LONDON (AP) — Diageo PLC, the world's biggest spirits maker, on yesterday reported a 10 percent fall in first-half profit as the global recession and keen competition for some brands cut into sales.

For the six months ending December 31, the maker of Johnnie Walker whisky, Smirnoff vodka and Guinness stout reported an after-tax profit of 1.02 billion ($1.6 billion), down from £1.13 billion a year earlier.

Sales fell two percent to £5.2 billion.

"The economic and consumer environment remained weak in many markets and we faced a difficult comparison against Q1 last year yet the second quarter did show a return to growth. In addition we reduced stock levels in all regions," said chief executive Paul Walsh.

The company raised its interim dividend by five percent to 14.6 pence per share and reaffirmed its previous guidance of "low single-digit organic operating profit growth for the full year".

Diageo shares were down 1.6 percent at 1,009 pence in early trading on the London Stock Exchange.

In the first half, Diageo's operating profit before exceptional items was down nearly one percent at £1.63 billion.

Simon Hales, analyst at Evolution Securities, said the company would need a five percent gain in second-half earnings before interest and taxes just to finish the year even with the previous year's result.

Diageo said sales of its global priority brands fell four percent by volume, with J&B scotch down 12 percent, Jose Cuervo tequila down 11 percent and Baileys down eight percent.