UK-based drinks and food giant, Diageo, reported pre-tax profits of £1.228 billion for the six months to the end of December, a marginal improvement on the £1.189 billion last year, in line with analysts' forecasts. The first half results were hit by a 29% fall in earnings at the group's fast food business, Burger King, but the spirits division performed strongly, Diageo said.

Diageo reported that premium drinks volumes had increased by 5% in the six months, with net sales growth of 11% and an increase in operating margin of 1.2% percentage points to 21.7%.The global priority brands saw a 9% increase in volume with net sales rising by 15%.

"As we begin the second half of this financial year we have seen no significant change in trading performance in our premium drinks business," said CEO Paul Walsh. "The trends in respect of volume and net sales growth achieved in the first half are expected to be delivered for the full year despite some deterioration in economic conditions in some markets, especially in Latin America. The second half reported results will benefit from the addition of the spirits and wine business of Seagram that we have acquired. We are confident of achieving both our short and long term financial targets in respect of this acquisition."

The solid performance in Diageo's drinks division contrasted sharply with the results from Burger King which posted a 29% reduction in operating profit to £79 million. The group said it remained committed to selling off the fast food business.

Diageo is expected to have almost no debt once it has completed the sale of both Burger King and the Malibu rum specialty brand which it is selling to comply with regulatory stipulations following the Seagram acquisition.