CONSERVATIVE PREDICTIONS FOR DIAGEO’S QUARTERLY EARNINGS

UBS predicts a conservative full year guidance for Diageo’s Interim forecast for the 6 months ending December 31, 2005. Overall, UBS expects a 4.5% increase in organic net sales with a slowdown in European sales from -1% to -2%, and a 7% rise in North America. Diageo has lagged in “the market and European beverages sector, underperforming the market by -3.1%.” Premium spirits remains a strong trend among consumers in the United States which will help expand margins in the country. Also, the October price increase across 40% of Diageo’s spirits is continuing to do well, and the company has reported 16 consecutive months of volume share gains in the US Control States which bodes well for the Open States as well.