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(Sharecast News) - Shares in Guinness-owner Diageo fizzed on Wednesday, after the drinks giant reported better-than-expected third-quarter growth, fuelled by strong demand across Europe and Latin America ahead of the football World Cup.
The blue chip - which also owns Johnnie Walker, Smirnoff and Baileys, among many others - saw sales rise 2.3% in the three months to March end to $4.48bn, or by 0.3% on an organic basis. Within that, volumes were 0.4% higher while the price/mix was -0/1%. Analysts had been expecting a 2% decline in organic sales.
Diageo acknowledged that conditions in North America remained difficult, with organic net sales sliding 9.4% to $1.71bn. Newly-installed chief executive Dave Lewis said the region remained "our biggest challenge, where market conditions are soft and our offer needs to be more competitive. Actions are already underway to address this".
Weak demand for Chinese white spirits also continued to weigh heavily, leading to a 0.8% sales decline in Asia Pacific.
However, helping to offset that was "strong" organic net sales growth in Europe, Latin America and the Caribbean and Africa, boosted by the early Easter timing and advance sales ahead of the World Cup, which gets underway next month. Net sales in Europe, Diageo's second-biggest market after North America, jumped 8.8% to $1.05bn during the period.
As at 0915 BST, the stock was up 5% at 1,544p.
Lewis, the former Tesco boss who took up the role in January, said: "Progress on the re-design of our new strategy and the shaping of a more competitive operating framework is well underway.
"While we are mindful of continued geopolitical uncertainty, including the impact of the ongoing conflict in the Middle East on energy, supply and distribution, we are reiterating our fiscal 2026 guidance."
Diageo is currently guiding for a 2% to 3% decline in annual organic net sales, and organic operating profit growth in the range of flat to low single digit, including around $300m savings and the impact of tariffs.
The company has endured a difficult few years, rocked by changing consumer habits, tariffs and a weak economic backdrop, which has weighed on demand for its premium products. Lewis, who has a long-held reputation for cost cutting, warned in February that tough trading in the US and China would weigh on full-year results. He also slashed the dividend.
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