Diageo has warned of a tough 2010 after cost savings helped the drinks giant to hit guidance in its fiscal full-year, despite flat like-for-like sales and a fall in pre-tax profits.

Net sales for the 12 months to the end of June were flat against the year before on a like-for-like basis, with like-for-like volume sales down 4%, as the global economic downturn put the stoppers on growth.

But, lower media rates and reduced operating costs in general enabled the group to increase like-for-like operating profits by 4%, meeting the lower end of its full-year guidance.

Net profits for the year rose to GBP1.72bn (US$2.8bn), against GBP1.6bn a year earlier. Before tax, profits fell to GBP2bn, against almost GBP2.1bn last year.

"This has been a very challenging year," said Diageo CEO Paul Walsh. "We took action quickly to manage these difficult times, reducing our cost base and refocusing marketing spend as consumer trends changed."

Among Diageo's major brands, Johnnie Walker and J&B Scotch whisky and Baileys were worst hit during the year, suffering from destocking, particularly in the US, Spain and Russia. Tanqueray Gin and wine also had a weak year.

Walsh said Diageo expects lower single digit like-for-like operating profits growth in fiscal 2010.

"While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery and F10 will be challenging, as we lap a strong first quarter and a reasonable first half performance this year," he said.

Diageo aims to save GBP120m annually from fiscal 2010, partly as a result of restructuring and job cuts in its Scotch whisky business.

For the full announcement, click here.

An update, following the company's results conference, appears here. 

A further update, following a just-drinks interview with Diageo CEO Paul Walsh, will be posted tomorrow.