Diageo has reduced its dividend and outlined plans to strengthen financial flexibility after the spirits group delivered what its new chief executive described as mixed half-year results.

In its latest update, the owner of Guinness reported that net sales declined by 4 percent to 10.5 billion dollars in the six months ended December, while organic sales fell 2.8 percent. According to the company, growth recorded in Europe, Latin America and Africa was more than offset by softer demand in North America and China.

Chief Executive Officer,  Sir Dave Lewis, who has been in the role for seven weeks, said the performance was mixed and stressed that the dividend reduction would provide the group with greater room to invest in competitiveness. The company noted that the move effectively ends its long-running record of consistently increasing shareholder payouts since 1997.

Following the announcement, It confirmed that Diageo’s shares dropped by more than 6 percent in London trading. However, the company pointed out that the stock remains about 12 percent higher over the past two months as investors anticipate operational changes under the new leadership.

Noting that profitability also showed pressure, the group reported that operating profit slipped 1.2 percent to 3.1 billion dollars, while pre-exceptional earnings per share declined 2.5 percent to 95.3 cents.

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Again, the Finance director,  Nik Jhiangani said tariffs accounted for part of the earnings decline. He added that, excluding Chinese white spirits, organic sales would have been roughly two percentage points higher.

Looking ahead, the company reaffirmed its expectation that full-year organic sales will fall between 2 percent and 3 percent, while operating profit is projected to remain flat to slightly higher.

It also reiterated guidance of 3 billion dollars in free cash flow and stated that its Accelerate cost-saving programme, which targets 625 million dollars in efficiencies, remains on track.

Lewis, meanwhile, indicated that a broader turnaround plan will be presented in the spring. According to the CEO, the spirits category remains structurally resilient; however, he noted that economic pressure, particularly in the United States has constrained consumer spending in recent years.

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In other words, the company reported that its share of the ready-to-drink market in the US has fallen from 25 percent to 10 percent as consumers traded down. Lewis said the group must move quickly to capture unmet demand and improve execution across its portfolio.

So, to that end, Diageo said management is prioritising three actions: reinforcing competitive brand strategies, improving service to distributors and retail partners, and redesigning the company’s operating framework to drive greater agility and clarity.

Consequently, on portfolio management, the company confirmed it is reviewing potential disposals but emphasised that any asset sales would be value-driven. It added that it is exploring options regarding its Royal Challengers Bangalore franchise, although no timeline has been fixed.

The group also signalled a broader commercial shift. While premiumisation remains important, Lewis said the company must also compete more effectively at accessible price points to widen consumer reach.

The DrinkBusiness reported that the dividend reduction is designed to give Diageo additional financial headroom as it navigates weakness in key markets and accelerates its performance reset.

Overall, the company maintained that disciplined execution of the new strategy, alongside continued cost savings and targeted investment, should position the business for improved momentum in the periods ahead.