The world’s largest spirits producer Diageo lowers earnings forecast, shares drop 8%

Special Topic: Focus on US Stock Q4 2025 Earnings Reports

On Wednesday, European stock markets rose as US President Trump’s announcement of a global 10% tariff officially took effect (rather than the previously threatened higher 15% rate), easing global market tensions.

As of 11:50 a.m. London time, the pan-European Stoxx 600 Index was up 0.5%; the UK FTSE 100 Index rose 0.9%; Germany’s DAX Index gained 0.4%; and France’s CAC 40 Index climbed 0.3%.

Wednesday also marked a busy earnings day, involving companies such as Leonardo, Iberdrola, E.ON Group, Bayer, Faurecia, HeidelbergCement, Poste Italiane, Fresenius, Novo Nordisk, and Telefónica. On the economic data front, Germany’s GDP, consumer confidence index, and the latest eurozone inflation data will be released.

Shares of UK spirits giant Diageo plunged 8% in early trading on Wednesday after the company cut its 2026 sales and profit outlook. The world’s largest spirits producer said weak demand in North America and China impacted its first fiscal quarter earnings.

In the six months ending December, the company’s net sales fell 4% to $10.5 billion, citing “disposable income pressure impacting the US spirits market”; operating profit also declined 1.2% to $3.1 billion.

Diageo expects further weakening in 2026: organic sales are forecast to fall 2%–3%, organic operating profit to be flat or show low single-digit growth, and the dividend to be cut to $0.20 per share.

Additionally, UK carmaker Aston Martin announced on Wednesday that profits have declined due to US and China tariffs, and the company will cut its workforce by 20% in 2026.

The company stated that the layoffs will save £40 million in costs. This luxury carmaker’s 2025 revenue dropped to £1.26 billion, down 21% year-on-year; it recorded an operating loss of £259.2 million; total wholesale volumes fell 10% to 5,448 units.

Aston Martin CEO Adrian Hallmark said that increased tariffs from the US and China have dragged down company performance and affected their ability to effectively execute plans. The stock most recently fell 2.3%.

HSBC Holdings released its earnings report before the market opened, posting annual pre-tax profit of $29.91 billion, surpassing market expectations.

European stock markets opened higher on Wednesday, following gains in regional markets on Tuesday, as investors assess the new global trade landscape after Trump’s latest tariff measures. In his State of the Union address on Tuesday night, Trump said he believes tariffs will replace income taxes.

“Over time, I believe tariffs paid by foreign nations will, as in the past, largely replace the modern income tax system, relieving my beloved people of a heavy financial burden,” the President stated.

US stock index futures edged higher on Tuesday evening as the market awaits Nvidia’s key earnings report—currently, investors are reassessing high valuations in tech stocks and becoming increasingly cautious about the hefty AI capital expenditures by hyperscale cloud providers.

In the Asia-Pacific market, South Korea and Japan’s stock markets hit record highs overnight.

Editor: Guo Mingyu