Diageo preview: could quarterly sales beat expectations? Proactive uses images sourced from Shutterstock
Diageo PLC (LSE:DGE) could report a smaller decline in third-quarter sales than most analysts are expecting, according to UBS and Citi, who see helpful timing effects and stronger trading outside the US.
The banks expect organic sales to decline around 2% to 3%, compared with the consensus City forecast closer to 3-3.5%.
The improvement is largely driven by phasing effects, including Easter, Chinese New Year and stock build ahead of football-related demand in Latin America, rather than a change in underlying trends.
UBS said there is “upside risk” across most regions, particularly in Asia Pacific, Africa and Latin America, where growth is expected to offset continued weakness elsewhere.
North America remains the main drag. UBS expects US spirits sales to fall by around 10% in the quarter, reflecting weaker demand and market share losses in tequila and whiskey.
Citi said the absence of new negative developments should be seen as reassuring, although a sustained recovery in the US business is unlikely before the 2027 financial year.
Both brokers expect Diageo to maintain its full-year guidance for organic sales of around -2% to -3% and broadly flat to low single-digit earnings growth.
While the shares are seen as relatively cheap, analysts said a re-rating will depend on clearer signs of a turnaround in US spirits demand.