GUINNESS BREWER Diageo yesterday announced better than expected global sales for the first three months of the year but said its Irish market remained “challenging”.

The London-based drinks company, which also makes Smirnoff vodka and Captain Morgan rum, said it had seen signs of fragile recovery in its mature markets such as North America and in its emerging markets of Latin America, Africa and Asia.

Commenting on the group’s Irish division, a spokesman said: “We had benefits from the recent 250th anniversary celebrations which stimulated the on trade but overall trading conditions in Ireland have remained challenging.” He said the group’s planned €650 million investment in new Irish facilities will remain on hold until the economy recovers, which means breweries in Kilkenny and Dundalk, which are due to close under the plan, will remain open for the foreseeable future.

The drinks maker reported a 12 per cent rise in underlying sales in its third-quarter to the end of March, compared with a consensus forecast of 6.5 per cent by analysts and rival Pernod Ricard’s 16 per cent growth.

Diageo stuck to its full-year target, which sees a low-single-digit percentage rise in operating profits. After a 3 per cent fall in the first-half to end-December last, this required a rebound in its second half.

“With this double-digit sales result it appears that Diageo is well on its way to meeting its low-single-digit organic guidance target for the year,” said analyst Anthony Bucalo at brokers Credit Suisse.

Diageo and Pernod have suffered from the global downturn and big destocking in the United States in early 2009, which followed the collapse of Lehman Brothers, but both are now looking to benefit from the first signs of recovery.

Last week, Paris-based Pernod reported its rebound in sales and upgraded its target to look for a 3 per cent growth in profit for its year to end-June helped by signs of recovery in all areas around the world apart from western Europe. – (Additional reporting by Reuters)