Diageo's 12 per cent sales rise shows 'signs of recovery'

The drinks giant Diageo said it had seen "some signs of recovery" and growth of 12 per cent in its third-quarter sales to 31 March. But the performance was flattered by comparisons with sales in the depths of recession. The company, whose brands include Guinness stout and Johnnie Walker whisky, warned that "consumer trends remain difficult to predict".

Diageo, which was also helped by an early Easter holiday and buying brought forward to avoid increases in alcohol duty, left unchanged its forecast of "low single-digit" profits growth for the year to June. Despite the company's caution, Simon Hales, an analyst at Evolution, said the performance was impressive, with upgrades to full-year results now likely.

The update comes after a 2 per cent fall in underlying sales during the first half of Diageo's financial year and a 3 per cent fall in profits to £1.63bn in tough markets.