Drinks group Diageo said strongly growing emerging markets and a slow recovery in North America helped to offset weakness in Europe, prompting upbeat comments about meeting its 2012 targets.

The owner of Guinness said it expected the emerging markets of Latin America, Africa and Asia to continue to grow and was encouraged by North America, while Europe had now stabilised with flat sales.

Chief executive Paul Walsh said with underlying half-year sales growing at 7 per cent the group was well-placed to meet its medium-term financial targets for 6 percent annual sales growth, margin expansion and 10-percent plus earnings growth.

"We are cautious as to the consumer and economic trends we will face in 2012 but these first-half results have positioned us well," he said in a statement after the group beat forecasts with a 16 per cent rise in half-year earnings.

Walsh said the group's emerging market business grew 18 per cent in the half year, and now accounts for nearly 40 per cent of its business. This helped to offset a flat Europe hit by poor trading in the euro zone nations of Spain, Greece and Ireland.

Finance director Deirdre Mahlan said she expected the strong performance of emerging markets to continue with no signs of any slowdown reported by consumer goods groups Unilever and Reckitt Benckiser, and was encouraged by the economic data coming out of North America about a slow recovery.

She added that while Europe was mixed it had now stabilised and was more predictable, with 10-percent plus growth in Germany, Russia and eastern Europe offsetting declines in the troubled euro zone nations further south and west.

The London-based group is expanding into fast-growing emerging markets with recent deals in China and Turkey and expects half its turnover to come from these markets by 2015.

UBS analyst Melissa Earlam described the half year results as "very good" as the group beat expectations for sales and profit growth.

"Management flags general caution regarding the consumer and economic trends they face in 2012, while there is certainly no sense of an underlying deterioration in trends from these results," she said.

Diageo, which also sells Captain Morgan rum and Guinness beer, saw 9 per cent underlying profit growth for its July-December half year, helping drive underlying earnings up 16 per cent to 55.9 pence a share, above a company-compiled consensus of 54.8p and a ThomsonReuters forecast of 54.8p.

Its half-year dividend rose 7 per cent to 16.6 pence a share.

Ms Mahlan reiterated the group was looking for a "deeper interest" in the Jose Cuervo tequila brand if the owning Beckmann family desire this as Diageo's long-term distribution deal with the Beckmann's comes to an end in June 2013.

Analysts estimate the world best-selling tequila could be worth around $3.4 billion.

Reuters