Summary of H124 results Diageo''s H124 LFL sales declined -0.6%, modestly below consensus expectation (co. cons. 0.0%). The H124 LFL EBIT decline at -5.4% was also a small miss (co. cons. -4.7%). H1 EPS (basic, bei) at USc108.1 was modestly (+1.9%) ahead of co. cons but c.-0.8% below VA. cons. Diageo declared an interim dividend of USc40.5. Diageo now expects its group LFL EBIT growth to be negative in H224 but for the rate of decline to improve vs. H1. News Diageo does not want to predict when the US spirits industry will return to its historical (+mid-single digit) value growth algorithm. It could take 6 months, or it could take 18 months. Earnings We revise our FY24e/FY25e/FY26e EPS by +6%, +2% and +1% (primarily reflecting Diageo''s updated FX commentary). Investment thesis Combining weak industry sell-out trends in the US and the relatively geared nature of spirits (de-stock risk), we see risk of further operational disappoints. Rating and target price We maintain our Underperform rating. Our TP remains unchanged at GBp2,500. 15 questions for management Do you expect organic sales growth in US spirits business to return to positive territory in H224?