Guiness brewer Diageo beat forecasts with first-half profits today and said it was confident of a stronger performance in the second half despite a tough trading environment.
The firm, which sells Smirnoff vodka, Johnnie Walker scotch and Guinness, said profit before tax, goodwill and exceptional items rose to £1.29 billion (euro2.1 billion) in the six months to December 31st from £1.23 billion the year before as strong trading in Britain and North America offset weakness in Latin America and other parts of Europe.
Organic sales of premium brands rose four per cent, below the firm's medium-term target of eight-to-ten percent growth.
Diageo, which was formed from the merger of Grand Met and Guinness in 1997, has been shedding its conglomerate past and completed its transformation into a pure spirits company in December when it sold fast-food chain Burger King.
But this shift has coincided with a tougher trading environment for drinks companies, as consumer spending falters in the global economic downturn and duty-free sales suffer as travellers stay at home amid fears of war.
Diageo had already said in October its organic sales target would be tough to hit, as stiff competition and higher UK duties for ready-to-drink products such as Smirnoff Ice curbed the once explosive growth for such brands.
Diageo shares have marginally outperformed the UK drinks sector, but lagged the DJ Stoxx European food and drinks index by eight percent over the past year. They closed at 599 pence on Wednesday, valuing the business at around 19.2 billion pounds.
Daigeo proposed an interim dividend of 9.9 pence, up 6.6 percent on the year.