Diageo has predicted a rise in profits for the year ahead despite the European market being “slightly weaker” than last 12 months ago.

Sales were up for the three months to 30 September were up 5% to £2.06bn, according to the company’s latest trading statement. The maker of Guinness and Smirnoff vodka cited improved sales in Asia and North America as factors in the performance.

Chief executive Paul Walsh vowed to increase the company's spending on advertising but warned that the company faced a tougher environment than in 2009-10.

“Our first quarter performance is in line with our expectations, with good volume growth and a modest improvement in the level of price/mix,” said chief executive Paul Walsh.

“[But] we continue to increase marketing spend behind our brands globally and build our capabilities and our sales force in the developing markets.”

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