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Johnnie Walker popularity helps Diageo to toast profits

Diageo, the world's largest maker of spirits, forecast better profits in the year ahead after suffering a performance hangover in North America and Europe in its latest results.

Diageo said its best-performing "priority brand" in the year to 30 June was Johnnie Walker scotch whisky, which grew volumes by 11 per cent, helped by its "Walk with Giants" advertising campaign.

Johnnie Walker Black Label was its fastest-growing product, with "double-digit" net sales growth in regions including the Middle East, Latin America and South-east Asia over the period. Diageo, which also produces Smirnoff vodka, Guinness beer and Baileys liqueur, toasted a 13 per cent rise in pre-tax profits to £2.24bn, on reported net sales up by 5 per cent to £9.78bn over the year. But the company's operating profit was flat in North America and down by 1 per cent in Europe.

Paul Walsh, its chief executive, said: "Our performance in the developing markets drove overall growth while markets in North America and Europe remained weak."

Diageo's international division, including Africa, grew operating profit by 25 per cent and the Asia Pacific region was up by 6 per cent. Mr Walsh said the "global diversity of our business" made Diageo confident it would grow operating profit in its next financial year.

Its organic operating profit, before exceptional items, grew by 2 per cent to £2.75bn over the year.

While Europe remained a "challenging region" for Diageo, Great Britain posted net sales up by 5 per cent, boosted by Baileys and Pimms.

Diageo yesterday appointed Lord Mervyn Davies of Abersoch, a former trade minister, to its board as a non-executive director. Lord Davies was previously chairman of Standard Chartered bank and a director at Tesco between 2003 and 2008.