Diageo First-Quarter Sales Slip, Keeps Full-Year Target

Diageo, the world's biggest alcoholic drinks group, said on Tuesday sales growth slowed in its first quarter, but it maintained its full-year target for underlying operating profit to rise by 9 percent.

The maker of Smirnoff vodka and Guinness beer said underlying sales grew by 5 percent in its July-September first quarter as distribution changes in Korea and changes in calculating sales in Venezuela trimmed more than one percentage point from sales growth.

"The second quarter is a key selling period for us and although we continue to watch for any impact that recent financial market volatility may have on broader trading conditions we are maintaining our guidance for 9 percent organic operating profit growth for the current fiscal year," Chief Executive Paul Walsh said in a statement.

The London-based group was giving a trading update before its annual general meeting later on Tuesday, and the update came after it raised the profit growth target to 9 percent from 8 percent in late August.

Diageo, which makes Captain Morgan rum, Baileys liqueur and Tanqueray gin, reported then that underlying operating profits in its financial year to end-June 2007 rose 8.7 percent and underlying sales by 7.3 percent.

Diageo shares slipped 1.6 percent in a lower London stock market.