Summary of FY25 results Diageo FY25 LFL sales grew +1.7% (+1.5% excluding a +20bp benefit from removal of Ciroc North America from headline organic growth), which was broadly in-line with co. cons. (+1.4%). FY25 LFL EBIT declined -0.7% (-1.0% inc. Ciroc North America) modestly ahead of expectation (co. cons -1.2%) driven by North America (LFL EBIT +0.3% vs. co. cons. -2.3%). FY USD EBIT was a c.+1% beat but a c.-2.5% miss excluding the benefit from fair value remeasurements. FY EPS (basic, bei) was a +1.6% beat and FY DPS at USc103.5 was flat YOY. Shares were up ~5% at the close. News We highlight that Diageo expects its group LFL sales growth to accelerate in fiscal H226 following a slight decline in H1. Earnings We revise our FY26e/ FY27e/ FY28e EPS by +2%/ +3%/ +3%, primarily driven by reduction to our net finance cost forecasts which in turn is partly attributable to capitalisation of borrowing costs on capex spend. Investment thesis We see risk that further moderation of Diageo''s US growth leads to earnings downgrades and a de-rating. Rating and target price We maintain our Underperform rating. Our TP moves from GBp1,660 to GBp1,700. 15 questions for management Does your FY26 top-line guidance embed an assumption of improvement in your prevailing US spirits value sell-out (Nielsen / NABCA) decline of c.-4% (fiscal H225)?