UK drinks group, Diageo, posted profits before tax, exceptionals and goodwill amortisation for the year to the end of June of £2.043 billion (US$3.19 billion), in line with analysts' forecasts which had ranged between £2.036 and £2.078 billion.

The company said organic drinks sales growth of 9% and operating profit growth of 13% had met its targets, and these targets would be met in 2002/2003 despite tough market conditions in Latin America and Spain.

"We are not changing our targets; these are not easy targets but we are confident we can meet them although we will not get much help from improvements in the trading environment or from world economies," said finance director, Nick Rose.

Diageo registered 8% volume growth from its eight biggest drinks brands, which include Johnnie Walker, J&B, Smirnoff, Guinness and Baileys. Smirnoff saw the biggest volume gain with growth of 21% while Baileys was also among the strongest performers with a volume rise of 10%.

Brands from the Seagram transaction, which closed on 21 December 2001, were included only in the six months ended 30 June 2002. However the acquisition still contributed volumes of 7.5m equivalent cases, net sales were £451m and operating profit was £130m.

"These are challenging times," said CEO PAul Walsh, "exacerbated by the appalling events of September 11th." However he went on to say: "In 2002 Diageo delivered on the promises it made. With the achievement in premium drinks of 9% growth in net sales and 13% growth in operating profit, we have delivered on our organic performance targets in the year.

"In common with other global businesses, Diageo has faced a challenging economic environment in some markets and unique world events. Despite this background the operational excellence and superior financial performance of Diageo's world leading premium drinks business has created shareholder value."

Stuart Price, the beverage analyst with WestLB Panmure called the results "solid and in line". However he also warned that the "top line growth rate needs revising because of the increasingly competitive ready-to-drinks sector and the failure of Captain Morgan Gold - as well as weaknesses in Scotch."