Growth in Europe, LAC and Africa offset by weakness in North America and China

• Reported net sales of $10.5 billion declined 4.0% due to organic net sales decline and the negative impact of disposals.
  
  
• Organic net sales declined 2.8%, driven by organic volume down 0.9% and negative price/mix of 1.9%. Strong organic net sales growth in Europe, Latin America and Caribbean (LAC) and Africa was more than offset by softer performance in North America given pressure on disposable income impacting US Spirits, and the adverse impact of Chinese white spirits (CWS) in Asia Pacific.
  
  
• Negative price/mix primarily as a result of adverse mix due to US Spirits performance and weaker results in CWS.
  
  
• Excluding CWS, organic net sales for the group would have been c.2% higher; with volume down c.0.5% and price/mix broadly flat.
  
  

• Reported operating profit declined 1.2% due to organic operating profit decline and lower exceptional operating charges. Reported operating profit margin grew 85bps, primarily due to the positive impact of disposals.
  
  
• Organic operating profit declined by 2.8%; organic operating profit margin was broadly flat, mainly due to adverse market mix and tariff costs offset by lower marketing investment given efficiencies.
  
  
• EPS pre-exceptionals was 95.3 cents, down 2.5%.
  
  

• Net cash flow from operating activities decreased by $202 million to $2.1 billion. Free cash flow decreased by $164 million to $1.5 billion.
  
  
• Net debt as at 31 December 2025 was $21.7 billion.
  
  
• In December 2025, Diageo announced an agreement to sell its shareholding in East African Breweries plc and its shareholding in the Kenyan spirits business, to Asahi Group Holdings, Ltd. Estimated net proceeds after tax and transaction costs of $2.3 billion imply a 17x EBITDA multiple. This is expected to complete in H2 calendar year 2026 and to reduce net debt to adjusted EBITDA ⁽³⁾ by c.0.25x.
  
  
• Ongoing strategic review by United Spirits Limited (USL) of ownership of Royal Challengers Bengaluru (RCB) cricket team well advanced.
  
  
• Declared interim dividend of 20 cents. Committed to growing shareholder distributions over time and targeting a 30-50% payout policy going forward, with a minimum floor set for the dividend of 50 cents per annum.
  
  

• Cost savings programme progressing well with c.50% Accelerate savings now expected in fiscal 26; savings in the first half driven by supply chain agility and related cost savings, A&P efficiencies and overhead savings.
  
  
• For fiscal 26, given further weakness through the first half in the US we have updated both organic net sales and operating profit growth guidance. We have reiterated free cash flow guidance of $3 billion.
  
  

Our performance in the first half of fiscal 26 was mixed. Strong performance in Europe, LAC and Africa, was offset by a weakening performance in NAM and continued weakness in Chinese white spirits in APAC. US Spirits performance reflected pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet.

Only several weeks in I can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering leading to higher growth. As we refine our new strategy to deliver stronger shareholder value, the immediate priorities for the team are clear:

– Build competitive category strategies, winning with relevant brands

– Customer, customer, customer

– Redesign of the Diageo operating framework to drive sustainable returns

To deliver on these opportunities, we need to create more financial flexibility. Accordingly, the Board has taken the difficult decision to reduce the dividend to a more appropriate level which will accelerate the strengthening of our balance sheet. We are confident that this is the right action which will ensure that Diageo can reinforce its position as the leading international spirits business and drive stronger shareholder value over the coming years.

I am encouraged by the depth of the passion and pride that our people have for our brands across the business. This will be invaluable given the significant work ahead.

<sup>(1) See pages 36-43 for an explanation and reconciliation of non-GAAP measures.

(2) Represents organic movement.

(3) Leverage ratio calculated using adjusted net debt which is the equivalent to adjusted net borrowings (net borrowings plus post-employment benefit liabilities before tax).

See pages 36-43 for an explanation and reconciliation of non-GAAP measures, including organic net sales, organic marketing investment, organic operating profit, free cash flow, EPS before exceptional items, adjusted net debt, adjusted EBITDA and tax rate before exceptional items. Unless otherwise stated, movements in results are for the six months ended 31 December 2025 compared to the six months ended 31 December 2024.</sup>

Results, reports and presentations

2026 Interim Results webcast