* Full-year results due Thursday, Aug. 27 at 0600 GMT
* Year to end-June basic earnings seen up at 64.6 pence
* Year pre-exceptionals earnings seen at 65.8 pence
LONDON, Aug 26 Diageo Plc (DGE.L), the world's biggest spirits group, is expected to show around a 10 percent rise in annual earnings on Thursday, but most eyes will focus on the group's outlook to see if it sets targets for the current year.
The London-based group has suffered from destocking in the United States and weak demand in markets such as Spain, Ireland and Russia, but said in May the weak pound and lower tax will see earnings grow above 10 percent in its year to end-June 2009.
The maker of Johnnie Walker whisky, Smirnoff vodka and Guinness beer is set to post underlying operating profit growth towards the lower end of its current 4-6 percent range while underlying sales are likely to be broadly flat, analysts said.
Analyst Trevor Stirling at Bernstein Research is looking for top-of-the-range earnings growth helped by an exceptionally low tax rate, while those at the bottom end of the range point to lower contributions from Diageo's 34 percent stake in Moet Hennessy.
Earlier this year, market speculation increased that Diageo would buy out the rest of Moet Hennessy from 66 percent owner LVMH (LVMH.PA), and although denied by the French group at the time some analysts fear Diageo may be tempted in the future to pay a high price of the rest of the champagne and cognac group.
A key focus of the results will be if the group offers guidance or targets for the current financial year.
Bernstein's Stirling thinks not, but Philip Morrisey at Citi expects Diageo to guide to flat to slightly higher underlying sales and low single-digit percentage operating profit growth.
Most agree that profit growth for the current year to June 2010 will be driven by 120 million pounds of planned cost savings and also further foreign exchange gains, while the firm awaits recovery in its key U.S. and European developed markets.
Diageo saw sales growth slow through the later half of 2008 but January-to-March sales dipped 7 percent due largely to destocking in the U.S., making nine month sales to end-March 2009 flat.
Analysts will look for signs that the U.S. destocking is now complete, whether trading down to cheaper products in developed markets has stabilised, potential for price rises and continued emerging market growth outside Russia and eastern Europe.
Diageo has said it expects the weak pound to boost profits by 210 million pounds in its year to June 2009, while analysts expect it to cut its foreign exchange anticipated gain to 120 million pounds from 200 million for the year to June 2010.
Diageo's chief rival and No 2 in the spirits world Pernod Ricard (PERP.PA) said in July it expects flat sales in its year to June 2009 and operating profits growth at the lower end of its own 3-5 percent growth range.
The Paris-based maker of Absolut vodka and Chivas Regal whisky has like Diageo been hit by a decline in consumption and the effect of destocking. It reports in early September.
DIAGEO FULL YEAR RESULTS (12 MONTHS TO END-JUNE 2009)
Basic EPS Pre-exceps EPS Sales EBIT
Average 64.6 65.8 +0.4 +3.9
High 72.6 67.7 +2.0 +4.8
Low 57.6 64.0 -0.3 +3.4
Previous 59.3 60.6 +7.0 +9.0
Sample size 7 11 10 9
NOTE - Earnings per share (EPS) is in pence, growth in underlying sales and earnings before interest and tax (EBIT) in percent.
Estimates collected from Bernstein, Cazenove, Charles Stanley, Citi, Deutsche Bank, Evolution Securities, Goldman Sachs, ING Securities, Investec Securities, JP Morgan, Nomura and UBS.
(Reporting by David Jones; editing by John Stonestreet)