Diageo, the world's biggest alcoholic drinks group, said sales rose in Russia, eastern Europe and Asia-Pacific last year, but it held its profit growth target at 8 per cent due to higher marketing spending.

The British maker of Smirnoff vodka, Johnnie Walker whisky and Guinness said in a trading statement yesterday the upturn in sales growth in early 2007 would mean the group's underlying sales for its year to end-June would rise more than 6 per cent in its first half.

But the hike in marketing costs to arrest falling sales in Europe, and investment in Asia-Pacific regions such as China, wiped out any hope the London-based drinks giant might increase its profits outlook for the second time in under five months. Disappointment that Diageo did not raise its guidance and news of a negative currency impact for next year weighed on the shares, which closed down 3 per cent.

"There were some analysts who had hoped for an increase in profit guidance, but we see it as positive that Diageo is investing for the future," said one drinks industry analyst.

In February the group raised its guidance for operating profit for the year to June 2007 to 8 per cent from 7 per cent previously, due to better growth in most areas outside Europe.

The company reiterated that it expects exchange rates, mainly the weaker dollar, will trim £90 million off profits in the current year, but then added a new figure by saying currency would slice £40 million off operating profits in its next year to the end of June 2008.