Diageo eyes recovery despite profits dip

Diageo, the world's biggest spirits maker, has seen its half-year profits dip but says it is "in the early stages of recovery".

Pre-tax profit for the six months to December 2009 fell slightly to £1.39bn from £1.41bn a year ago.

Chief executive Paul Walsh said it had been a "challenging" six months as the consumer environment remained weak.

The group's brands include Johnnie Walker whisky, Smirnoff vodka and Guinness stout.

Mr Walsh said the first quarter of the company's financial year had been tough as expected, with sales down 6%, but sales in the second quarter had picked up by 2%.

"If you look at the second quarter it's clear that the US and Europe remain pretty slow but markets such as Asia, Latin America and Africa are quite buoyant," he said.

In July, Diageo announced plans to close its Johnnie Walker bottling plant in Kilmarnock and its Port Dundas grain distillery in Glasgow.

Despite strong protests, the company has confirmed that the closures will go ahead, with about 900 jobs lost as a result.