Shares of Diageo (NYSE:DEO) climbed nearly 3% in London on Tuesday after the global spirits giant delivered better-than-anticipated results for its fiscal year ending June 2025, coupled with a confident outlook for operating profit growth.
The company reported net sales of $20.25 billion, essentially flat on a reported basis but up 1.7% organically. Both figures exceeded company-compiled consensus forecasts, which had projected $20.2 billion in revenue and a 1.4% rise in organic growth.
Earnings per share (EPS) reached 164.2 cents, outperforming the market expectation of 161.6 cents.
Though pretax profit declined to $3.54 billion from $5.46 billion the previous year, and EBIT edged down 0.7%, the operating profit drop was milder than the 1.2% decline analysts had predicted.
“We would expect shares to be better today as the business doubles down on the controllables,” Jefferies analyst Edward Mundy wrote in a research note.
“As recovery becomes visible, we would expect leverage through the i/s, improving free cash flow (FCF) and better returns, which will allow the shares to rerate to north of 20x PE,” he added.
BofA analysts also viewed the update positively, commenting that Diageo delivered “reassuring results in an uncertain environment.”
Looking ahead, the beverage maker said it expects organic net sales growth in fiscal 2026 to mirror the pace seen this year, acknowledging persistent headwinds in the operating environment. It projected organic operating profit to grow in the mid-single-digit range, topping the 2.6% analyst consensus cited by Jefferies.
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