At Capital Markets Day, Diageo Lays Out Fiscal 27 and Medium-Term Guidance
DEO sits 27% above its 52-week low of $72.45.
Summary
Diageo's Capital Markets Day revealed fiscal 2027 guidance of broadly flat organic sales and low-to-mid-single-digit operating profit growth, supported by $1 billion in cost savings over three years. Medium-term targets include mid-single-digit profit growth and $8 billion in cumulative free cash flow.
Key Events · Earnings and Guidance · DEO
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Fiscal 27 Guidance Issued
Organic net sales growth is expected to be broadly flat, with North America down mid-single-digit, while organic operating profit growth is projected up low-to-mid-single-digit. Free cash flow is forecast at ~$2 billion after ~$850 million in exceptional cash costs.
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Medium-Term Targets Set
For fiscal 27-29, the company targets a low-single-digit organic net sales CAGR and a mid-single-digit organic operating profit CAGR, with attractive EPS growth ahead of operating profit. Cumulative free cash flow is expected to reach ~$8 billion after ~$850 million in exceptional cash costs.
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$1 Billion Cost Savings Program
Roughly $1 billion in savings is anticipated over three years, driven by an operating framework redesign (~$850 million) and supply chain initiatives (~$150 million). Restructuring costs to achieve these savings are expected to total ~$1.2 billion.
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Leverage Target
By the end of fiscal 27, leverage is expected to be around the mid-point of the 2.5-3.0x net debt/EBITDA range, assuming the completion of the EABL and Royal Challengers Bengaluru transactions.
Analysis · DEO · Manufacturing
At its Capital Markets Day, Diageo unveiled a turnaround strategy anchored on $1 billion in cost savings, flat near-term sales growth, and improving profitability. The fiscal 2027 and medium-term guidance acknowledges ongoing North American headwinds while signaling confidence in margin expansion and cash generation. The stock may react to the detailed financial targets and the disclosure of $1.2 billion in restructuring costs.
At the time of this filing, DEO was trading at $91.89 on NYSE in the Manufacturing sector, with a market capitalization of approximately $49.1B. The 52-week trading range was $72.45 to $116.41. This filing was assessed with neutral market sentiment and an importance score of 8 out of 10.