[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 15 February 2007, 22:47 GMT
Diageo upbeat despite challenges
Pint of Guinness
Diageo sales rose, but demand for Guinness is slipping
The world's largest alcoholic drinks group, Diageo, has reported higher earnings, despite a weaker performance in some key markets.

The firm, whose brands include Smirnoff vodka and Guinness, said half-year operating profits rose to 1.3bn ($2.5bn), up from 1.26bn a year ago.

UK-based Diageo said strong growth in North America, Latin America and Asia helped to lift sales across the group.

However, weaker demand for Smirnoff Ice and Guinness hit sales in Europe.

Strong spirits

Diageo said pre-tax profits slipped to 1.29bn in the six months to the end of December 2006, from $1.4bn a year ago - although the previous year's figure had been boosted by the firm's 151m sale of its shares in General Mills.

Diageo added that it expected the weaker US dollar to shave as much as 90m from the firm's full-year operating profits.

Despite the warning, Diageo chief executive Paul Walsh said the company, which also makes Baileys liquor, Johnnie Walker whisky and Captain Morgan rum, had made "a strong start to the year".

"In North America our continued outperformance in the US spirits market was the key driver of the 11% organic operating profit growth we delivered," Mr Walsh said.

"Our spirits brands, especially Scotch where net sales grew 11%, did particularly well, benefiting from increased investment in marketing."

Diageo added that it planned to invest 100m to boost whisky production in Scotland, creating 200 jobs.

The firm said it intended to expand a grain distillery in Fife, where its Johnnie Walker, J&B and Bell's whisky brands are made.

Shares in Diageo ended 2.3% higher on Thursday.


SEE ALSO
Diageo to keep pouring Guinness
31 Aug 06 |  Business
Diageo to cover pension arrears
27 Mar 06 |  Business
Diageo toasts strong sales in US
16 Feb 06 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific