Total reported turnover rose 15.6% to £12.3bn but pre-tax profits were down by nearly 4% at £2.02bn.
However, the company said Europe was the most challenging market where net sales were down 5% and operating profit was down 1%. It said it had cut marketing spend by 14% in the region.
Spirits and beer were affected by a further shift to the off-trade. However, Diageo said wine net sales increased on the back of Blossom Hill sales in Great Britain.
In Europe, Smirnoff vodka net sales declined 3% as the brand came under increased pressure from heavily-promoted competitor brands. However, the company said the brand continued to be the number one premium spirit in Great Britain.
Paul Walsh, chief executive officer at Diageo, said ‘This has been a very challenging year. By region, International, North America and Asia Pacific have been stronger than Europe.'