Diageo FY2026 results: Guinness grew in Great Britain, Don Julio fell in America, and $1.2 billion of restructuring is now in motion

Diageo published its fiscal year 2026 preliminary results on 6 August 2026, covering the twelve months to 30 June 2026. Organic net sales declined 2.0%, with volume down 0.4% and an unfavourable price/mix of 1.6%. Reported net sales were $19,643 million, down 3.0%. Operating profit before exceptional items grew 2.0% organically to $5,683 million, with the margin before exceptional items expanding 116 basis points to 28.9%. Free cash flow increased $463 million to $3.2 billion. Leverage closed at 3.1x net debt to EBITDA, down from 3.4x at the end of FY25. A full-year dividend of 50 cents per share was recommended, in line with the revised dividend policy announced in February 2026.

The headline organic sales decline of 2.0% requires immediate context: excluding the impact of Chinese white spirits – Diageo’s baijiu business in China, operating under the Shui Jing Fang brand – organic net sales for the group would have been approximately 1.5% higher. Chinese white spirits is a structurally separate category within the Chinese market, and its underperformance is driven by a specific set of market dynamics – government policy changes affecting prestige price points, consumer downtrading within the category – that do not apply to Diageo’s international spirits portfolio operating in China. The same challenge impacted the broader Chinese baijiu market. Stripping it out gives a cleaner read on the performance of the brands that most of Diageo’s commercial partners and competitors care about.

The reported operating profit figure of $3,156 million, down 27.2%, is dominated by exceptional charges and should not be read as the operational story. Diageo incurred $0.9 billion in restructuring charges in FY26 – approximately $752 million related to implementing the new operating framework, with the balance covering supply chain agility and Accelerate costs. Additionally, $1.5 billion in impairment charges were recorded, largely related to Türkiye (driven by hyperinflationary accounting and a change in market pricing strategy) and a $287 million write-down of the Don Papa rum brand. These are non-cash or one-time charges associated with a deliberate strategic reset programme. The operational measure – operating profit before exceptional items, +2.0% organic – is the number that reflects the underlying business performance.

Where the business grew and where it didn’t