Diageo has reported a 0.3 per cent rise in quarterly organic net sales, beating analyst expectations as stronger trading in Europe and Latin America helped offset softer performance in the US.

The Johnnie Walker, Guinness and Smirnoff owner said reported net sales increased 2.3 per cent year-on-year to £4.5bn during the quarter, helped by a positive hyperinflation adjustment, although this was partly offset by disposals and a limited foreign exchange impact.

Analysts had expected organic net sales to fall 2.3 per cent over the three months to March, according to a company-compiled poll.

The spirits giant maintained its full-year guidance for fiscal 2026, but said it remained mindful of the ongoing conflict in the Middle East and its potential impact on energy, supply and distribution costs.

Diageo chief executive Dave Lewis said North America remained the group’s “biggest challenge”, with market conditions still under pressure.

“North America remains our biggest challenge, where market conditions are soft and our offer needs to be more competitive. Actions are already underway to address this,” he said.

Lewis, who became known as “Drastic Dave” during his time leading cost-cutting programmes at Tesco and Unilever, has moved quickly since taking the top job at Diageo.

In February, the company cut its sales forecast and halved its interim dividend as it looked to respond to weaker consumer demand and pressure across parts of its global portfolio.

Diageo also pointed to recent disposals designed to reduce leverage and improve financial flexibility.

In March, its Indian subsidiary United Spirits Limited agreed to sell its full equity stake in Royal Challengers Sports Private Limited for INR 166.6bn, equivalent to around €1.53bn.

The group has also disposed of its shareholding in EABL, with completion expected in the second half of its financial year.

Looking ahead, Diageo said it still expects organic net sales to decline between two and three per cent for the full year.

Organic operating profit is expected to be flat or up low-single digits, including around $300m of savings from its Accelerate programme and the previously outlined impact of tariffs.

Sign up here to get the latest grocery and food news each morning