On track, margins H2 weighted The company has issued a trading update ahead of the AGM today. Management reiterated the FY guidance issued in late July (of organic sales growth at the middle of the 4-6% medium-term range, and organic EBIT growth c. 100bps ahead of organic sales). However, tough comps mean H1 organic EBIT growth will be flat or below organic sales growth, implying no organic margin expansion and an H2 weighted profit growth profile. Our model already reflects this. We maintain our Sell recommendation, on valuation grounds. US tariffs still a risk The last sentence of the statement reveals that "we would not be immune from significant changes to global trade policy and continue to monitor this closely." The main outstanding issue, we think, is whether the US will place tariffs on Spirits imported from the EU - which would mainly affect Diageo's Scotch sales in the US. We estimate those tariffs could potentially be a drag of a low single digit percentage on group organic sales growth over a FY period, given Diageo’s exposure to the US is high (c. 35% of sales and c. 50% of profit), with Scotch accounting for perhaps 15% of its US sales.