Diageo H1 earnings rise despite tough markets

London, Feb 15: Diageo Plc, the world's biggest alcoholic drinks group, posted a rise in half-year earnings on Thursday despite some tough markets and a weakening dollar dragging on profits.

The maker of Smirnoff vodka, Johnnie Walker whisky, Gordon's Gin and Guinness beer said it had seen underlying earnings for its half year (July-Dec 2006) rise to 34.4 pence a share using a an effective tax rate of 25 percent from 31.1p a year ago.

Net sales rose to 4 billion pounds (.79 billion) from 3.96 billion while operating profit was lifted to 1.3 billion from 1.26 billion.

Diageo said North America, Latin America and Asia had helped growth but European sales had been soured by the waning popularity of ready-to-drink Smirnoff Ice-type alcopops, fewer pints of Guinness being drank in Ireland and Spaniards losing the taste for scotch whisky.

Diageo warned that exchange rates, largely dollar weakness, would knock full-year operating profit by 90 million pounds although it would also reduce interest charges by 10 million.

Reuters