefe's brief is to evaluate North America's competitiveness, details in August.

Q: Longer-term benefits of FIFA World Cup activations.

A: First spirit sponsor, look at brand equity and sales impact, learning curve in North America, more confident in Latin America.

Q: Canada commercial dispute impact.

A: Technically drops to bottom line, but consider business investment, tracked position but not certain.

Q: Quantifying Canada benefit and US beer momentum.

A: Canada benefit not that high, US beer momentum from RTDs and Guinness cultural relevance.

Q: RTDs color ahead of August.

A: Considered growth opportunity, plans in place, will share strategic overview in August.

Q: Europe agri and brand competitiveness.

A: Strong momentum on Guinness, broader portfolio play in Europe, more color on competitiveness, category and brand strategy in August.