For a very long time, I preferred the look of drinks large Diageo (LSE: DGE), however not the price. Then the Diageo share price fell to what I assumed was a lovely stage and I purchased a stake, which I nonetheless personal.

Since then nevertheless, the share has continued to lose momentum. Enterprise issues have mounted. Is that this weak point a possible cut price for an investor with a long-term method like me? Or ought to I keep away from shopping for any extra shares within the Guinness brewer?

Newest outcomes paint a blended image

The corporate launched its interim outcomes Tuesday (4 February) and I feel they contained each good and unhealthy information. Web gross sales, working revenue, working revenue margin and earnings per share all declined year-on-year.

On the plus aspect although, free money circulation grew. Natural web gross sales grew. That was resulting from price and the combination of merchandise bought. Volumes really declined barely general, with all areas besides Asia Pacific recording decrease volumes.

However I feel that underlines the attraction of Diageo’s portfolio of premium manufacturers, which supplies it pricing energy. That could be a massive attraction of its enterprise mannequin for me.

An extended highway forward

Dan Lane, lead analyst at Robinhood UK, pointed to ongoing power within the efficiency of Guinness, whereas he reckoned that the corporate’s spirits enterprise “should have its day again”.

Within the six months underneath overview although, spirits web gross sales declined in Europe, Asia Pacific and Latin America and the Caribbean. There was, at the very least, sturdy progress in tequila gross sales.

That weak spirits efficiency general exhibits why Guinness (which grew strongly) is a crucial counterbalance in Diageo’s portfolio technique.

Nonetheless, that considerations me. Beer gross sales are in long-term decline globally. Guinness has performed an incredible job advertising itself and rising demand, however I have no idea how lengthy it may possibly efficiently push ahead in a market that’s going the opposite approach.

In the meantime, Diageo’s spirits enterprise efficiency seems more and more problematic to me. This isn’t the Latin American gross sales wobble seen final 12 months, however now a broader-based decline for a lot of pricy spirits throughout a number of and various markets.

That implies financial weak point is hurting gross sales. I see a danger that might proceed.

Getting Diageo again to sturdy progress mode goes to take years, in my view, and to date present administration has not proved it’s up to that job. Time will inform.

Potential cut price, however I’m not shopping for

Diageo has raised its dividend per share yearly for many years. The interim dividend was held flat, unusually, so it stays to be seen on the full-year level whether or not the overall dividend continues to develop.

However the flat interim dividend unsettled me, the weak spirits gross sales and potential for issues to worsen concern me, geopolitical dangers like tariffs hurting demand for worldwide spirits are excessive and I stay unconvinced that present administration is ready to ship in what looks like a tricky market atmosphere.

So whereas the Diageo share price might but come to appear like a cut price on reflection, the dangers are more and more unsettling me as an investor. I can’t be shopping for any extra shares in Diageo for now.