Shares of the UK-based liquor giant Diageo PLC (GB:DGE) slumped to their lowest level in four years after the company’s sales and profits dropped for Fiscal Year 2024. The company’s organic net sales fell by 0.6% to $20.3 billion, while its organic operating profit fell by almost 5% year-over-year to $6 billion in FY24. Following the results, DGE stock lost 5.6% as of writing.
Despite the disappointing results, the company increased its full-year dividend for FY24 by 5% to 103.48 cents per share.
Diageo owns a portfolio of around 200 well-known brands, including Baileys, Smirnoff, Tanqueray, Guinness, and many others.
Cautious Environment Dampens Diageo’s Numbers
Overall, Diageo’s sales volume declined 3.5% during the year amid a cautious consumer environment. Among its regions, the company’s performance was hit the most in the Latin America and Caribbean region (LAC), with a decline of 21.1% in organic net sales. This was mainly affected by the need to reduce excess inventory in the LAC region to align with the current market trends.
Excluding this region, the company’s organic net sales increased by 1.8%, driven by growth in Africa, Asia Pacific, and Europe.
Among its brands, Guinness showed strong momentum in Europe with a 22% growth in organic net sales.
The company’s CEO, Debra Crew, described the year as “challenging” for the company and the industry as a whole. She also highlighted a record productivity savings of nearly $700 million during the year.
Is Diageo a Buy, Hold, or Sell?
Overall, analysts maintain a cautious outlook on Diageo stock, as the company has indicated that it expects challenges to continue in FY25.
According to TipRanks’ consensus, DGE stock has received a Hold rating based on a total of 12 recommendations from analysts. This includes five Buy, three Hold, and four Sell recommendations. The Diageo share price target is 2,949.03p, which is 21.4% above the current trading levels.
