Diageo beats forecasts in tough climate

Diageo, the world's biggest spirits group, beat forecasts with a 16 percent rise in annual earnings and despite a fragile global economy set targets for 10-percent plus earnings growth going forward.

The British maker of Smirnoff vodka and Johnnie Walker whisky said on Thursday that emerging markets in Latin America, Africa and Asia grew strongly, but European markets in debt-hit Greece, Ireland and Spain continued to be difficult.

Chief Executive Paul Walsh said the group was looking to grow underlying sales by six per cent, improve margins and see double digit percentage earning growth in the medium term.

"While Diageo is not immune from a fragile global economy, this is a strong platform... Achievement of these aims would underpin even stronger dividend growth," Walsh said in a full year results statement.

European brewer Heineken warnedthat weak consumer sentiment and a damp summer would wipe out its profits growth in 2011, but analysts said spirit maker were less dependent on weather and gained from strong emerging markets.

The London-based group which also sells Captain Morgan rum and Guinness beer posted underlying earnings of 83.6 pence a share beating a Reuters SmartEstimate of 78.9p and a company-compiled consensus of 79.1p for the year to end-June.

The full year dividend rose 6 percent to 40.4 pence.

Diageo shares have outperformed the FTSE 100 index .FTSE so far this year by 10 percent and arch rival and world No 2 spirits maker Pernod Ricard (PERP.PA) by 12 percent. Diageo shares closed on Wednesday at 11.18 pounds.

Pernod reports its annual results on Sept 1.