Diageo, the world’s largest spirits producer, has reported a sales decline of six per cent in the first quarter but remains confident that they can deliver low single digit profit growth in fiscal 2010.

The maker of Smirnoff, Guinness and Johnnie Walker said that the decline was expected, given weakness in key markets and was not reflective of current demand for their products.

“As we anticipated consumer trends across our markets remain broadly unchanged since the year-end,” Paul Walsh, Chief Executive of Diageo, commented. “Therefore net sales in the first quarter of the new financial year have been weak when compared to the strong performance of the first quarter last year. In the first quarter of last year stock levels increased. However this year, stock levels have not risen in the first quarter and in our biggest market, North America, stock levels in our US spirits distributor channel are below those held at 30 June 2009.”

“The year has started as we thought it would and we reiterate our guidance for low single digit organic growth in operating profit in fiscal 2010.”

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