UPDATE 1-Diageo earnings rise, but cuts growth target

LONDON, Aug 28, 2008 (Reuters via COMTEX) -- DEO | Quote | Chart | News | PowerRating -- Diageo Plc , the world's biggest alcoholic drinks group, matched forecasts with an 11 percent rise in underlying annual earnings on Thursday, but cut its profit growth target due to slower global economic growth.

The London-based maker of Johnnie Walker whisky, Smirnoff vodka and Guinness beer reported underlying earnings per share of 60.6 pence for the year to June 30, compared to a consensus forecast of 60.3p and a range of 59.5 to 61.0 in a Reuters poll.

Basic earnings per share rose 7 percent to 59.3p.

But the group, which also makes Captain Morgan rum, Baileys liqueur and Gordon's gin, cut its target for underlying operating profits growth to between 7 and 9 percent in the current year to June 2009 after meeting its target for 9 percent growth in the reported year to June 2008.

"We enter the new financial year facing slowing global GDP growth and more challenging global economic trends, but ... we believe we can deliver organic operating profits growth for the coming year within our range of 7 to 9 percent," said Chief Executive Paul Walsh in a results statement.

He added that with the positive impact of exchange rates on its results and its share buyback programme he expects to deliver double-digit percentage earnings growth this year.

The group raised its full year dividend 5 percent to 34.35p.

The shares have outperformed the UK market and the alcoholic beverage sector in the recent market turmoil, outpacing the FTSE 100 index by 7 percent the DJ Food and Beverages index by 3 percent since the start of the year. The shares closed at 979-1/2p on Wednesday.

(Reporting by David Jones; Editing by Andrew Callus) Keywords: DIAGEO/ tf.TFN-Europe_newsdesk@thomson.com vjt

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