Diageo quarterly sales fall 1.5% on emerging market weakness

But says it expects sales to increase for the full year

Diageo, the world's largest spirits company, reported a 1.5% decline in first-quarter organic net sales on Thursday, hurt by ongoing weakness and currency devaluations in a number of emerging markets.

Yet the maker of Johnnie Walker whisky and Smirnoff vodka said it expects sales to increase for the full year.

In the three months to Sept. 30, the company's smallest quarter, Diageo said sales volume fell 3.5%, in line with its expectations. Sales of its higher-priced "reserve" brands rose 10%.

Diageo has taken several big steps to expand its footprint in emerging markets, buying makers of local spirits in China, Brazil, Turkey and India, but over the last year it has been hurt by a range of issues, from the Chinese government's crackdown on extravagance to an excise tax increase in Kenya.

"Consumer trends in most markets are unchanged," Chief Executive Ivan Menezes said in a statement. "Emerging markets' performance remains weak with further currency weakness in a few markets and specific geopolitical situations in some areas."

Meanwhile French rival Remy Cointreau also said on Thursday it expects to deliver higher full-year sales, after declines eased slightly in its fiscal second quarter.

The namesake Remy Martin cognac saw sales fall more than 13% in the first half of the year, hurt by the ongoing impact of the Chinese government crackdown and customers throughout Asia taking on less inventory, as well as economic malaise in Western Europe.

For Diageo, sales edged up 0.1% in North America, were flat in Africa and fell 1.4% in Europe and Latin America and the Caribbean. Sales fell 7.4% in the Asia Pacific region.